The Advantages of Having a Non-Disclosure Agreement

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The Advantages of Having a Non-Disclosure Agreement

The presence or absence of a Non-Disclosure Agreement (NDA) among submarine cable owners or with suppliers does not guarantee a problem-free operation — but it can significantly reduce risks. Think of it like owning a luxury home: installing a security system will not prevent every break-in but publicly announcing that you do not have one is an open invitation, even to the most amateur thief. 

In submarine cable governance, the same logic applies. Transparency and confidentiality must be balanced. Failing to establish clear frameworks around sensitive data — especially regarding infrastructure technology, pricing, outages, or routing — not only invites legal and regulatory uncertainty but can also provoke opportunistic behaviour by other market players or actors with competing interests.

Some critics would argue that such agreements stifle business efficiency and create unnecessary bureaucratic hurdles. However, in industries like subsea cables, where the long term investments are high, the advantages of having a well-structured NDA cannot be overstated. An NDA not only protects the company but also its partners, customers, and its proprietary technologies, all of which are vital in a landscape where information leakage can put a carrier in a very difficult position.

1. Informal Talks Without an NDA — A Costly Miscommunication

   
   

   Two international carriers began exploratory discussions to potentially co-develop a new submarine cable system under a future consortium model. At that stage, no NDA had been signed between the parties, as conversations were still considered preliminary. However, a mid-level employee mistakenly sent an email to the other party explicitly stating that his company had firm intentions to proceed with the project and was actively working to bring in additional consortium members.

   
   

   The email, while not formally authorized, was interpreted as a commitment. When the project did not move forward and no new members materialized, the other party filed a lawsuit claiming breach of promise and financial loss due to reliance on that assurance.

   
   

   Had an NDA been signed, it would likely have included a “No promise” clause, which serves as a critical safeguard in these preliminary discussions. A standard version of this clause reads:

   
   

   “The execution of any exchange of information or other action taken to give effect to, the Agreement, shall not constitute or imply any promise or intention or commitment by either party to purchase any product or service, to market (now or in the future); to distribute or supply any product or service; or to engage in or commit to any other kind of transaction or agreement with the other party.”

   
   

   Such language explicitly protects both sides from claims of premature commitment, clarifying that the exchange of ideas or technical evaluations does not constitute a commercial obligation.

   
   

   Lesson learned: Always ensure that employees or representatives involved in these exploratory discussions do so with an NDA in place. Protect your own staff from their own involuntary mistakes. 

   
   

   The NDA not only protects the confidentiality of the information exchanged but it also manages expectations and prevents casual or informal language from being misconstrued as binding intent — a risk that can lead to significant legal and financial consequences.

   
   
   
   

2. Cable Route Leak and Competitive Sabotage

   
   

   In another real-world case, a telecom carrier began informal discussions with external technical consultants to explore the feasibility of a new submarine cable system. The scope included designing and surveying a new, strategically advantageous route. However, no Non-Disclosure Agreement (NDA) was signed between the carrier and the consultants.

   
   

   Some of the consulting firm’s employees, acting disloyally, leaked details of the proposed route to a competing carrier. That competitor quickly adjusted the design of its own future cable system to incorporate the leaked route, expediting its deployment. The competitor then marketed the new system to potential customers and successfully captured significant client commitments — clients that had previously been in discussions with the original carrier.

   
   

   With no NDA in place, the original carrier found itself with limited legal tools to challenge the actions of either the consultants or the competitor. In court, the absence of a contractual confidentiality obligation made it far more difficult to demonstrate wrongdoing or to claim damages.

   
   

   Had there been a properly worded NDA in force, the carrier could have relied on clauses such as:

   
   

   "The Receiving Party shall take all reasonable measures to avoid disclosure, dissemination, or unauthorized use of Confidential Information, including, at a minimum, those measures it takes to protect its own confidential information of a similar nature, which shall not be less than the care a reasonable person would use under similar circumstances."

   
   

   This would have enabled the carrier not only to pursue legal recourse more effectively but also to establish clear security standards for handling sensitive data.

