Safeguarding Confidential Arbitration Awards in Uncontested Confirmation Actions

• Published date: 01 October 2022
• Author: Mitch Zamoff
• Date: 01 October 2022
• DOI: http://doi.org/10.1111/ablj.12211

American Business Law Journal

Volume 59, Issue 3, 505–557, Fall 2022

Safeguarding Confidential

Arbitration Awards in Uncontested

Confirmation Actions

Mitch Zamoff*

Two bedrock principles of American jurisprudence collide when courts are called

upon to decide whether to seal confidential awards that prevailing arbitration

parties petition to confirm in court. On the one hand, the strong public policy in

favor of arbitration dictates that courts should honor arbitration parties’ confi-

dentiality agreements by sealing confidential awards that are the subject of con-

firmation petitions. On the other hand, the public interest in court proceedings

suggests that motions to seal should be infrequently granted. Courts continue to

struggle with how to harmonize these two important values when they conflict

with each other in actions to confirm confidential arbitration awards. To clarify

and improve the law in this area, this article proposes the following rule to guide

the adjudication of motions to seal confidential arbitration awards in confirma-

tion actions: deny the motions when the losing arbitration party challenges the

underlying award and grant the motions when the award is uncontested. Such a

rule would provide arbitration parties with clarity, consistency, and the confi-

dence to submit their confidential disputes to arbitration without risking public

disclosure in the event they lose and their adversary initiates a confirmation

action. It also would prevent prevailing arbitration parties from misusing the

confirmation process to engage in undesirable strategic behavior, and empower

arbitration parties to request that their arbitrators issue reasoned awards without

*Mitch Zamoff is the J. Stewart and Mario Thomas McClendon Professor of Law and Alter-

native Dispute Resolution and Assistant Dean of Experiential Education at University of

Minnesota Law School, as well as an arbitrator. Professor Zamoff previously servedas a

member of the Board of Directors of the American Arbitration Association (AAA) and a

member of the AAA Healthcare Advisory Council. Professor Zamoff currently serves as a

member of the AAA Council. Bridget Hoffmann and Janae Aune provided valuable

research in support of this article.

©2022 The Author

American Business Law Journal published by Wiley Periodicals LLC on behalf of Academy of

Legal Studies in Business.

This is an open access article under the terms of the Creative Commons Attribution

License, which permits use, distribution and reproduction in any medium, provided the

original work is properly cited.

505

fear that those awards will end up in the public domain whenever the prevailing

party petitions to confirm them.

INTRODUCTION

A potentially serious problem is brewing for commercial parties that

agree to maintain the confidentiality of their arbitration awards.

1

When

prevailing parties go to court simply to convert their confidential awards

into uncontested judgments—a routine procedure expressly contem-

plated by the Federal Arbitration Act (FAA) and state arbitration laws—

some courts are purporting to serve the “public interest”by stripping

the awards of their confidentiality. This misguided approach undermines

the strong policy in favor of arbitration that has long been a part of

American jurisprudence. One of the key features of arbitration that dis-

tinguishes it from litigation is the parties’ ability to keep the award confi-

dential. Indeed, many commercial parties rely heavily on the assurance

of confidentiality in deciding to arbitrate rather than litigate their dis-

putes. If courts make a practice of ignoring the confidentiality commit-

ments of arbitration parties and exposing their private awards to the

public even when those awards are uncontested, commercial parties will

lose one of the essential benefits of the arbitration bargain. They might

eventually become reluctant to submit their confidential disputes to arbi-

tration, which would further encumber already overburdened court

dockets and deprive parties of the benefits of arbitration.

The promise of confidentiality is the primary reason many disputants

elect to arbitrate.

2

While many parties (and even their lawyers)

1

The term “commercial parties”in this article is used loosely to refer to business entities

that are more likely than individuals to be familiar with the arbitration process, participate

in arbitration on a repeat basis, and have the sophistication and leverage to negotiate cus-

tomized arbitration agreements. While contractually valid confidentiality provisions may be

entered into by non-commercial disputants (or by one commercial and one non-commercial

party, such as a business and a customer), this article focuses on arbitrations and confirma-

tion actions between commercial parties. Concerns about unconscionability and duress,

which are beyond the scope of this article, are much less likely to arise in this context.

Moreover, commercial parties are more likely than non-commercial parties to expressly

contract to protect their arbitral awards from public disclosure.

2

See infra Part II.B.

506Vol. 59 / American Business Law Journal

mistakenly assume that confidentiality is automatic in the arbitration

context,

3

this private form of dispute resolution does afford the parties

the opportunity to agree to treat the arbitrator’s final award, as well as

any interim awards, as confidential.

4

Commercial parties choose to make

their arbitral awards confidential for a host of legitimate and important

reasons.

5

Absent duress, unconscionability, or some other defect in the

agreement to arbitrate,

6

these confidentiality pacts, which are a common

feature of commercial arbitration,

7

are enforceable. Sufficiently robust

confidentiality agreements typically provide that any awards entered in

the arbitration shall be treated as confidential and filed under seal in the

event they are submitted to a court.

8

A prevailing arbitration party enforces an arbitral award by filing a

confirmation action in court to convert the award into a court judg-

ment.

9

Where the parties have agreed to treat the underlying award as

confidential, the confirmation petition will typically be accompanied by

a motion to file the award under seal.

10

Courts adjudicating confirma-

tion petitions sometimes grant these motions to seal, thereby preserving

3

See infra Part II.A.

4

While arbitration awards may be rendered by a single arbitrator or a panel of multiple

arbitrators (usually three) depending on the agreement of the parties and the applicable

rules, this article uses the term “arbitrator”in the singular to describe the decider of an

arbitration proceeding. It makes no difference to the analysis and proposal contained

herein whether a confidential arbitration award was rendered by a single arbitrator or a

panel of arbitrators.

5

See infra Part II.B.

6

Agreements to arbitrate, or confidentiality covenants contained within those agreements,

that are invalid as a matter of contract law are beyond the scope of this article. So, too, is

the arbitration of certain statutory claims that could potentially raise public policy concerns.

See, e.g., Robert J. Landry, III & Benjamin Hardy, Mandatory Pre-Employment Arbitration

Agreements: The Scattering, Smothering and Covering of Employee Rights,19U.F

LA. J.L. & PUB.

POL’Y479, 484 (2008) (“[W]hen mandatory arbitration is applied to Title VII rights or other

statutory rights … there is a lack of public accountability.”). This article focuses exclusively

on arbitration confidentiality clauses that are valid and enforceable as a matter of

contract law.

7

See infra Part II.B.

8

See infra Part V.A.

9

See infra Part III.

10

Id.

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