Associated Electric & Gas Insurance Services Ltd v European Reinsurance Co of Zurich

[2003] UKPC 11
Lords Bingham, Hoffmann, Hobhouse, & Millett, Sir Christopher Staughton
Privy Council
January 2003

Confidentiality of arbitration awards and the nature of a party's rights arising from an arbitration award.

The parties were insurance companies. They had entered into a facultative reinsurance agreement that contained an arbitration clause. Two separate disputes were referred to arbitration under this clause. In the second dispute, the respondent, European Reinsurance, wanted to rely on the award made in the first arbitration between the same parties. The Appellant, Aegis, obtained an ex parte injunction restraining European Reinsurance from doing so, contending that it would be a breach of the confidentiality of the first arbitration award.

It was held that, even though the confidentiality agreement made during the first arbitration had not granted permission to communicate anything or to provide any document relating to it to the arbitrators in any other arbitration, other factors had to be considered. It became clear that the confidentiality agreement should not be construed so as to prevent one party from relying upon an award as having given him rights against the other. This had to be the case for three reasons - the insurances were liability insurances; the essential purpose of arbitration was to determine disputes between the parties to the arbitration and also because proceedings in both arbitrations were governed by the law of Bermuda, which confirmed the duty to perform the award, and to recognise and respect the rights it declared.

Contrary to Aegis' submission, it was held that the first award had conferred upon European Reinsurance a right that was enforceable by later pleading an issue estoppel. Aegis's argument that disclosing the first award was a breach of the ordinary principles of privacy of arbitrations and also of the privacy provisions of the express settlement agreement was held to be unsound. Its other argument, that the plea was bound to fail and therefore should not be allowed to go ahead, could only succeed, absent bad faith, if the plea of issue estoppel was obviously unarguable.