Federal – confidentiality of arbitration must be re-established independently on appeal to court – #224

In a pair of decisions, the Federal Court in Canadian National Railway Company v. Gibraltar Mines Ltd., 2019 FC 225 and in Canadian National Railway Company v. Gibraltar Mines Ltd., 2019 FC 963 held that there is no general principle that confidentiality of arbitration proceedings carries over to court when a party appeals the arbitral award.  Even if confidentiality was imposed by statute for the purpose of the arbitration, absent specific wording in the statute, confidentiality does not automatically extend into the courts which are open and public.

Canadian National Railway Company (“CN”) and Gibraltar Mines Ltd. (“Gibraltar”) were parties to a final offer arbitration (“FOA”) under Part IV, sections 159 and following of the Federal Canada Transportation Act, SC 1996, c 10.

Section 167 of the CTA authorizes a party to a FOA to request that matters relating to the arbitration be kept confidential.  Further to a request made by Gibraltar to the Canada Transportation Agency (“Agency”), confidentiality was recognized and “all reasonably necessary measures” were taken to ensure that confidentiality was maintained.

167 Where the Agency is advised that a party to a final offer arbitration wishes to keep matters relating to the arbitration confidential,

(a) the Agency and the arbitrator shall take all reasonably necessary measures to ensure that the matters are not disclosed by the Agency or the arbitrator or during the arbitration proceedings to any person other than the parties; and

(b) no reasons for the decision given pursuant to subsection 165(5) shall contain those matters or any information included in a contract that the parties agreed to keep confidential.

If requested by all parties to the arbitration, section 165(5) requires an arbitrator to provide written reasons in selecting a final offer of either party in a final offer arbitration.  Note that section 167 of the CTA is triggered by a single party’s request whereas, in contrast, section 165(5) requires that all parties request a written decision.

CN applied for judicial review of the arbitrator’s decision (“Decision”).  In its application, CN also applied for an order that all information and documents filed in the judicial review application be filed and maintained as confidential under Rules 151 and 152 of the Federal Courts Rules, SOR/98-106.  An order made under Rule 152(1) continues in effect until the Court orders otherwise, including any appeals and even after final judgment.

CN’s interest in seeking a confidentiality order resulted in two (2) decisions, with the second issuing on a revised motion based on more specific evidence.

Decision # 1 – The application was first heard by Mr. Justice George R. Locke, as he then was.

CN argued that section 167 of the CTA uses broad language to define the information that must be kept confidential on request of a party and that this requirement of confidentiality extends to an application for judicial review.  In support of its position, CN referred to a September 17, 2013 decision of Prothonotary Roger R. Lafrenière, as he then was, in National Gypsum (Canada) Ltd v Canadian National Railway Company, Federal Court File No. T-1323-13 (unreported). 

Not cited in Locke J.’s reasons but still relevant, is the decision by Madam Justice Cecily Y. Strickland in that same file T-1323-13 between the same parties in National Gypsum (Canada) Ltd. v. Canadian National Railway Company, 2014 FC 869.  National Gypsum (Canada) Ltd. had applied for judicial review of a FOA.  Strickland J. introduced her reasons, noting that “[t]hese public reasons are an edited form of the confidential reasons and reflect the parties’ expectation of confidentially arising from s. 167 of the CTA.”  Her reasons bore the caption “Public Judgement and Reasons [Confidential Judgment and Reasons issued on September 12, 2014]”.

Before Locke J., Gibraltar opposed CN’s application despite having itself having initially sought the confidentiality order before the CTA in the FOA.  Gibraltar argued that section 167 of the CTA was limited to the FOA and did not extend into the court for judicial review.   Not only did section 167 not mention having any effect beyond the FOA but Gibraltar further argued that the courts should be open and public.  It distinguished the unreported reasoning in National Gypsum (Canada) Ltd. v. Canadian National Railway Company, noting that the court in that instance had relied on the consent of the other party which Gibraltar did not give in the case before Locke J.

