The Hollow Promise of Confidentiality: A Look at Section 42A

[Devansh and Udayaditya are students at National Law School of India University.]

Confidentiality is one of the main reasons parties choose arbitration. They do not want their disputes, documents, or commercial information to enter the public record. Section 42A of the Arbitration and Conciliation Act 1996 (Arbitration Act) codifies this preference. It states that the arbitrator, the arbitral institution, and the parties shall maintain confidentiality of all arbitral proceedings.

On its face, the provision appears complete. We argue that it is not. When we trace how confidentiality operates in practice, Section 42A reveals significant gaps. The statutory duty exists, but the statutory mechanism to enforce the same does not.

Excluding the Non-Party

The Supreme Court considered Section 42A in Kamal Gupta v. M/S LR Builders Private Limited (Kamal Gupta). An individual who was not a party to the arbitration agreement sought to attend the hearings. His claim was premised on the apprehension that the signatories would deal with or adjudicate issues pertaining to properties owned by him. The court held that even assuming this apprehension was bona fide, the presence of a non-signatory in arbitral hearings has no basis in the statute. It further held that non-parties could not attend the hearing as it would be in violation of Section 42A.

We argue that the Supreme Court had an opportunity in Kamal Gupta to clarify the consequences of a violation of Section 42A, but it did not do so. We agree with the outcome. But this case shows only that non-parties cannot enter the room. It does not address what happens when information leaves the room. Section 42A controls access, but it does not control movement of information beyond the hearing.

A Duty without a Sanction

The first gap is clear. Section 42A imposes a duty, but it does not specify a consequence for breach. If a party discloses pleadings or documents outside the proceedings, the tribunal cannot impose a penalty.

Because the provision lacks an internal enforcement mechanism, an injured party must ordinarily approach a court for remedies, which may require disclosure in a public forum. We argue that this structure defeats the purpose of confidentiality. A rule mandating confidentiality, yet enforceable only through public proceedings, defeats the very interest it seeks to protect.

The Third-Party Loophole and Evidentiary Use

A second gap lies in the limited reach of the duty. Section 42A imposes a duty of confidentiality only on the tribunal, the institution, and the parties to the arbitration. It does not bind witnesses, stenographers, consultants, employees, or any other person who may obtain access to the material. If such a person discloses documents, the statute offers no remedy.

In Kamladityya Construction Private Limited v. Union of India, the Delhi High Court held that a draft award visible to parties violated Section 42A’s “strictest” confidentiality and removed the arbitrator. But this remedy works only because 42A binds the arbitrator; it cannot restrain or sanction the many non-statutory actors who handle arbitral material in court.

The issue is further complicated when considered considering the principles governing the law of evidence. Under Pooran Mal v. Director of Inspection (Pooran Mal), if evidence is relevant, the court will look at it, no matter how it was obtained. Even if it was obtained illegally. As a result, material leaked from an arbitration may enter other proceedings and be used without restriction.

This leads to absurd results. In the Amazon v. Future Coupons case, the Competition Commission of India looked at confidential evidence from a pending arbitration, because it was relevant and arbitration confidentiality could not bind it.

Assume a party has improperly obtained documents from an earlier arbitration. Indian law has no exclusionary rule comparable to the “fruits of the poisonous tree” doctrine, and those documents are not automatically barred. A party may still rely on them and argue that, as a non-participant in the earlier arbitration, it was never bound by that proceeding’s confidentiality obligations. The duty of confidentiality attaches only to the parties and the tribunal in the original arbitration, not to third parties. The mere fact that the documents emerged from a confidential arbitration does not, by itself, prevent their use in a subsequent dispute. The outcome is simple. Documents once confidential can be deployed in later proceedings. There exists no clear legal prohibition on their reuse.

We argue that this combination, limited statutory reach and permissive evidentiary rules, undermines confidentiality in substance. Once information enters the public litigation system, the arbitral tribunal cannot control its movement.

