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[2013] ZAWCHC 124
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Transnet v MV âAlina IIâ (AC 104/09; AC 03/10) [2013] ZAWCHC 124; 2013 (6) SA 556 (WCC) (5 September 2013)
Republic of South Africa
In the High Court of South Africa
Western Cape High Court, Cape Town
REPORTABLE
CASE NO: AC 104/09
and
AC 03/10
TRANSNET LIMITED
.........................................................................................
Applicant
and
MV “ALINA II”
...............................................................................................
Respondent
___________________________________________________________________
JUDGMENT: 5 SEPTEMBER
2013
GOLIATH, J
This is an interlocutory application for the discovery
of certain documents in terms of Uniform Rules of Court 35(7). The
applicant
seeks an order compelling the respondent to comply with a
notice in terms of Rule 35 (3).The respondent opposes the
application.
The applicant is the Port authority at Saldanha Bay
that instituted two actions in this court against the respondent.
The applicant
since identified itself as Transnet Limited and its
two actions have been consolidated. The respondent is the MV“Alina
II” (the vessel). On 29 October 2009 the vessel berthed at the
Langebaan Iron Terminal at the port.On completion of the loading
on
31 October 2009, the vessel took on a port list and it was
discovered that the vessel’s hull had pre-existing damage
and
that there had been ingress of water into the double-bottom port
ballast tank caused by the fracture of the vessel’s
hull. As a
result the damaged vessel remained at the terminal until 26 March
2010.The vessel’s extended occupation of the
terminal resulted
in there only being a single berth available to load other vessels
during this period. Consequently the applicant
is claiming
significant damages from respondent arising out of this incident. In
addition to this, substantial damages were sustained,
not only by
the applicant, but also by the owner of the cargo which had been
loaded on board the vessel at Saldanha, Anyang Steel
International
Trading Co Ltd (“Anyang”), and various companies in the
Kumba Iron Ore Group of companies which had
chartered the vessel
from her owner.
In the event that the respondent is found liable to the
applicant, the respondent has indicated that it intends to seek a
stay
in the proceedings on the basis that:
3.1. A number of legal proceedings have been brought or
threatened to bebrought in arbitration proceedings in London against
it
in relation to the same incident, in the capital sum of US $
15,932, 272 45.
3.2. It and the vessel’s owners are entitled to
bring proceedings for an order limiting their total liability for
that incident
in terms of Section 261(1)(b) of the Merchant Shipping
Act, 57 of 1951(MSA).
Anyang has instituted arbitration proceedings against
the vessel’s owners in London and Kumba Shipping Hong Kong
Limited
(“Kumba HK”) has commenced arbitration
proceedings against the owner in London. Applicant is seeking
disclosure
ofthese arbitration documents in respondent’s
possession for the purposes ofinspection in terms of Uniform Rule
35(3). In
its notice in terms of Rule 35(3) the applicant seeks
inspection of three categories of documents:-
4.1. The pleadings and all other documents filed of
record and/or exchanged between the parties in, or in relation to,
the proceedings
instituted by way of arbitration or court process
against the respondent, the owner and/or those who have an interest
in her, by
or at the instance of:
4.1.1. the person(s) responsible for the interdict
referred to in paragraph 8 of defendant’s plea; and/or
4.1.2 Anyang; and/or
4.1.3. any other persons, apart from those referred to
in the preceding two sub-paragraphs;
4.2. Documents discovered and/or made available by the
parties to each other in the aforesaid proceedings (“the
discovered
documents”); and
4.3. All documents in which claims against the
respondent or the owner have been intimated or demanded arising out
of the incident
referred to in paragraph 25 of the defendant’s
plea, apart from claims by those persons already listed in paragraphs
25.1
to 25.3 of the plea (“the claim documents”).
Applicant contends that two aspects of the pleadings
filed in both matters are particularly relevant to the application:
5.1. firstly, the defence pleaded by the defendant that
the vessel did not depart from the berth as a result of her
condition, but
by virtue of an interdict brought by Anyang under case
number AC 107/2009 to interdict various parties from removing the
vessel
from her berth; and
5.2. second, the defendant’s reliance on
limitation of liability in terms of Section 261(1)(b) of the Merchant
Shipping Act
57 of 1951.
