Confidentiality in Arbitration

Alternate Dispute Resolution

Confidentiality in Arbitration

Submitted by:
Shimal Surabhi Kapoor (1925)
3rd Year, B.A., LL.B. (Hons.)
Date of Submission: May 14, 2014
IX Trimester

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Table of Contents

Table of Contents.......................................................................................................................2
Table of Cases............................................................................................................................3
Table of Statutes.........................................................................................................................3
Introduction................................................................................................................................4
Research Methodology...............................................................................................................6
Section 1: The Concept of Confidentiality................................................................................8
Section 2: Rationale Behind Confidentiality...........................................................................14
Section 3: Problems Caused By Confidentiality in ADR.........................................................17
Section 4: Position Of law in India Regarding Confidentiality of ADR..................................22
Section 5: Striking the Right Balance......................................................................................24
Conclusion................................................................................................................................28
Bibliography.............................................................................................................................30

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TABLE OF CASES

1. A.W.A. Ltd. v. Daniels, (1992) 7 ASCR 463.

2. A-G v. Guardian Newspaper Ltd., [1988] All ER 545.
3. Fenton v. Howard, 575 P. 2d 318.
4. In re River Steamer Company, (1871) LR6 Ch 822.
5. In Re Waller, 573 A. 2d. 780.
6. National Labour Relations Board v. Joseph Macaluso, 618 F. 2d 51.
7. Nick v. Morgan's Foods, 99 F. Supp. 2d 1056.
8. Rush &Tompkins Ltd. v. Greater London Council, [1988] 3 All ER 737.
9. Saltman Engineering Co. Ltd. v. Campbell Engineering Co., [1963] 3 All ER 413.
10. Simrin v. Simrin, 233 Cal. App. 2d. 90.
11. Somatra Limited v. Sinclair Roche & Temperley, [2000] 1 WLR 660.
12. Tarasoff v. Regents of the University of California, 17 Cal. 3d 4225.

TABLE OF STATUTES
India
1. Arbitration and Conciliation Act, 1996.
2. Indian Evidence Act, 1872.
3. Indian Penal Code, 1860.
4. Industrial Disputes Act, 1947.
5. Legal Services Authority Act, 1987.

U.S.A.
1. Federal Rules of Civil Procedure.
2. Federal Rules of Evidence.

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INTRODUCTION

Alternative Dispute Resolution (ADR) is the general name given to a variety of

procedures available to parties in cases to resolve their disputes before a formal trial. The
mainstream method of dispute resolution in India being litigation, the other methods of
dispute resolution are coined alternative. Some of the popular methods of dispute resolution
include mediation, negotiation and arbitration. In mediation, a neutral third party helps the
parties come to an agreement about how to resolve the case. The mediator has no authority to
impose a solution on the parties; he only facilitates the process of finding a solution.
Negotiation is a process where the parties negotiate with each other without the help of a
third party to come to a mutually satisfactory resolution of the case. In arbitration, the parties
authorize a neutral third party (or panel) to decide the outcome of their dispute. The process is
similar to a trial in the sense that each side presents facts and arguments to the decision
maker(s), but it is different because the rules of evidence do not apply and the arbitrator(s)
need not adhere exactly to the law.
Society is forced to deal with the inevitable side effects of expansion as it continues to
grow. The continual increase in litigation is one of these side effects, and it has strained the
resources of our judicial system. This extreme rise in litigation has led society to explore
alternative means of dispute resolution. Today, ADR is a rapidly increasing field of study that
encompasses many aspects of society. Besides encouraging ADR, especially mediation;
several statutes make mediation and conciliation a part of the mainstream dispute resolution
process, particularly in the stream of labour and family disputes. After all, interest rei
publicae ut sit finis litium (it is for the interest of the state that there should be an end to
litigation).1
The primary motivations for ADR are to save money and control risk. Preparing for
trial is extremely expensive, and parties can save money if they can resolve the case without
having to incur the expense of trial preparation. Also, when parties settle cases, they have
some control over the outcome of the case in that they can negotiate for terms of the
settlement. If a lawsuit goes to trial, the outcome of the case is left entirely in the hands of
the judge or jury, and is therefore risky.

1
Ratanlal and Dhirajlals The Law of Evidence 90 (Justice Y.V. Chandrachud & V.R. Manohar, Ed., 19th ed.,
Nagpur: Wadhwa & Co., 1997).

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In some cases, privacy or confidentiality may be a factor motivating a party to go for

ADR. In most cases, trial before a court is open to the public. Therefore there is no privacy.
So parties that are interested in keeping the cases to themselves prefer ADR, which being a
private process need not be open to the public. Though in many cases, confidentiality is not a
major concern, nevertheless, lawyers put confidentiality clauses into settlement agreements as
a matter of habit, even if confidentiality was not specifically negotiated. Thus, ADRs are
usually confidential merely by virtue of practice.
However, the concept of confidentiality in ADR is not free from issues. As a
fundamental element of the mediation process, confidentiality has been a hotly debated topic
in the courts and among academia. This debate has centered on the individual's expectation
of confidentiality, its importance to the mediation process, on the court's interest in
adjudicating all relevant evidence and on the right to information of the public. Even the
exact understanding of the term confidential in relation to ADR has given rise to various
debates. Although ADRs might take place under the cloak of confidentiality, the exact extent
of the confidentiality is rather ambiguous. The scope and extent of confidentiality is widely
mooted.
Such a keenly debated issue requires an in-depth analysis of the reasons supporting
the existence of confidentiality and the arguments against it. An attempt must be made to
understand the scope of the confidentiality and the limits to it, if any. Thus, the issues
underlying the concept of confidentiality in ADR make it a very relevant topic demanding a
detailed study. Moreover, as ADR is an emerging field in India, the debate of ADR and
confidentiality is largely unexplored in this country, without much guidance on this field by
Indian courts.

