When choosing a dispute resolution mechanism, the list of advantages of arbitration are numerous and varied, ranging from efficiency to flexibility to expertise. No features, however, are as important as the crown jewels of arbitration: confidentiality and privacy. When a dispute is high stakes or touches upon sensitive issues of a personal, business, or even political nature, arbitration is arguably the best dispute resolution tool for preserving the confidentiality and privacy of the proceedings, the information shared, and the outcome. Although confidentiality and privacy are critical features of arbitration, the industry has only recently started to address the cybersecurity risks involved in the creation, collection, retention, and exchange of sensitive information, documents, and communications during the arbitral process. This progress towards cybersecurity maturity in arbitration is long overdue, but a welcome development in an industry where cyber risk is substantial and cyber resilience is imperative.
Cyber Risk Profile: The Vulnerabilities of Arbitration
As the digital revolution progresses, there is an increasing awareness of the risks of harm and disruption associated with a potential cyber attack or data breach. In the context of arbitration, and especially international arbitration, cyber risk is especially significant for a number of reasons. Most notably:
- Arbitration proceedings are highly confidential and involve issues and disclosures that the parties wish to remain private. In some cases, the very fact of the proceedings may not be disclosed in an effort to avoid financial loss or disruption.
- Privileged information is at stake, which might include sensitive and valuable data, or potentially harmful admissions.
- In international arbitration matters involving governments, highly sensitive political information and communications may be exchanged and, if disclosed, could have political or economic ramifications.
