A Corporation v Firm B and Another [2025] EWHC 1092 (Comm)

Background

In A Corporation v Firm B and Another [2025] EWHC 1092 (Comm), the English Commercial Court considered whether to grant interim injunctions to prevent a law firm, Firm B and one of its partners, Mr W, from acting in an arbitration, alleging breaches of confidentiality. The case involved two separate arbitration proceedings with a common factual background - one concerning Vessel 1 and the other concerning Vessel 2. A Corporation, the claimant, argued that Firm B had improperly shared confidential information from the first arbitration (Vessel 1 Reference) with its Asia office, which was acting for C Corporation in the second arbitration (Vessel 2 Reference).

The claimant sought injunctions to restrain Firm B from acting for C Corporation and required the firm to cleanse its files related to the second arbitration. The key allegations were that confidential information, including settlement offers and expert opinions from the first arbitration, had been disclosed improperly.

Legal Framework: Confidentiality in Arbitration

Although not specifically addressed by the Arbitration Act 1996, English law recognises the duty of confidentiality in arbitration. The legal basis of this duty has been the subject of debate. In Ali Shipping Corporation v Shipyard Trogir [1997] EWCA Civ 3054, the Court of Appeal treated confidentiality as an implied term of the arbitration agreement. However, this view has been criticised in later cases. Despite this, the duty of confidentiality is generally accepted under English law, extending to the arbitration hearing, documents disclosed during proceedings and the resulting award.

Test for Interim Injunctions: American Cyanamid Principles

The test for granting interim injunctions was established in American Cyanamid Co (No 1) v Ethicon Ltd [1975] UKHL 1. The applicant must show that there is a serious issue to be tried, that damages would not be an adequate remedy and that the balance of convenience favours granting the injunction.

Facts

The dispute arose from two separate arbitrations. In the first arbitration (Vessel 1 Reference), Firm B acted for B Corporation. In the second arbitration (Vessel 2 Reference), Firm B’s Asia office acted for C Corporation. A Corporation claimed that Firm B had disclosed confidential information from the first arbitration to the Asia office, which was then passed on to C Corporation in relation to the second arbitration.

A Corporation sought to restrain Firm B from acting for C Corporation, prevent any further disclosure of confidential information and obtain an affidavit from Mr W about the extent of the sharing of information. Firm B admitted to disclosing a settlement offer from the first arbitration but contested other allegations, arguing that the information shared was not confidential or fell within exceptions to the confidentiality obligation.

Decision

Scope of Arbitral Confidentiality
Foxton J considered the scope of the duty of confidentiality, noting that it extends to the arbitration hearing, documents disclosed during the proceedings and the arbitral award. However, the judge emphasised that pre-existing documents or information used in arbitration are not automatically subject to confidentiality. The fact that a commercial dispute led to arbitration does not make the dispute itself confidential. However, information derived from confidential documents could be covered under the duty of confidentiality.
Exceptions to Confidentiality
The court recognised that exceptions to arbitral confidentiality exist under English law, particularly where disclosure is necessary to protect a party’s legitimate interests. Foxton J acknowledged that it was "strongly arguable" that confidential information could be used for eliciting similar fact evidence from third parties, which could fall within an exception to confidentiality.
Assessment of Alleged Breaches
Foxton J examined each of the alleged breaches of confidentiality. In most instances, the judge found that the information was not subject to confidentiality, fell within an exception, or had already been shared with C Corporation without causing prejudice to A Corporation. For instance, information about Vessel 1’s condition was disclosed before the parties entered into memoranda of agreement, meaning the confidentiality obligation did not cover it. Furthermore, sharing information to establish similar events related to both vessels was considered a potentially legitimate exception.
Risk of Future Breaches
In considering the risk of future breaches, the judge concluded that there was no realistic possibility of Firm B disclosing further confidential information to C Corporation. This was due to the preventive measures taken by the firm, such as standing down personnel who had worked on the Vessel 1 Reference and cleansing the relevant files. Mr W and a colleague had already reviewed the files, removing any sensitive correspondence.
Balance of Convenience
Applying the American Cyanamid principles, Foxton J found that granting the injunction would cause significant prejudice to Firm B and C Corporation, who would lose their chosen legal representation. In contrast, not granting the injunction would result in limited prejudice to A Corporation. The judge distinguished this case from situations like Bolkiah v KPMG [1999] 2 AC 222, where former clients seek to restrain solicitors from acting against them. In this case, A Corporation had the burden to show a real risk of prejudice.
Court’s Discretion and Undertaking
Foxton J refused to grant the banks permission to appeal, finding no realistic prospect of success. The judge suggested that the banks could give an undertaking, which could be recorded in the court’s order, not to rely on the declarations regarding the arbitration agreements.

Commentary

This case highlights the complexities of confidentiality in arbitration and the balancing act between enforcing that confidentiality and allowing for limited exceptions. The court's approach suggests a flexible view on confidentiality, allowing for disclosure where it serves a legitimate purpose, such as eliciting similar fact evidence. It also underlines the importance of taking early action to prevent breaches of confidentiality and the need for clear procedural safeguards.

Case: A Corporation v Firm B and Another [2025] EWHC 1092 (Comm) (8 May 2025) (Foxton J)

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