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RESEARCH METHODOLOGY

Scope, Focus and Limitation

The scope of the project involves an analysis on the concept of confidentiality in
ADR. The focus is on issues of public policy and public interest for and against
confidentiality in ADR. A major limitation faced by the researcher was the absence of Indian
case law on the issue.

Aims and Objectives

The aims of this project are as follows:
To understand the concept of confidentiality in ADR.
To examine the rationale behind confidentiality in ADR.
To critically analyse the concept of confidentiality in ADR in light of conflicting
public interests.
To come up with the proposed changes in the law regarding confidentiality in ADR.

Research Questions
The research questions are as follows:
What is the rationale behind confidentiality in ADR?
What are the situations when public interests clash with confidentiality in ADR?
How to resolve this clash of interests?
What changes are required to be made in Indian law in the field of confidentiality in
ADR?

Method of Analysis
The researcher has adopted a blend of analytical and comparative method of analysis.
An analytical method has been adopted to understand the reasons behind
confidentiality in ADR and conflicting public interests. A comparative method has been used
to look at the laws in other jurisdictions to draw guidance for change in the Indian position of
law.

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Chapterisation
Section 1 studies the basic concept of confidentiality in ADR.
Section 2 examines the rationale behind confidentiality in ADR.
Section 3 analyses the problems regarding confidentiality in ADR.
Section 4 examines the Indian position of law in the field of confidentiality in ADR.
Section 5 justifies the changes to be made in Indian law in the field of confidentiality
in ADR
Sources
The researcher has made use of primary sources like cases and statutes. Secondary
sources such as books, encyclopaedia, websites and articles have also been used.

Mode of Citation
A uniform mode of citation has been followed throughout the project.

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SECTION 1: THE CONCEPT OF CONFIDENTIALITY

The Oxford English Dictionary tells that confidentiality refers to imparting "private or
secret matters to another" or "the relation of intimacy or trust between persons so confiding." 2
Confidentiality in the legal and colloquial sense is understood very differently. The common
man client could perceive confidentiality in ADR in various ways. One extreme view
people may take is that confidentiality here means total secrecy- not to be disclosed to
anyone, ever.3 Another opposite extreme view held is that confidential here means that the
ADR process is protected from being adduced in the court, but can be disclosed to the rest of
the world. The middle path views are also held, whereby the ADR would be known only to
the participants and parties directly related to, and affected by the dispute. 4 Mediation clients
are often given the impression that everything that transpires in a mediation session is
confidential and immune from any investigation, whereas the reality might not be so.
Confidentiality, in the legal sense, has at least two distinct implications: exclusion and
privilege.

Exclusion:
In most jurisdictions, negotiations concerning a disputed legal claim are not
admissible as evidence to prove the claim or its amount. In India, S.23 of the Indian Evidence
Act, 1872 provides that in civil cases, no evidence is relevant if it is made upon an express
condition that evidence of it is not to be given, or under circumstances from which court can
infer that the parties agreed together that evidence of it should not be given. 5 This would
apply if the communication is made under a without prejudice clause. Without prejudice
offers mean that I make you an offer which you may accept or not, as you like; but if you do
not accept it, my having made it is to have no effect at all.6
In the USA, Federal Rule of Evidence 408 provides an evidentiary exclusion of
settlement discussions. According to this rule, evidence of furnishing or accepting a valuable
consideration in compromising a claim, which was disputed as to either the validity or the
amount is not admissible to prove the validity of the claim or amount. 7 In addition, evidence
2
Oxford English Dictionary, 1995.
3
Kevin Gibson, Confidentiality In Mediation: A Moral Reassessment 1992 J. Disp. Resol. 25.
4
K.K. Kovach, Mediation: Principles and Practice 143 (1st ed., St. Paul: West Publishing Co., 1994).
5
S.23, Indian Evidence Act, 1872.
6
In re River Steamer Company, (1871) LR6 Ch 822, cited from Ratanlal and Dhirajlals The Law of Evidence
90 (Justice Y.V. Chandrachud & V.R. Manohar, Ed., 19th ed., Nagpur: Wadhwa & Co., 1997).
7
Federal Rule of Evidence 408.

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of conduct or statements in compromise negotiations is inadmissible. 8 However this rule

does not exclude any evidence otherwise discoverable merely because it is presented in the
course of compromise negotiations.9 This rule of not excluding any evidence as to something
discussed or disclose in mediation otherwise discoverable or provable by independent
evidence before a court was also established in Australia in the case of A.W.A. Ltd. v.
Daniels.10 This is sound on logic as persons should not resort to mediation just to ensure that
certain evidence is excluded. Moreover the Federal Rule of Evidence 408 does not require
exclusion of evidence for other purposes, such as proving bias of a witness and so on.
The reason for the above exclusionary rule is based on the policy of promoting
settlement and a concern that the judge or jury may give undue weight to an offer motivated
by desire for peace rather than from any concession from guilt or weakness of position. 11
Such offers have little probative value, but can be extremely prejudicial.
The above rules of exclusion only pertain to the use of settlement discussions in the
court for purposes of evidence. The rules are silent as to the other aspects of confidentiality,
such as whether the information disclosed by the parties can be discussed by the parties or the
mediator in public with others. However, the exclusion is absolute in the sense that it
prohibits all parties from testifying. The information is excluded in evidence irrespective of
whose testimony is sought- a party or the mediator.12

Privilege:
Privilege is the freedom of a person to do or not to do something. 13 The privilege
vests in the holder of the privilege and such a holder can waive the privilege if required. 14
Privilege not to do something is the negation of duty to do something. 15 A privilege is a
blanket protection from testimony, usually based on the special relationship between parties.16
The ambit of a privilege with respect to confidentiality in ADR is different from that
of exclusion. The privilege although generally excludes evidence from trial or discovery,
there may be protection against other disclosures as well. 17 Thus a privilege is wider in the

8
Id.
9
Id.
10
(1992) 7 ASCR 463.
11
S.B. Goldberg et al., Dispute Resolution: Negotiation, Mediation and Other Processes 180 (2 nd ed., New York:
Aspen Law & Business, 1992).
12
Supra note 4, at 144-145.
13
R.W.M. Diaz, Jurisprudence 28 (5th ed., New Delhi: Aditya Books, 1994).
14
Id.
15
Lloyds Introduction to Jurisprudence 495 (M.D.A. Freeman Ed., 6th ed., London: Sweet & Mawell, 1996).
16
Blacks Law Dictionary, 1979.
17
Supra note 4, at 145.

