Malaysia’s High Court Rules That Third Parties Can Disclose Confidential Documents Produced In Arbitration Proceedings

Herbert Smith Freehills review the Malaysia High Court’s decision in Dato’ Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd [2019] MLJU 405, where the Court considered for the first time the new section 41A of Malaysia’s Arbitration Act 2005 and its application to non-parties to an arbitration.

In this case, although the plaintiff was not a party to the arbitration, the defendant company argued that the rules on confidentiality under section 41A applied to non-parties, citing a prior decision of the High Court that “[t]he principle of privacy precludes third parties from making use of documents generated in arbitration proceedings outside the arbitration without the consent of the party producing it or the leave of court“. As a party to the arbitration, the defendant company did not consent to the disclosure of the two documents.  The High Court dismissed the objection on the basis that:

  • the plaintiff, as a non-party to the arbitration, was not bound by section 41A; as such, they did not require the consent of the parties nor did they need to qualify under any exemption under section 41A(2) in order to disclose confidential information relating to the arbitration;
  • the introduction of section 41A was intended to supersede any Malaysian common law principles of confidentiality of arbitrations, including any duty of confidentiality imposed on third parties;
  • any express or implied obligation of confidentiality between the parties to an arbitration could not extend to non-parties due to a lack of privity; and
  • (although not decisive in this case) confidentiality could be superseded where the interests of justice requires disclosure.

The authors comment that the circumstances surrounding the claim and the reasoning of the High Court are curious given that:

  • one of the statutory exceptions to confidentiality allows a party to the arbitration to disclose confidential documents where any party (including a third party) brings litigation proceedings against it; however, it does not envisage a situation where a third party commences proceedings against a party to the arbitration by relying on confidential documents in the arbitration.  It is unclear from the case how the plaintiff obtained the confidential documents.
  • Section 8 of the Arbitration Act provides that “[n]o court shall intervene in matters governed by [the Arbitration Act] except where so provided in [the Arbitration Act]. As evident from the judgment, the prevailing notion under Malaysian arbitration law is for the Arbitration Act to take precedence on any area of arbitration law previously regulated by Malaysian common law where the Arbitration Act makes such provision. If that is the case, then it is arguable that the Malaysian common law rule prohibiting third parties from using confidential documents produced in arbitral proceedings should continue to stand, as it is not specifically regulated by the strict wording of the Arbitration Act.

See also the following reviews of this case:

For a review of confidentiality in arbitration proceedings in India, see the article by Singhania & Co.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

View

Leave a Reply

Your email address will not be published. Required fields are marked *