The Harman confidentiality undertaking (or obligation of confidentiality of documents obtained pursuant to discovery, document production or subpoena) is well established: in principle, information obtained pursuant to discovery or subpoena cannot be used for a collateral or ulterior purpose unrelated to the proceedings in which that production occurs. From time to time there is some debate around the scope and limits of the obligation, and this is one of those times.
In a recent decision, the Supreme Court of Western Australia considered the application of the Harman obligation to documents sourced from arbitral proceedings, and determined that, in the circumstances of the case, it was appropriate to release the co-defendants’ from their Harman obligation in the arbitral proceedings for the purposes of conducting their defence in the curial court proceedings, which involved a party who was not a party to the arbitration agreement.
Key takeaways
The decision serves as a reminder that the veil of confidentiality in arbitration is not absolute, and can be lifted, notwithstanding the Harman obligation.
The Court held that the fact that documents are disclosed in private arbitration proceedings cannot give rise to an absolute prohibition on the use of the documents in court proceedings. Relevantly, the Court noted that granting leave to the co-defendants for this purpose should not prohibit any party (including in this case, the interested non-party, Georgina Rinehart) from seeking an appropriate confidentiality regime over any particular documents that are sought to be used or tendered in the main trial.
Background
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 21] [2023] WASC 169 (Wright v Hancock) primarily concerned the issue of whether documents disclosed in arbitration proceedings (Documents) could be used in separate court proceedings that involved a third party who was not party to the arbitration agreement.
In the process of exchanging discovery categories in court proceedings, Wright sought two broad categories of documents that concerned arbitration proceedings between Wright and Hancock (the Arbitration). Following arguments at subsequent directions hearings, the Court issued interim discovery orders for the Documents to be produced to Wright for inspection, noting that ‘the Harman obligation will yield to discovery and production orders of a court’.
Upon inspection of the Documents, Wright applied for leave from the Court to use the Documents in preparation of its defence in the court proceedings. Hancock objected, arguing that:
- the Documents remained confidential documents produced under compulsion in other proceedings (the Arbitration) and were therefore subject to Harman obligations;
- to permit co-defendants to use the Documents in the court proceedings without obtaining release from the arbitral tribunal would be to “intervene” in a matter governed by the Commercial Arbitration Act 2012 (WA), contrary to s 5 of that Act; and
- in any event, the Court should not exercise any power to permit general use of the Documents absent proper evidence that the co-defendants have been unable to obtain release from the arbitral tribunal.
Hancock’s objection was, in essence, that court proceedings were the incorrect forum for seeking release from the Harman obligation, and that the correct forum was before the arbitral tribunal.
Decision
Smith J rejected Hancock’s objection, noting that case law on the subject does not establish a principle that an application to release or to obtain orders to use documents subject to a Harman obligation cannot be made to a court that is not the court in which the implied undertaking was given.
In relation to the “intervention” in the arbitration process, the Court held that allowing Wright to use the Documents would have no effect on any matters in the arbitration process, or any matters that the tribunal is yet to decide on. Therefore, the orders sought were:
“not orders of a kind that are contemplated by the term ‘intervene’ in s 5 of the Commercial Arbitration Act. The orders sought to be made are orders that are open in the exercise of the court’s jurisdiction in relation to proceedings between persons who have not entered into or are not otherwise bound by arbitration agreements.”
In conclusion, Smith J allowed the Documents to be used by the co-defendants in the court proceedings for the purposes of preparing their defence, therefore confirming that the Harman obligation is not absolute and can be released in certain circumstances in the context of an arbitration.
The Court noted that the exercise of the discretion to grant leave to use the Documents was in accordance with public interest in the proper administration of justice, which in this case required that the co-defendants be granted leave to use the Documents for the purpose of the conduct of their defence.
For further information, please contact:
Leon Chung, Partner, Herbert Smith Freehills
leon.chung@hsf.com
