Requirements Governing Compliance with the Principle of Transparency and the Principle of Confidentiality in International Arbitration Agreements (A Comparative Study in Iranian and German Law)

Abstract

The principle of transparency is currently regarded as one of the most significant principles governing the process of international arbitration. It has been argued that this principle guarantees the validity and accuracy of procedures within this process and, accordingly, may be considered a factor ensuring the parties’ access to the necessary information in arbitration proceedings. Although resistance has occasionally arisen against the acceptance of this principle in international commercial arbitration, the majority of jurists and legal analysts have endorsed the necessity of the existence and protection of this principle in the course of international arbitration proceedings. Nevertheless, this principle is closely connected with another principle governing international commercial arbitration, namely the principle of confidentiality. In resolving the tension between these two principles, scholars have ultimately concluded that the principle of confidentiality should not serve as a basis for violating the principle of transparency. The foundation for recognizing the obligation to preserve confidentiality, in the absence of an explicit provision in the contract, is the doctrine of implied terms. However, it should be noted that the scope of this obligation is limited to specific aspects of arbitration proceedings, and, on the other hand, not all individuals participating in arbitration can necessarily be regarded as bound by confidentiality obligations. Furthermore, certain exceptions, due to particular circumstances, govern this issue and compel those bound by confidentiality to breach such obligations and disclose matters that would otherwise be considered confidential. However, where disclosure occurs outside the scope of such exceptions, the party breaching confidentiality must be required to compensate for the damages resulting from such conduct. Therefore, it can be observed that the claim regarding the superiority of the principle of transparency over the principle of confidentiality in international commercial arbitration—except in specific cases—is not unfounded. Nevertheless, with respect to two categories of disputes, the situation becomes more challenging. First, disputes relating to patents, in which, due to the necessity of protecting the moral rights of the intellectual property holder, emphasis is generally placed on adherence to the principle of confidentiality rather than transparency, except in cases where, for any reason, the precedence of transparency over confidentiality in patent matters becomes necessary. Second, disputes relating to foreign investment, in which, gradually, due to their connection with issues such as public order and the national character of projects, greater emphasis has been placed on the precedence of the principle of transparency over confidentiality.