Statutory Confidentiality Under Section 42A Renders Documents Sourced from Separate Arbitrations Inadmissible in Evidence

The dispute arose from a sub-contract dated 15.12.2015 for civil and electrical works under the Eastern Dedicated Freight Corridor Project.

The Petitioner alleged that the Respondent failed to provide encumbrance-free site access, causing delays.

The Respondent eventually terminated the contract due to the Petitioner's alleged non-performance.

During arbitration, the Petitioner sought to rely on a "Rejected Letter" dated 07.06.2017 sent by the Respondent to a third party (DFCCIL), which allegedly contained admissions regarding site access issues.

The Arbitral Tribunal, in its award dated 15.11.2023, declined to admit this letter, citing confidentiality under Section 42A of the Arbitration and Conciliation Act, 1996.

The Petitioner challenged the rejection of four specific claims (Nos. 2, 3, 13, and 16) before the Delhi High Court under Section 34 of the Act.

The court primarily applied Section 42A of the Arbitration and Conciliation Act, 1996, which mandates that the arbitrator and parties maintain the confidentiality of all arbitral proceedings.

The court relied on the principle that the scope of judicial interference under Section 34 is limited to grounds of "patent illegality" and "fundamental policy of Indian law," as delineated in OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd. and Ssangyong Engg. & Construction Co. Ltd. v. NHAI.

The court applied the doctrine that an arbitrator is the ultimate master of the quantity and quality of evidence.

The Court reasoned that Section 42A, which includes a non-obstante clause, represents a legislative intent to preserve the integrity of the arbitral process through confidentiality.

The Court rejected the Petitioner's argument that Section 42A creates a duty without a consequence, holding that allowing a document procured in breach of confidentiality to be used as evidence would render the statutory protection illusory.

The Court found that the Tribunal exercised its evidentiary discretion reasonably by examining the provenance of the letter and finding that the Petitioner likely obtained it via its counsel who was involved in the Respondent’s separate arbitration with DFCCIL.

The Court held that the ICC Rules invoked by the Petitioner could not override the mandatory statutory provisions of the seat of arbitration (India).

The Court noted that the Tribunal had independent, self-sustaining reasons for rejecting the claims which the Petitioner failed to challenge.

The Court affirmed that Section 42A imposes a mandatory obligation that tribunals must respect to prevent the unauthorized use of materials from separate arbitral proceedings.

The Impugned Award dated 15.11.2023 was upheld in its entirety.