Applicant highlighted paragraph 8 of Plaintiff’s
amended particulars of claim where plaintiff pleads that the damage
to
the vessel :
“
detracted from the vessel’s
seaworthiness and/or rendered her unseaworthy. As a result of the
damage and the fracture (of
her hull), she was prohibited from
departing, alternatively was unable to depart, from the terminal.”
In response, in paragraph 8 of the defendant’s
amended plea the defendant raised as an express defence the fact
that:
“…
the vessel was
prohibited from departing from its berth at the terminal not as a
result of any condition of the vessel or any act
or omission of those
responsible for the vessel but by virtue of an interdict granted by
the above Honourable Court on 18 December
2009 which was thereafter
periodically extended and which was at all times opposed by the
owners of the defendant.”
The applicant disputes this defence and replicates
that:
7.1. The Anyang interdict application was launched as a
result of the vessel’s condition at that time.
7.2. The interdict was necessitated by virtue of the
condition of the vessel when she entered the port.
7.3 At the relevant time it was reasonably foreseeable
that the vessel’s entry into the port in such defective
condition could
give rise to legal proceedings such as the Anyang
interdict application, which may have resulted in the detention of
the vessel.
Applicant therefore submits that the nature of Anyang’s
cause of action against the vessel’s owner which gave rise to
the Anyang application is directly relevant to the defendant’s
defence to plaintiff’s claim. This cause of action
forms the
subject matter of the Anyang arbitration, hence documents filed in
the Anyang arbitration are directly relevant to
this action.
Respondent contends that applicant hadidentified those
aspects which it considered relevant in the Anyang arbitration,
namely,
the amount claimed by Anyang, and the nature of the claim,
including any allegations regarding the interdict. Respondent has
provided the applicant with all this information. Applicant is
therefore aware that the amount of Anyang’s claim is US
$11,234,054,57 and £ 5,892,50, the nature of the claim is
based on Anyang being the holder of a bill of lading, and the
pleadings contained no more “
allegations regarding the
interdict
”, than are already in the respondent’s
plea. Respondent therefore argues that there is no need to order the
production
of pleadings in the Anyang arbitration, since they are
irrelevant. Any further information regarding the arbitration will
not
assist the applicant in establishing the main issues in dispute,
namely, (a) its disputed contract with the vessel’s owner,
or
(b) the disputed legal duties owed to it by the owner and/or crew,
or (c) any alleged breaches of contract or duties by the
owner
and/or crew, or (d) whether the vessel was detained at Saldanha Bay
because of her unseaworthy condition or the interdict,
or (e) its
damages.
Respondent further contends that applicant’s
statement that “
Anyang’s cause of action [in the
arbitration proceedings] against the vessel owner which gave rise to
the Anyang interdict
application is directly relevant to the
defendant’s defence to the plaintiff’s claim
”
is logically and legally untenable. It is argued that the effect of
the vessel’s stay at Saldanha must be determined
on the basis
of pre-existing facts. It cannot be determined by allegations in a
subsequently instituted arbitration, even if
by the same party and
even if based on the same or similar allegations. Furthermore, what
is relevant for causation is the basis
on which the interdict was
brought, the interdict’s effect, and whether any factors
prevailing at the time were causally
connected to the vessel’s
stay at Saldanha. These facts are then to be considered on the basis
of a “
sensible retrospective analysis
.”
Consequently, respondent submits that Anyang’s plea in the
arbitration will not assist in an enquiry as to what
caused the
vessel’s extended stay at the iron ore terminal. Issues raised
in applicant’s replication should also
be considered on the
basis of a “
sensible retrospective analysis
” in
determining whether respondent’s denial of causation is to be
upheld, and nothing after the release of the vessel
from the
interdict is relevant in that inquiry. In any event, it is argued
that the applicant was a party to the interdict proceedings
and is
in possession of all relevant documents relating to the interdict.
Section 261 (1) of the Merchant Shipping Act 57 of 1951
states:
“
When owner not liable for
whole damage
The owner of a ship, whether registered in the
Republic or not, shall not, if any loss of life or personal injury
to any person,
or any loss of or damage to any property or rights of
any kind, whether movable or immovable, is caused without his actual
fault
or privity –
(a)….
(b) if no claim for damages in respect of loss of
life or personal injury arises, be liable for damages in respect of
loss of or
damage to property or rights to an aggregate amount
exceeding 66,67 special drawing rights for each ton of the ship’s
tonnage
...”