Gibraltar referred to the B.C. Supreme Court decision in McHenry Software Inc. v. ARAS 360 Incorporated, 2014 BCSC 1485 which held that “[m]oreover, there is no general principle that the confidentiality of arbitration proceedings carries over to court proceedings when the arbitration is appealed. On the contrary, such court proceedings are generally public.” 

McHenry Software Inc. v. ARAS 360 Incorporated, in turn, had referred to the earlier Ontario Superior Court decision in Gea Group AG v. Ventra Group Co., 2009 CanLII 17992 (ON SC) which, at para. 18, denied that arbitration’s confidentiality carried into the court.

[18] FNG and VGC argue, in effect, that given there is an obligation of confidentiality that adheres to an arbitration proceeding with its expectation of privacy, then the aspect of privacy automatically carries over to a court proceeding and continues with the determination by the court of the issues in that court proceeding. I disagree. Court decisions are normally publicly released for the reasons of public policy referred to above.

Locke J. disagreed that arbitration’s confidentiality flowed into the courts. 

I do not accept that Parliament intended section 167 of the Act to have effect in court proceedings that may follow related to an arbitration. Nothing in the wording of the provision indicates such extended effect, and the general principle of open and public court proceedings should apply unless there is some indication to the contrary.

Locke J. then considered whether CN met the requirements under Rule 151 and the elements established by Sierra Club of Canada v. Canada (Minister of Finance), [2002] 2 SCR 522, 2002 SCC 41.  See his discussion at paras 12-17.

Gibraltar dispute that all the information was confidential, indicating that some of it was in the public domain.  It did concede that some information provided in the arbitration “may meet” the test under Rule 151 and Sierra Club of Canada v. Canada (Minister of Finance) but that there was insufficient information before the court on which to issue a confidentiality order.

Locke J. agreed with Gibraltar “for the most part”.  Other than the fact that Gibraltar had already requested that the arbitration remain confidential, Locke J. did not have enough information on which to determine if some information merited protection.  Locke J. therefore dismissed CN’s application “on the evidence currently available” but allowed either party to return with a new motion once they were able to establish that certain material satisfied the requirements for such an order.

Decision # 2 – CN re-applied under Rules 151 and 369 for a confidentiality order.  Gibraltar opposed the motion but only in part.  The re-application was heard by Mr. Justice Simon Fothergill.

CN invoked the commercial sensitive nature of the information and the harm that public disclosure would cause to both CN and Gibraltar.  It also argued that “materials submitted in the course of arbitration should be treated as confidential in order to maintain the integrity of the process, and that the parties’ expectations of confidentiality should be respected in subsequent court proceedings.

Though Gibraltar had initially contested the sufficiency of CN’s evidentiary record on the re-apply, it did concede that certain information ought to have the benefit of a confidentiality order.

Fothergill J. did note that the number of documents forming part of the targeted documents to be “withheld from the public has been significantly reduced”.

Fothergill J. issued an order for three (3) categories of documents.

Category (i) – three (3) documents, identified at para. 19 as containing “commercially sensitive information” and which could not “readily be redacted”.  These included a contract, a negotiations document and CN’s response to Gibraltar’s final offer.

Category (ii) – a bundle of assorted documents which could contain commercially sensitive information but also contain factual information and arguments which Strickland J. believed “will inevitably become public in the course of the application for judicial review”.  Strickland J. listed them at para. 20 of his reasons.  They included the hearing transcript and the parties’ respective submissions at various points in the arbitration.

It is difficult to predict in advance precisely how much of this information will be disclosed in the course of the application for judicial review, and how much will ultimately be irrelevant to the proceedings. For this reason, the confidentiality of these documents should be maintained for the time being, but should be revisited by the parties and the presiding judge at the conclusion of the hearing of the application for judicial review”[.]

Category (iii) – the arbitrator’s Decision contained no confidential information by express function of section 165(5) of the CTA under which it issued and therefore did not require any further protection.  Therefore, the actual decision was not covered by the confidentiality order.

urbitral note – Unlike the arbitrator’s Decision, most other arbitral awards do contain commercially sensitive information and the result under category (iii) would like not be the same, or at least not for the same reason as the application of the statute.