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sense that it may be asserted to block any compelled disclosure whatsoever, not merely
admission into evidence. So the privilege can be invoked in pretrial, discovery, and other
stages where the evidentiary exclusion does not apply.18 Privileges involve parties in a
relationship and generally prohibit disclosure by one party of the information revealed by the
other. A privilege may prevent disclosure for any purpose, and in the context of mediation,
may include files and records of a mediation programme.19
These privileges are created by law in recognition of the sanctity of certain
relationships which are based on trust and also the need for protected disclosure. 20 The key
premise in this line of reasoning is that a confidential relationship is considered necessary for
the function of the office. The concept of confidentiality as a privilege has a strong base in
common law, and are also being statutorily mandated in the USA.21
An example of privilege would be as follows- except for special exceptions,
discourse between a lawyer and client, doctor and patient, priest and penitent are held
privileged and undiscoverable.22
As regards waiver of privilege, as it belongs to the parties jointly, it can be waived by
the parties expressly or otherwise in legal proceedings, and in this case, the mediator could be
compelled to testify.23 However, this view is not undisputed. Some courts abroad have also
held that even where parties had waived their privilege and requested disclosure, the mediator
was allowed to claim the privilege.24 It is submitted that the former view should hold as the
privilege is held by the mediator on behalf of the parties. 25 If the parties request for
disclosure, then there is no undue harm to the parties or breach of confidence or contract. In
addition, it would not affect publics faith in the process of ADR or in the mediator as in these
cases, the parties only ask for disclosure.

Confidentiality Agreements:
Confidentiality can also be ensured through confidentiality agreements. These
agreements are usually agreements between parties to the mediation and the mediator to

18
Supra note 11, at 180.
19
Supra note 4, at 145.
20
Id.
21
Supra note 4, at 145.
22
Maureen A. Weston, Confidentiality's Constitutionality: The Incursion On Judicial Powers To Regulate Party
Conduct In Court-Connected Mediation, 8 Harv. Negot. L. Rev. 29.
23
Somatra Limited v. Sinclair Roche & Temperley, [2000] 1 WLR 660.
24
Fenton v. Howard, 575 P. 2d 318.
25
Supra note 4, at 156.

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maintain secrecy with respect to all communications made in the process of mediation. 26
Breach of such a confidentiality agreement may result in liability. However, in the event of a
subpoena, that is, a writ issued by court to compel the attendance of a witness at a judicial
proceeding, it is uncertain whether the court would consider the agreement as a valid bar. 27
Encouraging ADR, the courts normally uphold and enforce confidentiality agreements. 28 In
matters where public policy advocates transparency, the courts generally weigh the issues of
established public policy disfavouring confidentiality agreements against potential harm
resulting from disclosure.29
If the court construes the agreement as an agreement with the aim of suppressing
evidence, the agreement would be against public policy and unenforceable against the
subpoena.30 Being a contract, it is not enforceable against parties to the agreement.
Even where individuals are legally bound to maintain confidentiality under statutory
or common law, an express agreement has an added advantage. At times, individuals may
maintain confidentiality because they have agreed to, and not because they are legally bound
to.31

Court Orders:
Courts, through protective orders, order parties to maintain confidentiality where
required. Often, when courts refer a matter to mediation, the referral order includes a
provision making the process confidential.32 In addition, parties going for ADR over a
dispute often try to increase the certainty of protection against a subpoena by incorporating
the confidentiality agreement into a joint request for a protective order.33
In the presence of a court order, the party seeking the confidential information must
convince the court to set aside the protective order on the grounds of lack of justification for
the order, or serving a purpose outweighed by the need for disclosure of information.34

26
Peter Robinson, Centuries Of Contract Common Law Can't Be All Wrong: Why The UMA's Exception To
Mediation Confidentiality In Enforcement Proceedings Should Be Embraced And Broadened, 2003 J. Disp.
Resol. 135.
27
Supra note 11, at 180.
28
See Simrin v. Simrin, 233 Cal. App. 2d. 90. In this case for divorce, the court enforced an agreement not to
subpoena a rabbi who acted as marriage counselor.
29
Supra note 4, at 147.
30
Supra note 22.
31
Supra note 4, at 147.
32
Id. at 148.
33
Supra note 11, at 180.
34
Id. at 181.

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Remedies:
As regards remedies of a party in case of disclosure, the following remedies exist. In
India, the case law is not developed in this regard. So guidance has been taken from English
and Australian cases where common law is followed. A glance at U.S. cases is also taken to
take guidance as to policies.
In most ADRs, there is an agreement about confidentiality. In such cases, a suit can
lie on grounds of breach of contract. In the U.S.A, the courts have been willing to see
confidentiality provisions upheld as they foster public policy in favour of mediation. 35 On the
ground of contract, the affected party can seek injunctive relief and where the mediator or
other party has used the information for his benefit, restitution of any profits so acquired can
be ordered.36 In appropriate cases, damages can be ordered.37
Then there also lies a remedy for breach of trust. Even in the absence of an express
agreement, if a person receives information under circumstances of confidentiality, he cannot
make unauthorized use of that information. In England, courts have granted relief against an
actual abuse, or a threatened abuse, of confidential information.38
Under common law, the following elements have to be satisfies for the remedy to be
available:39
1. Information to be protected must have the necessary quality of confidence about it;
2. that information must have been imparted in circumstances importing an obligation of
confidence;
3. there must be an unauthorized use of the information to the detriment of the party who
originally communicated it; and
4. Where the claimant is a private individual, there is an actual or potential detriment.
There would be no criminal suit on the grounds of breach of trust as the breach of
trust envisaged in the Indian Penal Code, 186040 is with regard to corporeal property.
Besides, proceeding under breach of trust or breach of contract, one can also sue for damages
or injunction under statutory rights as given by Arbitration and Conciliation Act, 1996 and
the Industrial Disputes Act, 1947, which will be discussed later.