In terms of Section 261 (3) of the MSA the entitlement
to limit only arises in respect of: -
“
claims for damages in
respect of …. loss of or damage to property or rights arising
on any single occasion, and in the application
of the said provisions
claims for damages in respect of loss, injury or damage arising out
of two or more distinct occasions shall
not be combined”
In its plea the defendant avers that:
“
26. The defendant and the
owner of the defendant are entitled to bring proceedings for an order
limiting their total liability in
respect of all claims arising out
of the same occasion to the amount defined in Section 261 (1) (b)
read with Section 262 of the
Merchant Shipping Act 57 of 1951.
27. In the event that the defendant be found liable
to the plaintiff then judgment against it in respect of its liability
falls
to be postponed until judgment in respect of all other actions
instituted and arising from the same occasion and the aforementioned
proceedings to limit liability have been concluded”.
It is not disputed that the vessel has a gross
registered tonnage of 92,191 mt. The value of the special drawing
right is currently
about R 13,80. Consequently, if the limitation
plea is valid, the respondent and her owner will not be liable for
damages in
excess of R 84,819,960 (92.191 x 66.67 x 13.80). The
Anyang arbitration claim is in the amount of US $ 11,234,054,47which
exceeds
the limitation amount.
The applicant submits that the respondent alleges that
all the various claims “
arise out of the same incident
.”
The respondent also seeks, in the alternative, for an order
declaring the respondent liable to the applicant, subject
to the
provisions of Section 261(1)(b) of the MSA. In addition, the
respondent requests an order staying the proceedings pending:
15.1 The determination of the proceedings in cases AC
03/10 and AC 38/10 and any other proceedings that may be brought
arising out
of the same occasion; and
15.2 The determination of proceedings brought or to be
brought by the respondent and/or owner of the respondent to limit
liability
to the applicant and all other claimants arising out of the
same occasion in terms of Section 261(1)(b) of Act 57 of 1951.
Applicant therefore submits that the following matters,
amongst others, are in issue in respect of the defendant’s
defence
of limitation of liability:
16.1 Whether the Anyang arbitration claims, as well as
all other claims referred to by the defendant, arise out of “
the
same incident”
as alleged;
16.2 The validity, nature, merits and quantum of each of
those claims, and in particular the Anyang arbitration claim;
16.3 Whether the respondent has met the requirements of
Section 261(1)(b) and (3) of the MSA.
Respondent contends that it pleaded the limitation
defence in order to obtain the fullest protection of Section 261 and
to ensure
that the limit provided for is paid only once, to bring
its own claim for an order proportionally reducing its liability in
respect
of the potential claims against it such that the total
liability does not exceed the maximum statutory amount. Respondent
submits
that a limitation claim is permitted in English Courts, with
reference to
The “VolvoxHollandia”(CA)
[1988] 2
Lloyd’s Rep 361 at 371 and
Caspian Basin vsBouygues Offshore
SAand Others
(No 4) (QB) [1997] 2 Lloyd’s Rep 507 at 525 –
526. Similarly, it is also allowed in South Africa as was done in
Nagos Shipping Ltd v Owners, Cargo Lately Laden on Board the MV
“Nagos”, and Another
1996 (2) SA 261
(D&CLD).
Respondent further contends that a defence based on limitation of
liability is binding only in respect of the claim
of the particular
plaintiff in whose action it is raised.Indescribing the nature of a
limitation claim, respondent referred to
The Happy Fellow
(QB)
[1997] 1 Lloyd’s Rep 130 at 134 where Longmore J stated:
“
A
limitation action is thus a special proceeding to which all potential
claimants are made parties and includes a power to stay
proceedings
to enforce any judgment which may have been obtained in other
proceedings ….. It seems to me therefore that,
in what I may
call a multi-party situation, a ship owner’s right to limit is
not an incident or attribute of a claimant’s
claim but an
altogether different right to have all claims scaled down to their
proportionate share of a limited fund
.”
Respondent accordingly argues that its plea is a
recordal of its entitlement to the full protection of Section
261(1)(b). Consequently,
it is argued that the limitation of
respondent’s liability to Anyang will not be relevant in the
applicant’s action.
There is thus nothing in relation to
Anyang’s claim that requires to be discovered.
