Any law school graduate will explain that one of the main advantages of arbitration proceedings on Court proceedings (beyond the fact that the arbitrator may have expertise in the required field, one may arbitrate in a language that is not necessarily Hebrew and the process is usually faster than Court proceedings) is that arbitration proceedings are confidential. But is that indeed correct?
The Israeli Arbitration Law establishes a series of principles for managing the process of arbitration. However, confidentiality is not one of them, despite being one of the major benefits of the arbitration process. The parties (or the arbitrator) may decide to arbitrate under strict confidentiality, but whether a Court will later give effect to this decision?
The Israeli Supreme Court recognized the importance of privacy and confidentiality of the arbitration proceedings and the need to protect them from disclosure. The Supreme Court refused to allow disclosure by request of a third party of documents filed in arbitration proceedings and the arbitrator's award but did not set a clear rule stating confidentiality of arbitration proceedings. The subject re-arose in a later case of arbitration held against the State when a third-party demanded disclosure of the arbitration award by arguing public interest to disclose the information. In such case the Court held that arbitration confidentiality is not complete. When the State is a party to the proceedings public interest may overcome the interest of confidentiality and the award, or at least parts thereof which do not jeopardize privacy of third parties, will be published. Note that a similar question could be raised regarding public companies and a case dealing with obligation of a public disclosure of the content of an arbitration award by a public company raised the option that in some cases shareholders of a public company may demand to accept the arbitrator's award.
Court proceedings are generally not confidential and an arbitration can sometimes reach the Court. This happens, for example, when the Court is requested to cancel an arbitration award or enforce it. The Supreme Court held that the mere motion to the Court for approval or cancellation of the arbitration award does not create waiver of right to confidentiality. However, when an arbitration case reaches the Court it is important to move the Court to hear the case in camera, to avoid making the arbitration proceedings open to the public. In one case, for example, when arbitration documents have been introduced into the Court in a proceeding for approval or cancellation of the arbitrator's award the Court held that an argument of confidentiality of the arbitration documents has been weakened.
Thus, to the extent that the intention of the arbitration proceedings is to keep it confidential is important to define this within the framework of the arbitration agreement, but keep in mind that even in such a case the confidentiality of the arbitration proceedings is not absolute.