Arbitration as an alternate dispute resolution mechanism has seen a substantial rise in the last decade or so, not only in India but throughout the globe owing to the fact that arbitration allows greater party autonomy and is more cost effective and speedier as compared to litigation. The Arbitration and Conciliation Act, 1996 (“the Arbitration Act”) deals with the law relating to arbitrations in India and the Arbitration Act was amended recently in 2019 with the enactment of the Arbitration (Amendment) Act, 2019 wherein the principle of confidentiality of arbitration proceedings was introduced in India .

Confidentiality, as a principle, has been a part of the Arbitration Act since its inception in terms of Section 75 of the Arbitration Act. However, Section 75 of the Arbitration Act only related to conciliation proceedings and not arbitration proceedings. Section 75 of the Arbitration Act provides that the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings and such confidentiality shall extend to the settlement agreement except where its disclosure is necessary for purposes of implementation and enforcement.

In 2017, a High Level Committee headed by Justice B. N. Srikrishna was formed in order to review the institutionalization of arbitration mechanism in India which submitted a report suggesting various reforms and amendments to the Arbitration Act. One such recommendation by the High Level Committee was the introduction of the principle of Confidentiality in arbitration proceedings. Pursuant to the recommendations, the Arbitration and Conciliation (Amendment) Act, 2019 was enacted which introduced Section 42A wherein the principle of Confidentiality was extended to arbitration proceedings as well. Section 42A is reproduced below:
“42A. Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.”

Meaning of Confidentiality
Confidentiality has not been specifically defined anywhere in the Arbitration Act. Oxford Dictionary defines the word “Confidentiality” as “a situation in which you expect someone to keep information secret”. 
The concept of confidentiality introduced to arbitration proceedings vide Section 42A of the Arbitration Act provides that the arbitrator(s), the arbitral institution and the parties to the arbitration proceedings will maintain confidentiality with respect to the arbitration proceedings and the only exception being disclosure of the arbitral award for the purpose of its implementation and enforcement.
Rationale behind incorporation of Section 42A

Confidentiality in arbitration proceedings are ideal for parties who wish to save the dispute involved from the glaring eyes of the media, competitors, etc. and it further protects the market position of parties involved in disputes dealing with intellectual property rights or trade secrets. It is also necessary to point out that Section 42A begins with a non-obstante clause which means that it shall prevail over any other law for the time being in force and makes it mandatory for parties to abide by such provision, which in turn has a cascading effect on party autonomy as far as arbitrations are concerned.
Drawbacks of Section 42A

It is clear from a bare perusal of Section 42A that only the arbitrator, arbitral institution and the parties to the arbitration are obligated to abide by the principle of confidentiality. However, Section 42A does not talk about the witnesses, stenographers, transcribers and other persons who attend and/or are a part of the arbitration proceedings who might be witness to certain information which is confidential in nature and hence, the obligation of keeping information pertaining to the arbitration proceedings would not apply to them which in itself points to a glaring lacunae in the said principle. Section 42A does carve out an exception to the obligation of maintaining confidentiality and excludes from its purview, disclosure for the purpose of implementation and enforcement of the arbitral award. Whether the principle of confidentiality as envisaged under Section 42A is to be also applied to proceedings before the Court arising under the Arbitration Act such as proceedings under Section 9, 34,14, etc. has not been specified. This aforesaid exception is the standalone exception to the obligation of maintaining confidentiality as laid down by Section 42A of the Arbitration Act and is clearly not what the High Level Committee report suggested. The report intended to include disclosure related to the arbitration proceedings where it was necessary under law or to protect or enforce a legal right, or to enforce or challenge an award before a court or judicial authority. Section 42A, however, restricted itself only to one exception of disclosure. Suffice it is to say that the limited exception provided under Section 42A might lead to precarious or uncertain situations such as when it is necessary to disclose information related to such arbitration proceedings in the case of a Petition under Section 34 of the Arbitration Act for challenge to the arbitral award, an application under Section 9 of the Arbitration Act for interim measures, an appeal under Section 14 of the Arbitration Act challenging interim measures granted by the tribunal or an application under Section 14 of the Arbitration Act for termination of the mandate of the arbitrator, etc. Further, it would also be worthwhile to point out that there are no consequences of non-compliance of the provisions of Section 42A which raises serious doubts as to its effective adherence.

Conclusion
Since, the concept of confidentiality has recently been introduced in the domain of arbitrations in India, it would be interesting to see how the Courts interpret this provision and whether any further amendments to Section 42A are envisaged by the legislature keeping in view the drawbacks mentioned above.

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