Rule 35(7) is designed to assist a party that is
dissatisfied with the discovery or supplementary discovery that has
been made
and remedies under Rule 35(3) have been exhausted (
Tractor
& Excavator Spares (Pty) Ltd v Groenedijk
1976(4) SA 359
(W)). Rule 35(7) empowers the Court to dismiss a claim, or strike
out the defence, if a party fails to give discovery
in compliance
with the Rules. Discovery was defined in
STT Sales (Pty) Ltd v
Fourie
2010 (6) SA 272
(GSJ) at 276 C-D as “
a tool used
to identify factual issues once legal issues are established
”.
The purposeof discovery is not only to assist the parties as well as
the court in determining the truth, but alsoto save
costs as stated
in
Air Canada v Secretary of State for Trade
[1983] 2 AC 394
at 445 – 446 and
Santam Ltd and Others v Segal
2010(2)
SA 160 N at 162 E – F.
With regard to the object of discovery of documents in
terms of Rule 35 Tredgold J said the following in
Durbach v
Fairway Hotel Ltd
1949(3) SA 1081 SR at 1083:
“
The
whole object of discovery is to ensure that before trial both parties
are made aware of all the documentary evidence that is
available. By
this means the issues are narrowed and the debate of points which are
incontrovertible is eliminated. It is easy
to envisage circumstances
in which a party might possess a document which utterly destroyed his
opponent’s case, and which
might yet be withheld from discovery
on the interpretation which it is sought to place upon the rules. To
withhold a document under
such circumstances would be contrary to the
spirit of modern practice, which encourages frankness and the
avoidance of unnecessary
litigation”.
Schultz AJ (as he then was) in
Crown Cork & Seal
Co Inc and Another v Rheem SA (Pty) Ltdand Others
1980 (3) SA
1093
(W) at 1095 quoted with approval what an English Judge said in
Church of Scientology of California v Department of Health and
Social Security
(1979) I WLR 723 (CA) at 733 C-E that:
“
The
object of mutual discovery is to give each party before trial all
documentary material of the other party so that he can consider
its
effect on his own case and his opponent’s case, and decide how
to carry on his proceedings or whether to carry them on
at all…..
Another object is to enable each party to put before the Court, all
relevant documentary evidence….”
In Sunderland Steamship P and IAssociation v Gatoil
International
(
The
“
Lorenzo Halcoussi
”)[1988]
1 LIoyd’s Rep 180 (QB) at 184 referred to obiter in
Replication Technology Group and Others v Gallo AfricaLtd
2009 (5) SA 531
(GSJ) at 535 G, the court said the following:
“
Our
law… recognises that proper mutual discovery in litigation and
arbitration is in the public interest in that it promotes
settlements; it reduces [the chances of] a party being taken by
surprise; and enables the Judge to decide the case in the light
of
contemporary documentary material which is often more valuable than
the oral testimony. On the other hand, our law recognizes
that no
sensible civil justice system can be organized on the basis that
time, money and inconvenience [are] irrelevant. Nevertheless,
the
scope of discovery is wide. It extends to documents having only a
minor or peripheral bearing on the issues, and to documents
which may
not constitute evidence but which may fairly lead to an enquiry
relevant to the issues. But a court may, of course, refuse
to order
discovery to the extent that the discovery is not necessary for
fairly disposing of the matter, and to the extent that
it would be
oppressive to order it”.
In
Swissborough Diamond Mines (Pty) Ltd and Others v
Government of the Republic of South Africa and Others
1999 (2)
SA 279
(T) at 316, the court reviewed the authorities relating to
relevance in the context of Rule 35(1), (2) and (3) and cited with
approval the principle laid down in
CompagnieFinancière et
Commerciale du Pacifique v Peruvian Guano Co
(1882) 11 QBD 55
(CA):
“
It
seems to me that every document relates to the matter in question in
the action which, it is reasonable to suppose, contains
information
which
may
– not which
must
– either directly or indirectly enable the party requiring the
affidavit either to advance his own case or to damage the
case of his
adversary. I have put in the words “either directly or
indirectly” because, as it seems to me, a document
can properly
be said to contain information which may enable the party requiring
the affidavit either to advance his own case or
to damage the case of
his adversary, if it is a document which may fairly lead him to a
train of enquiry which may have either
of these two consequences.”
In
Durbachv Fairway Hotel Ltd
(supra)
at 1083 it was stated that “
A
party is required to discover every document relating to the matters
in question, and that means relevant to any aspect of the
case. This
obligation to discover is invery wide terms
.