35
K. Brown, Confidentiality in Mediation: Status and Implications 1992 J. Disp. Resol. 307.
36
L. Boulle & M. Nesic, Mediation: Principles, Processes and Practice 501 (1st ed., London: Butterworths,
2001).
37
Id.
38
Saltman Engineering Co. Ltd. v. Campbell Engineering Co., [1963] 3 All ER 413.
39
A-G v. Guardian Newspaper Ltd., [1988] All ER 545.
40
S. 405, Indian Penal Code, 1860.

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SECTION 2: RATIONALE BEHIND CONFIDENTIALITY

The concept of confidentiality in mediation is based on more than one premise.

Academicians and courts have based the rule of confidentiality on the following reasons:

a. Promotes frank discussion and trust

A mediation or conciliation can only be successful if the parties trust each other, open up
to each other and frankly address all issues of the dispute.41 The mediator can build an
atmosphere of trust when the parties are assured that their underlying interests, needs,
wants, and desires will not be disclosed to any other person. The underlying interests and
desires are very personal in nature and parties are very reluctant to disclose them to the
opposite party. Now if these interests were to be disclosed to third parties also, there
would be no way a party would be frank. The parties should be encouraged to freely and
frankly put their cards on the table.42

b. Use in a subsequent trial would discourage a party to go for mediation

Parties would be very hesitant to make any admissions if anything stated could be used
against them in a subsequent trial. 43 Without frank admissions and statements, mediation
would be reduced to a blame-game with every party pointing finger at the other. Nobody
would risk a medication as telling anything there could be harmful.
Discouraging persons from ADR would mean that the courts would be over-burdened
and litigation would increase manifold, which is certainly not good for the justice delivery
system. This is one of the several reasons why the legislature and courts follow the
policy of encouraging ADR. So, to encourage mediation, confidentiality is a must.

c. Confidentiality attract parties who are wary of publicity

There are disputes where the major concern of parties is to avoid publicity. There may be
several reasons for avoiding publicity- ego, sensitive nature of dispute, and many social
and economic implications. For example, a family dispute for divorce where the man is
impotent. In such a case the fact of impotency coming out would hurt the ego of the man;
also the sex-life of the woman would be a very personal question which would be
41
Supra note 11, at 181.
42
Supra note 36, at 489.
43
Supra note 4, at 140.

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embarrassing for the woman if disclosed openly. At times, disclosure of the nature of
dispute can bring about great social sanctions against the parties.44 For example, in a
dispute between homosexuals where their sexual relationship and consequences thereof,
such as sexually transmitted diseases are the subject matter of disputes, parties would
generally go to any extent for preserving confidentiality.
Thus, parties would prefer ADR in cases where they want to shun publicity and
resolve openly, and this makes ADR an attractive proposition to many potential users. If
confidentiality is not maintained, ADR would lose its popularity to a marked extent.

d. To avoid prejudicing the judge or jury

There is a fair chance that the judge or jury may give undue weight to an offer motivated
by desire for peace rather than from any concession from guilt or weakness of position,
thereby thinking that the party offering to compromise is the wrongdoer. As clearly
mentioned by the House of Lords in Rush &Tompkins Ltd. v. Greater London Council,45
these communications have little probative value, but are highly prejudicial in nature.

e. Disclosure with discourage volunteer mediators from practicing

Another collateral argument given to support confidentiality of ADR is that if there were
no provision or agreement for confidentiality, most mediators and arbitrators would spend
most of their time testifying in the courts. 46 This will thin the ranks of persons facilitating
alternative dispute resolution.

f. Abuse of mediation as a form of discovery

Confidentiality protects the legally nave party from the party who seeks to use mediation
as a form of discovery.47 If mediation were not protected by confidentiality, some parties
would offer to mediate only to get the other party to make statements and admissions
which can be used as evidence in subsequent trial. The court in Nick v. Morgan's Foods48
expressed the risk of abuse in court-ordered mediation for parties:
to 'gain information about its opponent's case, strategy, and settlement posture without
sharing any of its own information.' Instead of a negotiation session, the mediation

44
H. Astor, Mediation in Intra-lesbian Disputes, (1999) 20 Mel. Univ. L.R. 953.
45
[1988] 3 All ER 737.
46
Supra note 11, at 180.
47
Id.
48
99 F. Supp. 2d 1056.

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becomes a stealth discovery session, to the unfair benefit of the party whose decision-
maker is not in attendance. When that happens, the Court's referral to mediation has been
callously misused. Meanwhile, the opposing side has spent money and time preparing for
a good-faith, candid discussion toward settlement. If the other party does not reciprocate,
most if not all of that money and time has been wasted. Thus, mediations would not be
aimed at arriving at an amicable settlement, but rather to get evidence for litigation,
thereby adding to the delay and waste of resources.

g. Adverse effect on mediators perception of a neutral facilitator
The mediator is a neutral third party present to facilitate settlement. If the mediator is
able to or required to disclose information to a decision-maker, the mediator may need to
compromise his neutral role.49 Further, if the parties are aware that a disclosure may be
made by the mediator to a decision-maker, the mediator would be perceived as affiliated
to the decision-maker. This would damage his image as a neutral facilitator. In National
Labour Relations Board v. Joseph Macaluso,50 a subpoena by a court on a mediator to
testify in the court was challenged, the U.S. Court of appeals reasoned that forcing the
mediator to testify would impair his or her future effectiveness by destroying "the
appearance of impartiality."
Thus, it is seen that several reasons exist advocating confidentiality in ADR. All these
reason stem from the policy of the state to encourage ADR as popular means of dispute
resolution.
However, the above is only one side of the story. Confidentiality in ADR raises
several serious issues as well. These will be studied in the following section.

