Keeping Information Confidential

In business it is often the case that one party wishes to disclose information of a confidential nature and in doing so wishes to restrict the receiving party’s capacity to further disclose the information or to use it. The imposition of a requirement to keep information confidential can arise in a number of spheres, in the employment relationship for instance, where an employee is privy to private company information. It could also arise more generally in business transactions, for example when inviting participating entities to submit a tender.

Confidential Relationships

In certain cases the obligation for another party to keep information from being disclosed will arise by virtue of governing regulations. Certain professionals are governed by regulations that expressly stipulate their obligations to keep information confidential. The Cyprus Banking Law protects the banker/customer relationship and s. 13 (1) of the Code of Conduct for Lawyers places the courts and any state or public authorities under an express duty to protect the professional obligation of confidentiality that exists between lawyer and client.

Confidentiality Agreements

In cases where no obligation of confidentiality exists by virtue of law, then parties may enter into a non-disclosure agreement in order to create such an obligation. In drawing up such an agreement it is vital to ensure that the scope of information to be protected is made clear. Information such as that which is already known to the public; disclosed by persons not governed by the agreement or which must be disclosed in order to comply with law or regulation should be expressly excluded from the duty of confidentiality.

The agreement should also specify any special measures to be taken in order to protect the subject matter of the agreement and any permitted users of the information must be listed. Furthermore, a clause that permits an aggrieved discloser of information to seek injunctive relief in the event that a breach does take place should be included. Where the agreement is breached, and confidentiality is broken, recourse by way of injunction and damages may be awarded.

Disclosure

Where a breach of confidentiality is claimed there are two common defenses:
a denial that the information was ever confidential; and
a claim that disclosure was justified.

In the case of a claim that disclosure was justified, Article 10 (2) of the European Convention on Human Rights gives the right to freedom of expression, which could allow disclosure of confidential information where doing so is clearly in the public interest. However, such right should be carefully weighed against the duty of confidentiality as the ECHR states that freedom of expression will not directly override confidentiality.