Even
if a party may lawfully object to producing a document, he must
stilldiscover it.”
It has been held
that the relevance of the documentation is to be determined with
reference to the pleadings and theissues raised
by
them.(
Swissborough Diamond Mines of RSA and
Others v Government of the Republic of South Africaand Others
(supra)
at 317 A-D
;
Federal Wine and
Brandy Co Ltd v Kantor
1958 (4) SA 735
(E) at 753
D-G;
Copalcor Manufacturing (Pty) Ltd and Another v GDC Hauliers
(Pty) Ltd
2000 (3)SA 181 (WLD) at 194A)).
The test for discoverability in the context of
privilege or relevance was set out in
Continental Ore
Construction v Highveld Steel and VanadiumCorporationLtd
1971
(4) SA 589
(W) at 598 D-F:
“
The
test of discoverability or liability to produce for inspection, where
no privilege or like protection is claimed, is still that
of
relevance; the oath of the party alleging non-relevance is still
prima
facie
conclusive,
unless it is shown on one or other of the bases referred to above
that the Court ought to go behind that oath; and the
onus
of
proving relevance, where such is denied, still rests on the party
seeking discovery or inspection”
.
The courts are generally reluctant to go behind a
discovery affidavit. In
Continental Ore Construction v Highveld
Steel and VanadiumCorporation Ltd
(supra) at 597 H – 598 A
the following was stated:
“
The
Court will go behind the affidavit only if it is satisfied –
from the discovery affidavit
itself; or
from the documents referred
to in the discovery affidavit; or
from the pleadings in the
action; or
from any admissions made by
the party making the discovery affidavit; or
from the nature of the case
or the documents in issue,
that there is a probability
that the party making the affidavit has or has had other relevant
documents in his possession or power
or has misconceived the
principles upon which the affidavit should be made
.”
(Also
See:
Federal Wine and Brandy Co. Ltd v Kantor
1958 (4) SA 735
(E) at 749 G).
In England there are no statutory provisions in the
Arbitration Act of 1996 addressing confidentiality in arbitrations.
However,
in terms of English Law a duty of confidentiality is
implied by arbitral parties. The classical view of the principle of
confidentiality
in arbitration was established in
Dolling-Baker v
Merrett
[1991] 2 All ER 890
(CA). The Court held that the
obligation extended to all documents generated in the process of
arbitration including the award.
In
Hassneh Insurance Co of Israel & Others v
Stuart J Mew
[1993] 2 Lloyd’s Rep 243 the English
Commercial Court relied on
Dolling-Baker supra
in finding
that arbitration proceedings are subject to an implied duty of
confidentiality. However, the court found that it shall
not be
absolute and that disclosure would be allowed if it is reasonably
necessary for the establishment or protection of an
arbitrating
party’s rights against a third party. This exception related
only to the award and its reasons and did not
cover pleadings,
witness statements and transcripts.
The principle was confirmed in
Ali Shipping
Corporation v Shipyard Trogir
[1997] EWCA Civ 3054
;
[1998] 2 All ER 136
(CA). The
English Court of Appeal held that confidentiality of the arbitral
process was implied by law “
as a necessary incident of a
definable category of contractual relationship
”.
In
Associated Electric and Gas Insurance Services
Ltd (AEGIS) v European Reinsurance Company of Zurich
[2003] UKPC
11the
English Court indicated a willingness to overrule the implied
principle of confidentiality. An express term was agreed upon
between
the parties and the case turned on the interpretation of the
confidentiality clause. The Court ruled at para[8] that the
“
legitimate use of an earlier award in a later, also
private, arbitration between the same two parties would not raise
the mischief
against which the confidentiality agreement is
directed.
”The Court ruled that the award could be referred
to in subsequent proceedings to establish an estoppel defence
against
a losing party. However, AEGIS does not deal with a
situation where the parties seek to rely on an arbitral award in
subsequent
proceedings where the parties to the arbitration are not
identical.
In
John Forster Emmott v Michael Wilson and Partners
Limited
[2008] EWCA Civ 184
the English Court of Appeal
reaffirmed the principle of implied confidentiality and recognized
four principle exceptions to the
general rule of confidentiality,
namely: -
where there is consent;
ii. where there is an order, or leave of the court;
iii. where the disclosure is reasonably necessary for
the protection of the legitimate interest of an arbitrating party;
iv. where the interest of justice require disclosure,
including on the grounds of public interest.