49
Supra note 4, at 141.
50
618 F. 2d 51.

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SECTION 3: PROBLEMS CAUSED BY

CONFIDENTIALITY IN ADR

There are indeed valid arguments in favour of confidentiality of the ADR process;
however, before proceeding any further, it is imperative to look at the possible disadvantages
of confidentiality. In this section, the problems caused by keeping ADR confidential are
looked at. Following are the areas where confidentiality of ADR raises problems.

1. Misconduct by disputing parties in ADR

Abuses of mediation process have been reported to have arisen due to the confidential
nature of mediation.51 If the mediator or arbitrator, through agreement or statute, is
absolutely prohibited from disclosing the mediation process, malpractices like
misrepresentation by the parties and attorneys could go unpunished. In such situations,
complete confidentiality becomes extremely problematic in nature as there would be no
check on the conduct of parties or their representatives.
The U.S. case of In Re Waller,52 dealt with disciplinary proceeding against an attorney
who had blatantly misrepresented and lied to the mediator. The accused attorney had lied to a
court appointed mediator about his representation of a third party, a surgeon. He also
admitted a conflict of interest under the impression that the mediator would not bring it to the
notice of the court due to the non-disclosure agreement. The mediator did report this conflict
of interest to the judge who referred the matter. In the disciplinary proceedings against the
attorney, he was found guilty of violation of code of conduct. In this case, had complete
confidentiality been permitted the lawyer abusing the process would certainly have got away
unpunished.
Confidentiality also thwarts the party who seeks to establish that another party
violated requirements imposed by agreement or law.53 The Federal Rules of Civil Procedure
in U.S.A. provide that a court may impose sanctions where a party or attorney has failed to
comply with court pretrial orders or failed to attend, to be adequately prepared, or to
participate in good faith in court-mandated settlement conferences. 54 For example, if the
statute or contract clause requires good faith efforts to bargain, the party seeking to establish

51
Supra note 4, at 141.
52
573 A. 2d. 780.
53
Supra note 11, at 182.
54
Rule 16, Federal Rules of Civil Procedure.

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its violations will need evidence of what was said or done during the mediation session. In
the absence of the risk of being hauled up for mala fide mediations, parties may go for ADR
only to delay litigation, or may just attend mediation and refuse to negotiate and so on.
Moreover, if confidentiality is absolute, it would become very difficult for parties who
allege that agreements have been obtained by fraud on part of the opposite party to prove the
fraud or misrepresentation.55 Public accountability fosters good-faith bargaining. Some
believe that inroads into confidentiality is the price which has to be paid for securing genuine
commitment on both side to the mediation; 56 while the others opine that confidentiality
cannot be impinged upon.57
Therefore complete confidentiality would become an unfettered licence to opposite
party to abuse the process of ADR. Policy considerations would certainly not support such an
absolute bar on disclosure going to the extent of promoting abuse by parties. If such abuses
are permitted, ADR as a process itself would lose face, and would cease to be an attractive
proposition. This would go against the fundamental policy of encouraging people for ADR.

2. Misconduct by the mediator or arbitrator
If everything that transpires in ADR is absolutely confidential, then it is likely that
there would be not check in the conduct of the mediator or arbitrator.58 There must be certain
extent of transparency in order to ensure accountability. If allegations about malpractices and
impartiality of the mediator or arbitrator are made, there courts must have access to the
relevant documents. If there is absolute confidentiality, then there would be no adverse
consequence upon the abuser of process, and this would be likely to continue.
As in case of misconduct by parties to the dispute, even in this case, absolute
confidentiality would encourage abuse of process, thereby eroding the integrity of the process
of mediation itself.

3. Public interest in environmental disputes

At times, the process of mediation deals with matters adversely affecting interests of
third parties. For instance, in an environmental dispute, the general public may not be a party
to the mediation. However, its interest would be or would have been adversely affected by
55
Supra note 11, at 181.
56
D. Shapiro, Alternative Dispute Resolution under the New Civil Rules: Some Guidelines for Lawyers and
Judges, 1999 Lit. J. Cont. Bus.
57
J. Hamilton, Protecting Confidentiality in Mandatory Mediation: Lessons from Ontario and Saskatchewan
1999 Q.L.J. 25.
58
Supra note 4, at 142.

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the environmental issue on which dispute would have been raised now. In such cases, if
mediation is kept totally confidential, then the interest of innocent and unaware general
public would suffer without them getting to know about it. The parties to the environmental
dispute might reach an efficient, speedy and inexpensive settlement which both sides are
happy with, but that may not resolve the environmental concern at all- public might still be
exposed to great risks. If the same suit had taken place in the court, the matter would have
come out in the open and public interest might have been taken care of. The consequences
that result from a poor environmental settlement are more likely to be lasting and affect a
greater population. Moreover, the public at large may have an interest in the result of a
precedent-setting environmental settlement.

