“Second Circuit Upholds the Enforceability of an Arbitration Filing Deadline, and Finds Litigants Cannot Evade Arbitral Confidentiality Rules in Court Filings”

The Second Circuit’s recent decision in In re IBM Arbitration Agreement Litigation is the focus of this article by Sullivan & Cromwell, available on Lexology. The decision is notable for two propositions that often are of interest to drafters of contractual arbitration provisions. First, the courts conceptually will enforce the parties’ agreement to establish a shortened time period in which a claim may be brought, at least where the time limitation does not make “access to the forum impracticable.”

The second important issue from the decision draws on confusion by parties between arbitration privacy and confidentiality. The fact that an arbitration takes place in a private office rather than a courtroom does not necessarily preserve the confidentiality of the proceeding. In particular, a party’s expectation of confidentiality often meets with an unpleasant surprise when arbitration pleadings and evidence make their way into court filings in proceedings, for example, to confirm or vacate an award. A party’s attempt to have the information filed under seal may be rejected based on the right of public access to judicial proceedings. The Second Circuit, however, determined that there is a balancing required between the presumption of public access to judicial documents and the Federal Arbitration Act’s “strong policy protecting the confidentiality of arbitral proceedings.” Considering the competing factors at play in the case before it, the Second Circuit held that it was appropriate to seal the documents at issue.