In
Westwood Shipping Lines Inc. and another v
Universal Schiffahrtsgesellschaft MBH and another
[2012] EWHC
3837
(Comm), the Court considered whether to allow the claimant to
rely on documents used in an arbitration. The claimants argued that
there had been a waiver of confidentiality in the documents in
question because either:
The liquidator had referred to them at a creditors
meeting.
They were in the public domain because they had been
referred to in a judgment of the court regarding enforcement of the
award.
One of the exceptions to confidentiality noted in
Emmott v Michael Wilson (supra)
applied.
The judge was not persuaded that either of the first
two grounds was established. However, with reference to
Emmott
,
the Court concluded that disclosure was justifiable either because
it was reasonably necessary for the protection of the claimants’
legitimate interests, or because the interest of justice required
it. The Court found that the claimants had an arguable case
of
unlawful conduct which could not be properly pursued without access
to arbitration documents, had a legitimate interest in
using the
material, and the interest of justice required disclosure.
It initially appeared that French Law also recognizes
such an obligation. In
Aïta v Ojjeh
1986 Revue de
L’Arbitrage 583 (Cour d’ Appel de Paris, Feb 18, 1986)
the Court dismissed an action to annul an arbitral
award rendered in
London, but ruled that the annulment action violated the principle
of confidentiality. The grounds on which
the obligation is based or
any exceptions as recognized by English Law were not considered in
the case. However, in
National Company for Fishing and Marketing
(Nafimco) v Foster Wheeler Trading Company
2004 Rev, ARB. 647,
which case also related to the production of documents generated
during arbitration, the Paris Court of Appeal
denied a claim for
breach of confidentiality of arbitration on the basis that a party
has a duty to provide explanations for
the existence and scope of
such confidentiality. The Court held that an implied duty of
confidentiality should be justified by
the protection of a
legitimate interest. It was furthermore held that the plaintiff
failed to establish that such an obligation
exists under French Law.
The Singapore High Court adopted the English position,
upholding the doctrine of implied confidentiality as seen in the
Singaporean
cases of
MyanmaYaung Chi Oo Co Ltdv Win Win Nu
[2003] 2 SLR 547
and
AAY v AAZ
[2009] SGHC. The principle was
also tacitly accepted in Hong Kong in the case of
Oriental Press
Group Ltd v Next Magazine Publishing
Ltd [1998] 40 HKCU 1.
In
United States v Panhandle Eastern Corp, et al
118 FRD 346
(D Del 1988) the case involved a request by the US
Government for the production of documents used in an International
Chamber
of Commerce (ICC) arbitration in Switzerland. The Court held
that without an agreement between the parties or procedural rules
that explicitly guarantee confidentiality, no doctrine of
confidentiality could be implied. Furthermore, it was held that the
ICC Rules place no obligation of confidentiality on arbitrating
parties.
The High Court of Australia declined to recognize a
broad obligation of confidentiality applying to all documents and
information
provided in and for the purposes of arbitration,as
followed byEnglish Courts. In
Esso Australia Resources Ltd v
Plowman (Minister for Energy and Minerals)
[1995] HCA 19
;
(1995) 128 ALR
391(HCA)
, one of the parties was compelled by the Minister of Energy
to produce certain information, as well as disclosure of an award.
The Court held that confidentiality, unlike privacy, is not “
an
essential attribute
” of commercial arbitration. The Court
therefore held that the Minister of Energy and Minerals, who was not
a party to the
arbitration, was entitled to discovery of arbitration
documents and information.
Mason
CJ observed that complete
confidentiality could not be achieved for the following reasons.
First, no obligation of confidentiality
attaches to the witnesses.
Secondly there are various circumstances in which an
arbitration award may come before a Court involving disclosure to the
Court
by a party to the arbitration and publication of court
proceedings. Thirdly, there are other circumstances in which an
arbitration
party must be entitled to disclose to a third party the
existence and details of the proceedings and the award. The Court
found
that any such obligation of confidentiality must be of
contractual origin.
Brennan
J, concurring with
Mason
CJ,
stated that any undertaking of confidentiality was not absolute. A
number of exceptions arose:
“
Where
a party is in possession of a document or information and is under a
duty at common law or under statute to communicate the
document or
information to a third party, no contractual obligation of
confidentiality can prohibit the performance of that duty.