4. Interest of third parties and public interest in potentially dangerous commodities

Similar to environmental disputes, in disputes relating to widely used products, which
are discovered to be harmful or potentially harmful, there is public interest at stake. For
instance, recently in Ahmedabad, a person found a rat in a bottle of Pepsi. Instead of
litigating in the consumer forum or the court, he decided to negotiate with the soft drink
company. A rival soft drink company, Coke, also offered to negotiate with the person in order
to get the bottle containing the rat. He negotiated with the one making the higher bid and got
the due amount. He was happy with the ADR as even in the court he would not have got that
much compensation, not would it have been such a speedy and inexpensive settlement. But
keeping this ADR confidential would mean Pepsi would not have been compelled to increase
its standards and public would be largely unaware of the risks they are exposed to while
consuming the soft drink.
This issue concerning the public interest and confidentiality came to limelight in the
1990s with the Ford-Firestone dispute. In this case, people were injured or killed in rollover
accidents blamed on defective tyres manufactured by Firestone Tyre Company. 59 The
company secretly settled the disputes through negotiation with the victims, and tried to hush
up the matter. Absolute confidentiality in this case clearly implies that public at large which
still continued to use the tyres would be exposed to a great risk to life and property.

5. Disputes involving issues of HIV and other grave diseases

Even family, employment and other disputes involving HIV and other grave diseases
have implications regarding harm to third parties. For example, in a family dispute on the
59
Anonymous, Secret Settlements in Hazardous Cases, http://www.rcfp.org/secretjustice/adr/cases.html.

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grounds of a person being HIV positive, his wife gets a divorce from him through mediation.
Later, the divorcee man wants to remarry. Does his bride have the right to know from the
mediator about her grooms status on HIV? Can the mediator divulge? In absolute
confidentiality, the lady would not know about his deadly disease and may herself be at risk
from this.
Thus, in such situations, there is scope for great harm going to the extent of harm to a
persons life itself if watertight confidentiality is maintained.

6. Public interest in accountability in public agencies

Moreover, in disputes where public agencies are involved, disclosure is demanded on
the grounds of public accountability and interest of the public in the agencies. The policy of
public access to governmental records clashes with confidentiality.60

7. Duties to inform potential future crimes

This may also clash with the general duty on a person to inform about crimes that are
going to be committed. Even in the communications between a lawyer and client which is
privileged, those communications in furtherance of illegal purposes are not protected from
disclosure based on public interest.61 Keeping knowledge of potential or future crime
confidential would be grossly against public interest. This issue came up in the case of
Tarasoff v. Regents of the University of California.62 The case concerned a patient, Prosenjit
Poddar, who told his therapist during psychotherapy that he would kill an unnamed, but
clearly identifiable, young woman. The therapist, who worked for the University of
California, believed the threats were real and informed the campus police, requesting their
assistance in confining Poddar. The police took Poddar into custody, but released him shortly
afterwards since they considered him rational. Tatania Tarasoff, the potential victim, was not
warned. Poddar ended therapy, and killed Tarasoff roughly two months after making his
initial declaration. Tarasoff's family sued the university, which negotiated an out-of-court
settlement on the basis that they had failed to give adequate warning to either the victim or
her family.
The 1976 Tarasoff ruling by the California Supreme Court requires psychotherapists
to disclose information needed to protect the public from violent patients, even when doing

60
Supra note 4, at 142.
61
S.126, Indian Evidence Act, 1872.
62
17 Cal. 3d 4225.

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so breaches confidentiality. Tarasoff is a significant U.S. precedent in that it places upon the
professional the "duty to warn."

7. Loss of evidence
An argument in favour of disclosure is that courts must have access to all evidence available.
The doctrine of justice as a public affair has become known as the right to "every man's
evidence.63 Absolute confidentiality would prevent the access of courts to all available
evidence thereby deterring in dispensing justice. This argument becomes important in cases
where the mediator or parties to ADR are the key witnesses or the sole witnesses. However,
this argument is not strong in all cases as law has validly created exceptions to rules
production of evidence wherever required, for example in matrimonial and professional
communications.
Thus, it can be seen that the principle of confidentiality in ADR clashes with public
interest on various grounds.

63
Supra note 3.

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SECTION 4: POSITION OF LAW IN INDIA REGARDING

CONFIDENTIALITY OF ADR

The law as regards confidentiality in ADR in India is not thoroughly developed. S.23
of the Indian Evidence Act, 1872 provides that in civil cases, no evidence is relevant if it is
made upon an express condition that evidence of it is not to be given, or under circumstances
from which court can infer that the parties agreed together that evidence of it should not be
given.64 This would apply if there is a without prejudice clause. If the letter marked
without prejudice is tendered in evidence and the other party admits them, the admission
implies that the privilege is withdrawn and the letters are free to be used as evidence in the
judicial proceeding.65
The Arbitration and Conciliation Act, 1996 provides for confidentiality in
conciliation. S.75 of the Act provides that the conciliator and parties shall keep confidential
all matters relating to the conciliation proceedings. The confidentiality shall also extend to
the settlement agreement, except where its disclosure is essential for implementation and
enforcement.66 In addition, under proviso to S.70 of the Act, when a party gives any
information to the conciliator subject to a specific condition that it be kept confidential, the
conciliator shall not disclose that information to the other party.67 Section 75 starts off with
the words Notwithstanding anything contained in any other law for the time being in force.
Thus, the principle of confidentiality incorporated in this section cannot be breached in
reference to any other law.68
As regards confidentiality in arbitration, there is no law in India providing for
confidentiality. Arbitration is a private tribunal for settlement of disputes. The public may
not be admitted if the admission is objected to, either by the parties or by the arbitrator.69
However, there is no uniform answer in national laws to the extent to which the participants
in arbitration are under the duty to observe the confidentiality of information relating to the
case.70 Moreover, parties cannot assume that all jurisdictions would recognise an implied

64
S.23, Indian Evidence Act, 1872.
65
Supra note 1, at 90.
66
S.75, Arbitration and Conciliation Act, 1996.
67
S. 70, Arbitration and Conciliation Act, 1996.
68
P.C. Rao, The Arbitration and Conciliation Act, 1996 76 (1st ed., New Delhi: Universal Law Publishing
Company, 1997).
69
Ronald Bernstein, Handbook on arbitration Practice 99 (1st ed., London: Sweet & Maxwell, 1987).
70
H.C. Johari, Commentary on Arbitration and Conciliation Act, 1996 925 (1st ed., Calcutta: Kamal Law House,
1997).

