Confidentiality in Arbitration

A. The Blessing of Confidentiality

Arbitrations are usually confidential, because they originated as a means of settling disputes between businesses and disputes between partners, and there was little to gain and much to lose by making each side’s dirty linen public. Both the winner and the loser want to avoid industry gossip and speculation, and a fair but quiet resolution can be important. The rules of arbitration service providers like the AAA normally provide that arbitrations are confidential unless both sides agree. Not even the names of the parties are public information.

By contrast, I have had court trials in which a reporter sat in the front row of the courtroom and wrote daily front-page stories on everything that happened that day. That can be useful if impeachment witnesses come forward, spurred by what they believe is a lie by someone whose testimony is reported in the paper. That can be a horror if the reporting is lurid, statements are taken out of context, and everyone winds up looking bad.

Employees are often concerned that publicity about an employment case—or even Internet searches on their names revealing that they sued an employer—will harm their future chances of getting a good job. Employers are often concerned that they may not look like a good place to work. The initial verdict tends to get the press coverage, not the remittitur of a plaintiff’s verdict, the grant of a new trial, or the correction on appeal.

Particularly in cases involving messy disputes, or disputes about deeply personal information, as in many sexual harassment cases and in some cases involving disability discrimination or family and medical leave problems, both sides may share a strong interest in confidentiality.

There is no such thing as perfect confidentiality, of course. The winner may file a motion in court to confirm the arbitration award and attach it to the motion; the loser may file a motion to vacate the award and do the same. Discovery in a subsequent case involving a party may also require revealing the arbitration and the award.

B. The Curse of Confidentiality

The parties to business disputes or employment disputes may not know enough about how arbitrations actually work to have confidence in them as a superior way to resolve some disputes. If they could read arbitration awards, they could compare it to decisions in court litigation and see that the reasoning and thoroughness are as confidence-inspiring as the decisions of courts.

Without that information, they may choose to lock themselves into litigation that may distract them and tie them up for years.

In addition, the parties’ selection of the best arbitrator to handle a particular dispute would be aided by the opportunity to read their past decisions. Only a tiny number are posted on WestLaw® or Lexis. ® Without the ability to read decisions, the parties may choose an arbitrator less qualified than available better arbitrators.