When choosing alternative means to settle conflicts and thus avoiding the Judiciary, the companies may still discuss corporate secrets with the necessary confidentiality and, at the same time, preserve their image from unfavorable effects usually seen in litigation.
However, it is important to emphasize that even though confidentiality is considered a natural consequence of arbitration, the confidentiality of the procedure requires the parties to express their will accordingly. The choice of the arbitration chamber that shall administrate the procedure and the wording of the arbitration clause protect future discussions regarding the level of confidentiality involved in possible litigation. It is certain that, once the arbitration is established and the parties fail to reach an agreement, the arbitrators tend to protect the private aspect of this method to solve conflicts. Specialized jurists and the actual practice undeniably confirm the private aspect of arbitration as well as the confidentiality involved in the procedure – including its existence, the evidences produces and its outcome. Therefore, in spite there is no provision in the Arbitration Law, the regulations of the main arbitration institutes, national and international, inform that, except if expressly agreed to between the parties otherwise, both the existence of the procedure and its content shall be confidential.
Even though there are no discussions regarding the general rule of confidentiality, its realization remains bringing some difficulties, especially when the parties involved require the communication and publicity of their acts, due to their own nature. This is the case, for instance, of the arbitrations involving the Public Administration – which will be more thoroughly discussed in further articles – and the publicly held companies.
Especially with respect to publicly held companies – with focus on those that are part of the New Market, which bylaws must provide an arbitration clause of the B3 Market Arbitration Chamber (CAM) – the matter may seem contradictory: these companies are required to release to their shareholders and to the public in general relevant information that may affect the investment decision, and at the same time the CAM itself provides that the arbitration procedure is confidential (article 9.1 of CAM’s arbitration regulation).
The paradox between confidentiality and publicity is already partially regulated (please refer to Instruction 358 of the Brazilian Securities and Exchange Commission – CVM) and allows for judicial, administrative and arbitration procedures filed under seal, whether by means of judicial order or due to the parties’ will, not to have their contents disclosed.
Therefore, the legal requirements of transparency do not assume the disclosure of procedural documents, decisions or even the object of the case, but only the existence of the arbitration procedure. Indeed, the provisioning and the submission of the risk assessment report prepared by the auditing company, which has access to relevant content of the arbitration procedure, may be enough to meet the disclosure requirements.
The systematic interpretation of the several rules that govern the capital markets clarifies that the right to information is not absolute and that the confidentiality of the arbitration procedure – which shall also, in certain cases, be partially more flexible – represents, in fact, a protection to the company and its shareholders against speculations and unwelcome influences in the development of the procedure. For this and other reasons, the violation of the confidentiality of the arbitration procedure, especially when involving publicly held companies, has been reprehended by the Brazilian and foreign case law, as we will discuss in our next article.