Reinsurance arbitrations are typically cloaked in confidentiality, often through a written confidentiality agreement or order. Some arbitration agreements include confidentiality provisions as well. In recent years, parties have gone to court to confirm reinsurance arbitration awards, sometimes as an end-around the confidentiality agreement. In 2023, the Second Circuit, in a non-reinsurance case, rejected an attempt to do an end-around an arbitration confidentiality provision.
In Abelar v. International Business Machines Corp., 76 F.4th 74 (2nd Cir. 2023), which involved wrongful termination claims by IBM employees subject to an arbitration provision, the district court had denied as moot a summary judgment motion brought by the plaintiffs, granted a motion to dismiss, and also granted the defendant’s motion to seal documents that were attached to the summary judgment motion from other confidential arbitrations. Among other issues, the plaintiffs appealed the sealing order.
In affirming the sealing order, the circuit court noted that there is a balancing between judicial documents that have a presumption of public access and the Federal Arbitration Act’s strong policy of protecting confidentiality of arbitral proceedings. In this case, the plaintiffs’ improper use of a summary judgment motion to evade the confidentiality provision of the arbitration agreement helped tip the scales.
The court agreed with the district court that there was a weaker presumption of public access because the district court did not need to consider the documents attached to the summary judgment motion when the motion was denied as moot. Even though the summary judgment motion and its attachments were judicial documents, they had no role in the court’s determination making the presumption weak.
This section of the opinion is important to consider:
Here, Plaintiffs initially sued to invalidate the Confidentiality Provision, so denying IBM’s sealing request “would be to grant Plaintiffs the relief they sought in the first instance.” In re IBM Arb. Agreement Litig., 2022 WL 3043220, at *2. The district court correctly observed that allowing unsealing under such circumstances would create a legal loophole allowing parties to evade confidentiality agreements simply by attaching documents to court filings. Id. at *3. Plaintiffs’ counsel may not end-run the Confidentiality Provision by filing protected materials and then invoking the presumption of access to judicial documents. The district court correctly sealed the documents.
When considering going into court to confirm a reinsurance arbitration award, parties should consider the Second Circuit’s admonition that “counsel may not end-run” the confidentiality provision or agreement by filing confidential documents and then invoking the presumption of access to judicial documents.