Moreover,
a party may be under a duty, not necessarily a legal duty, to
communicate documents or information to a third party who
has an
interest in the progress or outcome of the arbitration.”
At paragraph 6 he went on to clarify the duty or
obligation as follows:
“
I
would hold that, in an arbitration agreement under which one party is
bound to produce documents or disclose information to the
other for
the purposes of the arbitration and in which no other provision for
confidentiality is made, a term should be implied
that the other
party will keep the documents produced and the information disclosed
confidential except (a) where disclosure of
the otherwise
confidential material is under compulsion of law; (b) where there is
a duty, albeit not a legal duty, to the public
to disclose; (c) where
disclosure of the material is fairly required for the protection of
the party’s legitimate interests;
and (d) where disclosure is
made with the express or implied consent of the party producing the
material.”
(The Australian view was subsequently confirmed in
Commonwealth of Australia v
Cockatoo Dockyard Pty Ltd
(1995) 36 NSWLR 662.
).
Contrary to the approach followed in
Esso Australia
(supra), New Zealand recognizes a broad obligation of
confidentiality.Section 14 of the New Zealand Arbitration Act 1996
provides
that “
...
an arbitration agreement,
unless otherwise agreed by the parties, is deemed to provide that
the parties shall not publish, disclose,
or communicate any
information relating to arbitral proceedings under the agreement or
to an award made in those proceedings
”
.
The approach in
Esso Australia (supra)
was
however followed in Sweden in
Bulgarian Foreign Trade Bank Ltd
(Bulbank) v A.I. Trade Finance Inc
(2001) XXVI Y.B. Comm. Arb.
291(Swedish Supreme Court 27 October 2000). The Court held that a
provision that arbitration hearings
are private and confidential did
not automatically imply a general duty of confidentiality.
Accordingly there are only two ways
to ensure confidentiality of
arbitration proceedings in Swedish law, namely, by express contract
or by adopting arbitration rules
that expressly provide for it.
Other than Quebec, Canadian courts have not yet decided
the issue. The Supreme Court of British Columbia in
Hi-Seas
Marine Ltd v Boelman
2006 BCSC 488
; (2006) 17 B.L.R. (4
th
)
240 noted the contradictory position taken by the English and
Australian Courts and observed that “
it may be necessary
for Courts of this province to comprehensively address [it]”
but found it unnecessary to deal with in the case before it. (Also
see
Adesa Corporation vsBob Dickenson Auction Services Ltd
(2002) 73 OR (3d) 787);
Tanner v Clark
(2003) 63 OR (3d) 508
(CA)).In
Rhéaume v
Sociétéd’investissementsl’Excellenceinc
,
2010 QCCA 2269
the Quebec Court of Appeal refused to recognize an
implicit obligation of confidentiality associated with the arbitral
process.
In TelesatCanada vBoeing Satellite Systems International
Inc.
,
2010 ONSC 22the
Ontario Superior Court of Justice
recognized a general public interest in preserving confidentiality
of materials filed in court
about a pending arbitration. Arbitration
in Canada is generally assumed to be confidential although there is
no legislation and
little jurisprudence on the issue.
Courts in Australia, United States and Sweden have
therefore rejected ageneral implied duty of confidentiality. There
is also
no legislative basis for privacy and confidentiality of
arbitration proceedings in South Africa The
Arbitration Act 42 of
1965
does not automatically render arbitration proceedings
confidential (See
Replication Technology Group and Others v Gallo
Africa Ltd (supra)
at 545 H). There is no uniform universal
consensus on the confidentiality of arbitration proceedings. The
principle is not sacrosanct
and should be viewed from the
circumstances of each individual case. In this matter there is no
confidentiality agreement in
respect of the arbitration proceedings.
The arbitration proceedings, although private, are not necessarily
confidential. There
is also no suggestion that the documents sought
are commercially sensitive.