Tribunal Discretion and Legislative Silence

One answer may be this. The arbitrator’s power to decide what is relevant, what is admissible, and what weight each piece of evidence should carry comes from Section 19(4) of Arbitration Act. That subsection builds on Section 19(3), which gives the tribunal freedom to set its own rules of evidence, but only “subject to this Part.” Section 42A sits in the same Part. The tribunal cannot ignore it. If confidentiality is the rule of the Part, the tribunal cannot admit evidence that breaks it. The power to receive evidence does not extend to evidence that the Arbitration Act itself says must remain secret.

However, the structure of the Arbitration Act points towards a different conclusion. Section 81, which governs conciliation, contains an explicit rule barring the use of specified communications in subsequent judicial or arbitral proceedings. In contrast, no comparable provision appears in the parts of the Arbitration Act dealing with arbitration. In the arbitral context, Parliament chose to impose a duty of confidentiality but stopped short of creating a rule of evidentiary inadmissibility. That difference matters. It suggests that the silence in the arbitration provisions is not accidental. When Parliament wanted to prevent admissibility, it said so expressly. Where it did not, courts should be cautious about reading such a restriction into the statute.

Confidentiality at the Stage of Judicial Review

Confidentiality erodes further when an award is challenged under Section 34 of Arbitration Act. Court proceedings in India are presumptively open. There is no general practice of private hearings for arbitration-related matters. As a result, documents and pleadings that were confidential during arbitration may become part of the public record.

Unless protective orders are specifically sought and granted, the materials annexed to a Section 34 petition, including pleadings, evidence, and even the award, become part of the court’s record. What was confidential in arbitration thus risks entering the public domain.

Other jurisdictions have developed principles to manage this tension. For instance, English courts in cases such as Moscow v. Bankers Trust have accepted that a court may sit in private to preserve the subject matter of the dispute. Indian courts have not adopted a comparable standard; confidentiality in arbitration does not, by itself, trigger private hearings, and protective orders are granted only case-by-case on specific request.

We argue that this creates a structural inconsistency, confidentiality governs the arbitral stage but collapses when the matter reaches the court.

Reflections

Section 42A states a clear duty but provides little support for it. It restricts entry into the hearing room but does not prevent leakage outside it. It binds the parties but not the wider set of people who may handle arbitral material. Most significantly, the provision is silent on sanctions. It coexists with evidentiary rules that allow leaked documents to circulate without restraint. And once the dispute reaches court, confidentiality gives way to open justice.

We argue that meaningful protection of confidentiality requires reform. The statute must supply consequences for breach, extend duties to relevant third parties, and clarify the position on admissibility. Courts must have guidance on when confidentiality can and should continue during judicial review.

Until then, Section 42A imposes a duty in form, but not in substance.

Filling the Gaps: A Blueprint for Reform

If confidentiality is to move from principle to practice, Section 42A requires structural repair. The gaps identified earlier demand legislative intervention. Three changes are essential.

First, plug the courtroom leak. Confidentiality disintegrates once it enters an open courtroom. This is the largest fault line. India should import the closed-court presumptions used in Hong Kong and Singapore, where arbitration-related applications are heard in camera and judgments are redacted to protect anonymity. If, as Kamal Gupta recognizes, a stranger cannot enter the arbitral room, they should not be able to access its contents through a public court file. A statutory “closed court” mandate for Sections 9, 34, and 36 restores coherence. What is private in arbitration should remain private on review.

Second, build an admissibility wall. The third-party loophole, combined with Pooran Mal, allows leaked arbitral material to freely enter other proceedings. The law must reverse this flow.  An admissibility wall is therefore required to prevent such downstream use, through an exclusionary rule modelled on Section 81 of the Arbitration Act that bars reliance on confidential arbitral communications regardless of how they are obtained. At the same time, the risk of leakage must be reduced at the source. The “confidentiality club” mechanism used by the Delhi High Court, limiting sensitive documents to lawyers and experts, physically prevents the movement of information.

Third, give the tribunal teeth. A duty without a sanction is ineffective. Borrowing from Rule 39 of Singapore International Arbitration Centre Rules 2016, the Arbitration Act should authorize tribunals to issue adverse inferences or costs orders for breach. This internalizes enforcement and avoids reliance on public courts to protect privacy.

These reforms change little in principle. They give shape to what the statute already promises. Kamal Gupta confirms that confidentiality is a legal duty. The law must now provide the means to honor it.