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commitment to confidentiality.71 Thus, there must be an express agreement clearly

demarcating the limits and scope of the confidentiality agreed upon. However, the courts can
compel the party to an agreement to disclose in public interest.72
S.21 of the Industrial Disputes Act, 1947 provides for confidentiality of information
obtained by an arbitrator, conciliation officer, Labour Court or Tribunal upon request made by
the concerned trade union or business, to the concerned authority.
However, there is noting in the Legal Services Authority Act providing for
confidentiality of ADR. This is because Lok Adalats have their roots in mass mediation
centre. This being a public forum does not provide for confidentiality.

71
Id.
72
Supra note 69, at 90.

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SECTION 5: STRIKING THE RIGHT BALANCE

In the previous sections, we have analysed the cogent arguments of policy in keeping
the process of mediation confidential and its clash with public interest in certain occasions.
One way out of this dilemma is to accept the general rule of confidentiality and carve
out exceptions by using the test of balancing of interests. The courts in U.S.A. use a
balancing test to decide whether the benefits of maintaining confidentiality outweigh the
potential harms of disclosure.73 The balancing test that is usually applied is the "Wigmore
test" where any evidence that breaches confidentiality has to pass four criteria in order for
confidentiality to be protected:
(1) Communications must originate in confidence that they will not be disclosed to others.
(2) The preservation of secrecy must be essential to the success of the relationship.
(3) The relationship is one which the public ought to foster and protect.
(4) The injury from disclosure must be greater than the benefit to be gained by the public
from non-disclosure.74
The protection of confidentiality in ADR can be analyzed in the light of this test.
Taking up the first condition, in most mediations, the mediator describes the mediation as
confidential. In other forms of ADR, wherever required, there are agreements of
confidentiality. The first part of the test is arguably met. 75 Similarly, the second and third
conditional are also not of controversy as confidentiality is required for fostering ADR and it
is fostered by community for various reasons.
Of essence here is the fourth condition. The fourth condition of Wigmore's test
involves a balance of benefits and harms. Therefore, it is worthwhile to assess what are
perceived as the possible benefits and harms associated with confidential mediation, since the
apparent societal policy is to use mediation to increase benefits and minimize harms.
The benefits of maintaining confidentiality are seen by the legal community as (1) reducing
the pressure on courts, (2) possibly fostering expeditious settlements, (3) lessening the costs
of litigation by encouraging informal settlements, and (4) strengthening relationships between
potential litigants.76 We have also seen that mediation and its benefits would be ineffective
and inefficient without immunity.
73
National Labour Relations Board v. Joseph Macaluso, 618 F. 2d 51.
74
John H. Wigmore, Evidence, 2285, cited from K.K. Kovach, Mediation: Principles and Practice 145 (1st ed.,
St. Paul: West Publishing Co., 1994).
75
Supra note 4, at 145.
76
Supra note 3.

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The potential harms of immunity from testifying have also been seen in the previous
section. These involve a lack of public accountability in the form of fostering unfair
agreements, harming unrepresented parties and the loss of evidence to the courts. The harms
and benefits must be juxtaposed and weighed against each other in a case to case basis, and
then it must be codified into a statute.
There is no compelling reason to believe that all kinds of mediation are similar, or that
the same rules need apply universally. Although similar mediation principles may apply to
say, small claims cases and environmental cases, there are many practical differences. 77
Small claims deal with relatively small amounts of money, rarely involve a relationship that
must necessarily continue, and are usually limited to two individuals. In environmental
mediation, there may be many parties represented and some affected parties may not be at the
table. Environmental disputes may also be very complicated. The consequences that result
from a poor environmental settlement are much more likely to have a lasting and adverse
effect on a greater population. Moreover, the public at large may have an interest in the result
of a precedent-setting environmental settlement in a way that they would not have in a small
claims case.78
Thus, there are wide differences in mediation and, unfortunately, the same process
may be used to treat cases which differ in the number of disputants, the scope of the dispute
and the weight of the consequences. However, it is entirely possible that there is greater
public interest at stake in one sort rather than another, and hence the rule on confidentiality
which may be appropriate for one case may not be appropriate for another. Similarly, for any
kind of ADR, wide blanket provision as regards confidentiality can not be made.
The general rule of confidentiality is well accepted but in public interest, exceptions
to confidentiality must be created. In fact, in certain cases the law must impose a duty on the
mediator or arbitrator to inform.
Exceptions must be created in public interest in the following cases.
a. Duty to warn where serious psychological, physical, or environmental harm is to be caused
Where serious psychological, physical harm is about to be caused and the mediator
knows about it, he should be under a duty to warn the party under threat. This is similar to
the duty to warn imposed upon a psychotherapist by the U.S. court in the earlier discussed
Tarasoffs case where the person undergoing therapy mentioned that he would murder a
person and actually murdered her after the therapy. Similarly, if serious harm can occur to

77
Id.
78
Supra note 3.

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the public in an environmental matter, the mediator a should have a duty to inform the public.
If mediation is likely to result in an unfair agreement, there should be no compulsion to hang
on to confidentiality as an end-in-itself.
Thus, once a threat has been made, or harm is imminent, I feel that the mediator has a
responsibility to the potential victim to warn him about it, and allow the potential victim to
then choose what to do with the information.

b. Child abuse and serious crimes

Child abuse is assumed by many mediators to be the sole justified exception to
mediation confidentiality, and they tell their clients at the outset that they will halt the process
and report any revealed incidents.79 The law generally imposes a duty to report by a "caring
professional ... having cause to believe that a child's physical or mental health or welfare has
been or may be adversely affected by abuse or neglect."80
Just like child abuse, I feel that a mediator must be under obligation to report a serious
crime such as rape or murder because it is a crime against the state and not just against the
victims. To preserve the social fabric of the nation, a mediator should have a duty to report
such serious crimes. The state must clearly lay down these serious crimes. These must be
limited to crimes causing bodily harm.