The respondent, in an effort to protect its own
legitimate private interests, has elected to disclose limited
information concerning
the arbitration proceedings. . Disclosure for
this reason is permitted in terms of one of the exceptions in
English Law. Respondent
deemed partial disclosure reasonably
necessary in order to protect its rights towards third parties, and
to raise a limitation
defence. Respondent now seeks to withhold full
disclosure in circumstances where it alleges that the present and
arbitration
claims arose from the same incident, and that it intends
to stay proceedings to pursue a limitation claim.It is opportunistic
of the Respondent to disclose limited information regarding the
arbitration proceedings when it is beneficial for Respondent,
but to
withhold full disclosure claiming confidentiality. Having already
made partial disclosure, Respondent failed to show that
full
disclosure would result in any form of prejudice. A crucial issue in
this case is whether the claims arose from the same
incident.
Applicant needs to establish whether there is a connection between
the arbitration claims and its own claim. It is
therefore necessary
for the applicant to have access to the documents in order to assess
and prepare its case. The information
sought is directly or
indirectly relevant to the issues in dispute. I am satisfied that it
is necessary to disclose the arbitration
information in order to
achieve the fair disposal of this action. It would not be consistent
with the fair disposal of an action
to require the applicant to
simply accept respondent’s limited disclosures, and be denied
the opportunity to review its
position in respect of a possible
limitation action.
Respondent raised a limitation plea. I am of the view
that respondent should not be allowed to use the cloak of
confidentiality
to withhold documents relevant to a case in a
different jurisdiction, where the case raised the same or similar
allegations,
and where same is pleaded by respondent. Maintaining
secrecy around the arbitration and other proceedings “
arising
from the same incident
” undermines the search for the
truth in adjudicating the matter. In these circumstances the
applicant is entitled to full
disclosure of the legal and factual
basis of Anyang’s claims, as well as any information
pertaining to any case “
arising from the same incident
”.I
do not deem it necessary to determine whether English Law is
applicable in this matter. However, even if I should acceptthat
English Law is applicable, I am of the view that the disclosure of
the arbitration documents would be permitted in terms of one
of the
exceptions to confidentiality.The circumstances of this case are of
such a nature that the public interest clearly overrides
the private
obligation of confidentially. I accordingly find that the documents
are relevant, and that it is in the interest
of justice that they be
disclosed to the Applicant. I abide by the statement by Lord Denning
in
Riddick v Thames Board MillsLtd
[1977] 3 All ER 677
(CA)
at 687, cited with approval in
Crown Cork & Seal Co Inc. and
Another v Rheem South Africa(Pty) Ltd and Others
(supra) at
1069B:
“
[t]
he
reason for compelling discovery of documents in this way lies in the
public interest in discovering the truth so that justice
may be done
between the parties. That public interest is to be put into the
scales against the public interest in preserving privacy
and
protecting confidential information. The balance comes down in the
ordinary way in favour of the public interest of discovering
the
truth, ie in making full disclosure”.
In the result the following order is made:
The respondent is ordered to
comply with the applicant’s Notice in terms of Uniform
Rule
35(3)
which was served on the respondent’s attorneys on 19
November 2012 within 10 days of the date on which this order is
granted.
In particular, the respondent is directed to make the
following documents available to the applicant for inspection:-
1.2. All pleadings in the
London arbitration brought by Anyang Steel International Trading Co
Ltd against the owner of the respondent,
and any other documents
filed of record and/or exchanged between the parties in, or in
relation to such arbitration and/or the
London arbitration brought by
Kumba Shipping Hong Kong Limited against the owner of the respondent.
1.3. Documents discovered
and/or made available by the parties to each other in the aforesaid
proceedings; and
1.4. All documents in which
claims against the respondent or the owner have been intimated and/or
demanded by Kumba Shipping Hong
Kong Limited, arising out of the
incident referred to in paragraph 25 of the defendant’s plea.
Failing compliance with
paragraph 1, the plaintiff is granted leave to apply to this Court
on the same papers (duly amplified
as necessary), for an Order
striking out the defendant’s defence to the plaintiff’s
claims with costs.
The defendant is ordered to
pay the costs of this application, including the costs of two
counsel.
__________________
GOLIATH J
FOR THE APPLICANT : ADV R MACWILLIAM (SC) &
ADV D COOKE
INSTRUCTED BY : MR C CUNNINGHAM
BOWMANGILFILLAN ATTORNEYS
FOR THE RESPONDENT : ADV M FITZGERALD (SC) &
ADV D MELUNSKY
INSTRUCTED BY : MS A VILJOEN
SHEPSTONE & WYLIE ATTORNEYS
DATE OF HEARING : 21 MAY 2013
DATE OF JUDGMENT : 5 SEPTEMBER 2013