High-Profile Arbitration and the Press: What About Confidentiality?

On June 20, 2023, Kyle-Beth Hilfer moderated and spoke on a NYSBA panel exploring confidentiality in arbitration and press relations.

The panel explored varying perspectives: the entertainment litigator, the arbitrator, the press relations manager, and the American Arbitration Association. Using a hypothetical arbitration from the entertainment world, the panel tackled a variety of questions about confidentiality in arbitration, such as:
• How will you manage media relations before, during, and after the arbitration?
• How do you handle a call from a reporter, asking for details that have not been made public?
• How will you handle your client, who is eager to make its case on social media?
• How does arbitrator-ordered confidentiality establish parameters for what you can and cannot say to the press during or after the proceedings?
• How do American Arbitration Association guidelines and the Rules of Professional Conduct of the New York State Bar Association affect your decisions?

Arbitrator Authority to Protect Confidentiality in Arbitration

Ms. Hilfer explained how the current American Arbitration Association’s Commercial Rules provide opportunities for protecting confidentiality in arbitration.

• An arbitration tribunal can issue a confidentiality order that governs the entire arbitration by invoking their authority under both Rule R-45b and R-24.
• Rule R-24 allows the Arbitrator to condition document exchange and admissibility at the hearing on compliance with a confidentiality order.
• Under older versions of the rules, arbitrators had little control over what parties or counsel could say to the press or others unless the parties had entered into a confidentiality agreement. The current R-45b allows an arbitrator to protect the integrity of the proceedings with a confidentiality order, thus preventing counsel or parties from trying the case in the press.
• While the request for an order of confidentiality remains party driven, most arbitrators will bring up the issue in a preliminary hearing.  In particular, a high-profile case or a case with sensitive information may require a confidentiality order from the inception.The tribunal typically will be sensitive to maintaining confidentiality in arbitration.

Arbitrator Enforcement Authority

Ms. Hilfer also spoke about arbitral tribunal enforcement authority with regard to confidentiality in arbitration. She emphasized that any enforcement authority exists only within the context of the arbitration and not in any related judicial proceedings.

• Rule R-24d covers “willful non-compliance with any order issued by the arbitrator.” It allows the arbitrator to draw adverse inferences, exclude evidence or submissions, and to make special allocations of costs or even issue an interim award of costs relating to non-compliance.
• Rule R-24e allows the arbitrator to issue any other enforcements orders that she is empowered to issue under applicable law to maintain confidentiality in arbitration.
• Rule R-60 allows the arbitrator to order “appropriate sanctions” where a party fails to comply with an order of the arbitrator. While the failure to comply does not have to be willful, R-24 only covers willful non-compliance. Most arbitrators are going to be very careful without willful non-compliance in even considering sanctions.
• If the arbitration agreement disallows sanctions, the agreement would trump any authority under the Commercial Rules.
• If the parties’ contract prohibits punitive damages, the parties may need to brief for the arbitral tribunal whether sanctions are seen as such prohibited damages under relevant state law.
• The AAA rule prohibits a default award as a sanction. Other providers may have different rules.
• Finally, the rule allows sanctions against the party not the counsel.
• Any counsel requesting sanctions should expect to brief all issues including those relating to arbitral authority under the applicable law. Counsel who hopes to win the case should also be careful in requesting sanctions that could jeopardize confirmation or enforcement of the award.
• In general, arbitrators are going to be very careful to make sure they are not exceeding their power in granting sanctions. In addition, arbitrators consider closely if the requested sanction impacts due process concerns or requires a potential adverse inference that could impact the merits of the case.

For more information about Kyle-Beth Hilfer’s arbitration practice, click here.