Data Protection In International Arbitration: A Brazilian Perspective
Cyber security is a hot topic in international arbitration. The enactment of the EU General Data Protection Regulation (GPDR) and the Brazilian General Law on Personal Data (LGPD) has brought attention to the relevance of data protection and its associated risks. This article addresses the recent actions taken by certain arbitral institutions and international associations – worldwide and in Brazil – to bring awareness of data protection and avoid cyber attacks that could put at risk the confidentiality of arbitration, one of its most desired characteristics.
Confidentiality is one of the most desired characteristics of arbitration. In a 2018 survey carried out by London’s Queen Mary University and White & Case, 96 percent of respondents confirmed that confidentiality is a key element when choosing arbitration over other dispute resolution methods. Besides, most participants stated that confidentiality should be an opt-out – as opposed to an opt-in – feature for arbitration.
Indeed, parties may discuss and produce in arbitration valuable data, such as distribution networks, business models, commercial know-how, technical formulae, trade secrets or other proprietary information. The disclosure of such information to third parties may have severe adverse consequence. According to the ‘International Arbitration Survey: Cybersecurity in International Arbitration’, 11 percent of respondents declared they had already suffered cyber attacks in arbitration. A very famous cyber attack occurred in 2015 when the website of the Permanent Court of Arbitration was hacked to obtain information regarding a maritime boundary dispute between China and the Philippines.
According to the GDPR, which came into force in May 2018, companies or individuals that breach data protection rights may receive fines of up to €20m. The GDPR applies to all data controllers and data processors who are either located in the EU or process the data of individuals in the EU. The data transferred in international arbitration may therefore be subject to the GDPR and participants may also be subject to severe penalties in case of a breach.
In view of the above scenario, the arbitral community is aware of the relevance of data protection in international arbitration and has been taking measures to address concerns.
Data protection in international arbitration
Participants in arbitration exchange a lot of information digitally. Submissions, communications and documents are frequently transmitted in electronic format. Several participants are also involved in arbitral proceedings: arbitrators, counsel, arbitral institutions, technical assistants, hearing service providers, supporting staff and experts, among others. These stakeholders often travel extensively and work from various places, including hotels, airport lounges or private offices. One weak link or action could put all the sensitive information at risk.
Prominent international institutions have issued guidelines to promote awareness of cyber security measures. For instance, the International Chamber of Commerce (ICC) issued, in 2015, guidelines to help companies of all sizes to manage their approach to cyber security (the so-called ‘ICC Cyber Security Guide for Business’). These guidelines provide a checklist of steps that companies should take towards information security excellence.
In October 2018, the International Bar Association (IBA) issued the so-called ‘Cybersecurity Guidelines‘. Such guidelines provide practical guidance on technological measures to protect law firms from cyber attacks and recommendations based on the size of the firm and the type of issue to be protected.
In 2017, the International Institute for Conflict Prevention & Resolution (CPR), the International Council for Commercial Arbitration (ICCA) and the New York City Bar Association launched a working group to specifically discuss cyber security in international arbitration. In 2018, this working group released a draft ‘Cybersecurity Protocol for International Arbitration’. This protocol was subject to comments from the arbitration community until September 2018 and its final form should be available later this year.
The protocol recognises that everyone is a potential weak link and recommends that all arbitration agreements include provisions for the protection of confidential information during the arbitral proceedings. It also suggests that arbitral institutions offer adequate cyber security protections for sensitive information.
In practical terms, the protocol presents very usable and simple measures to promote cyber security and confidentiality in arbitration, such as: (i) the use of end-to-end encryption for email and password document protection; (ii) the use of secure file transfer to share documents; (iii) the use of privacy screens when viewing confidential documents in public; (iv) being cautious when using the internet in public environments; (v) implementing policies to reduce the data storage period used in an arbitration; (vi) making routine secure and redundant data back-ups; (vii) when defining a password, avoiding common dictionary words, past passwords, repetitive or sequential characters; (viii) the use of firewalls, antivirus and antispyware software, operating system updates and other software patches, (xi) downloading programs and digital content only from legitimate sources; (x) not opening attachments from unknown email senders; and (xi) keeping mobile devices close and making use of available protective measures in case of loss or theft.
In line with the above, international arbitral institutions have also taken steps to promote cyber security. The revised arbitration rules of the Hong Kong International Arbitration Centre (HKIAC), which came into effect in November 2018, determine that any written communication will be deemed to be received by a party, arbitrator and the HKIAC if it is uploaded to any secured online repository. Parties are free to use their own secured case platform, or a secured system provided by the HKIAC. Moreover, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) has just released a report informing that, as of September 2019, all SCC arbitrations will have access to a secured case platform whereby the SCC, the parties and the arbitrators can safely share case-related documents.
Data protection in Brazil
The Brazilian arbitration community also values confidentiality. In a 2018 survey conducted on behalf of the Brazilian Arbitration Committee (CBAr), 28 percent of respondents specifically described confidentiality as one of the main features of arbitration.
While confidentiality is not automatically applied to arbitral proceedings according to the Brazilian Arbitration Act, virtually all Brazilian arbitral institutions determined that proceedings will be confidential unless otherwise determined by the parties. Following such an approach, the Brazilian Civil Procedure Code states that court actions related to arbitration – such as annulment lawsuits and court injunctions prior to the constitution of the arbitral tribunal – are processed under seal.
Brazil has recently published the Brazilian General Law on Personal Data (LGPD). This law will become effective in August 2020 and has very similar principles and rationale to the GPDR. It applies to legal entities and individuals that handle and treat data produced or to be delivered in the Brazilian territory. Consent is a central element of the LGPD, being one of the conditions for processing personal data. The LGPD allows the international transfer of personal data provided that: (i) it is transferred to countries or international organisations that provide an adequate level of protection of personal data; (ii) the controller of the data demonstrates that the transfer will not violate the individual’s personal data rights under the LGPD; (iii) it is necessary for international legal cooperation; (iv) it is necessary for the execution of public policy; (v) the individual that holds the personal information has provided specific consent to the international transfer; or (vi) it is necessary for the controller to protect its rights. Violations of these provisions are subject to fines of up to 50m reais for each infraction and the blockage or elimination of the personal data to which the infraction refers.
In view of the LGPD, the Brazilian arbitration community is also aware that it needs to increase and promote awareness of data protection in arbitration. Several lectures and sessions have been promoted recently on this subject. The Brazilian Center of Mediation and Arbitration (CBMA), one of most important Brazilian arbitral institutions, has launched a working group to study potential measures to ensure data protection in arbitrations.
All participants in international arbitration share the responsibility to safeguard confidential information and secure it from cyber attacks. The first step is to promote awareness of the relevance of data protection and the need to take measures to avoid cyber attacks and increase data safety. As cyber attacks will constantly evolve, every player in arbitration should make efforts to be educated about cyber security best practices and associated risks. The arbitration community must closely watch the measures taken by arbitral institutions, arbitrators and law firms on this issue and how they may improve services and protect data.