c. Accountability in cases of abuse of process

It is only in public interest that the process of ADR be accountable and transparent.
So where the process of ADR is challenged for abuse of process, either by parties or by
mediator, disclosure must be allowed. There may be an appeal for openness of the process,
so that we can ensure that individual rights are not compromised by parties bargaining in bad
faith or that there is incompetence on the part of the mediator. If ADR, especially mediation,
is to be seen as fair and responsible to the public interest, then some sort of oversight appears
necessary. This would further encourage the public to resort to ADR.
It can be argued against it that such an oversight would increase the cost of
mediation.81 However, it would go a long way to improve the quality of mediation, and if the
quality of mediation increases and there is a consequent rise in faith of people in the process,
such appeals on grounds of malpractice would automatically go down.

79
Id.
80
Supra note 3.
81
Id.

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CONCLUSION

It can be seen that the position of law regarding confidentiality in ADR is unclear in
certain parts and not yet totally developed. Determining the scope and extent of
confidentiality in ADR requires serious balancing of conflicting interests. On one hand, there
lies the public interest in encouraging people to settle their disputes out of court and
encouraging ADRs and principles of sanctity of contract supporting non-disclosure where
agreed upon; while on the other, there is public interest in courts have access to all evidence
in order to do justice, public having access for maintaining transparency and accountability,
and the interests of unrepresented parties being taken care of. If the confidentiality is very
narrow, it would go against the policy of encouraging ADR, and would thereby have many
adverse implications such as increasing the workload on courts and costs of litigation and so
on. If the confidentiality is absolute, this extreme would also have adverse consequences on
public interest as innocent third parties may be gravely affected and even the process of ADR
would not be accountable. Thus, a fine balance has to be struck.

In such situations, it has to be kept in mind that ADR on all issues are certainly not the
same. Some matters such as environmental disputes are so much more serious than matters
like say small claims cases, that they come in a different class altogether. So, it would be
wrong to make blanket laws on confidentiality irrespective of the subject matter. There
should be a general rule of confidentiality; however due exceptions must be created imposing
a duty on part of the mediator to inform in cases where serious psychological, physical, or
environmental harm is to be caused; where child abuse and serious crimes come to
knowledge; and where there might have been an abuse of process. The rule of confidentiality
should not exclude any evidence otherwise discoverable merely because it is presented in the
course of compromise negotiations.

The legislature must codify the position of law in this regard, so as to ensure that no
ambiguity exists.82 The law should impose a duty on the mediator/
conciliator/arbitrator/negotiator to explain this position of law on the issue of confidentiality
so that the client is not under the wrong impression of watertight confidentiality. Till the time
such an enactment is made, the mediator/ conciliator/arbitrator/negotiator must get an
82
Even in the U.S.A., a Uniform Mediation Act is being enacted.

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agreement as to confidentiality, clearly demarcating the scope and limits of the agreement,
and warning the parties that the position of law in this regard is not clear.

Thus, the need of the hour is a well-drafted legislation clearly laying the law on this
point, by finely balancing the conflicting interests by creating righteous exceptions keeping in
mind public interest.

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BIBLIOGRAPHY

Articles
1. Anonymous, Secret Settlements in Hazardous Cases,
2. D. Shapiro, Alternative Dispute Resolution under the New Civil Rules: Some
Guidelines for Lawyers and Judges, 1999 Lit. J. Cont. Bus.
3. H. Astor, Mediation in Intra-lesbian Disputes, (1999) 20 Mel. Univ. L.R. 953.
4. http://www.rcfp.org/secretjustice/adr/cases.html.
5. J. Hamilton, Protecting Confidentiality in Mandatory Mediation: Lessons from
Ontario and Saskatchewan 1999 Q.L.J. 25.
6. K. Brown, Confidentiality in Mediation: Status and Implications 1992 J. Disp.
Resol. 307.
7. Kevin Gibson, Confidentiality in Mediation: A Moral Reassessment 1992 J. Disp.
Resol. 25.
8. Maureen A. Weston, Confidentiality's Constitutionality: The Incursion On Judicial
Powers To Regulate Party Conduct In Court-Connected Mediation, 8 Harv. Negot. L.
Rev. 29.
9. Peter Robinson, Centuries Of Contract Common Law Can't Be All Wrong: Why The
UMA's Exception To Mediation Confidentiality In Enforcement Proceedings Should
Be Embraced And Broadened, 2003 J. Disp. Resol. 135.

Books
1. K.K. Kovach, Mediation: Principles and Practice 143 (1st ed., St. Paul: West
Publishing Co., 1994).
2. L. Boulle & M. Nesic, Mediation: Principles, Processes and Practice 501 (1st ed.,
London: Butterworths, 2001).
3. Lloyds Introduction to Jurisprudence 495 (M.D.A. Freeman Ed., 6th ed., London:
Sweet & Maxwell, 1996).
4. P.C. Rao, The Arbitration and Conciliation Act, 1996 76 (1st ed., New Delhi:
Universal Law Publishing Company, 1997).
5. R.W.M. Diaz, Jurisprudence 28 (5th ed., New Delhi: Aditya Books, 1994).
6. Ratanlal and Dhirajlals The Law of Evidence 90 (Justice Y.V. Chandrachud & V.R.
Manohar, Ed., 19th ed., Nagpur: Wadhwa & Co., 1997).

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7. Ronald Bernstein, Handbook on arbitration Practice 99 (1st ed., London: Sweet &
Maxwell, 1987).
8. S.B. Goldberg et al., Dispute Resolution: Negotiation, Mediation and Other Processes
180 (2nd ed., New York: Aspen Law & Business, 1992).

Dictionaries
1. Blacks Law Dictionary, 1979
2. Oxford English Dictionary, 1995

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