   
   

   Critics may argue that startups and smaller companies are less inclined to deal with “paperwork” like NDAs in early stages. That might be true. But over time, corporate governance practices must mature — especially when aiming for long-term partnerships like consortiums, securing investor trust, or passing a due diligence process required for credit access or equity financing.

   
   

   It is equally problematic when service providers attempt to bypass this dialogue altogether — embedding sweeping legal commitments into Service Order Forms through obscure references to a Master Service Agreement that was never transparently disclosed or negotiated. This practice undermines the very principle of good faith and erodes trust.

   
   

   Lesson learned: Even in the exploratory phases, never underestimate the power of confidentiality tools. An NDA can be the difference between a protected strategic idea and an opportunity stolen.

   
   
   
   

3. Cable Route Leak and Competitive Sabotage

   
   

   Some industry voices argue that requiring NDAs for commercial discussions is outdated or unnecessarily bureaucratic, suggesting that carriers should adopt the “pragmatic” approach of skipping NDAs for pricing discussions, and even avoiding formal negotiations of Master Service Agreements (MSAs) by embedding boilerplate acceptance language directly in their Service Order Forms (SOFs).

   
   

   But convenience is not the same as prudence. Especially in the context of submarine cables and wholesale capacity, pricing information is often not generic: it reflects not just the price per unit (e.g. STM-1), but also capacity availability and SLA. These terms, if disclosed to competitors or customers prematurely or without context, can create commercial distortions or result in strategic disadvantage.

   
   

   Consider the following scenario: a small carrier exploring a long-term capacity IRU purchase begins conversations with a provider. No NDA is signed, because — as the vendor claims — “everyone shares pricing anyway.” However, the small carrier's internal request-for-approval process delays a decision. In the meantime, the pricing quote leaks — not through bad intent, but via internal email forwarding to partner consultants. Weeks later, a competing operator uses that same pricing matrix to undercut the vendor in a parallel negotiation. The original vendor loses strategic positioning and the buyer now faces reputational concerns with both parties.

   
   

   In this scenario, both the first provider and the client could have been protected if a basic NDA had been signed — even one limited in scope and duration. Most importantly, the NDA would have allowed the disclosing party to set expectations about confidentiality, trace how the information was handled and potentially enforce consequences if a breach occurred.

   
   

   Furthermore, many NDAs include a clause that defines the concept of Confidential Information, such as:

   
   

   “…the information disclosed to each other, whether verbally, electronically, visually or in a written or other tangible form, which is either identified as confidential or proprietary at the time of disclosure or should be reasonably understood to be confidential or proprietary in nature.”

   
   

   This means that even if a document or email is not explicitly marked “Confidential,” it is still protected if the context reasonably implies it. This is critical, especially in informal exchanges or early-stage drafts, where marking everything as confidential may not be practical — but protection is still necessary.

   
   

   NDAs also support the development of institutional discipline. Startups or fast-moving companies may initially avoid them, citing speed or informality, but even large entities have their salespersons that want to earn their bonus if they sell as fast as possible. But all those same companies will likely struggle during due diligence processes if they ever seek credit lines, strategic partnerships, or M&A processes. Good corporate governance starts with basic tools and an NDA is one of its pillars.

   
   

   Lesson learned: Even in commercial exchanges like quoting, information has value. A short, well-written NDA does not delay business — it enables trust and gives legal ground to address misconduct or carelessness later. What may seem “pragmatic” in the short term can become expensive in the long run.

Final Remarks

While it is tempting to view legal documents like NDAs as bureaucratic hurdles that slow down business, in the submarine cable industry the benefits of having a well-drafted NDA far outweigh the perceived downsides. NDAs are not just legal formalities — they are essential instruments for preserving competitive advantages, safeguarding confidential strategies, ensuring compliance with regulatory obligations and building long-term trust between partners.

However, this does not give lawyers carte blanche to impose rigid or excessive templates under the banner of “corporate governance” or “professionalism.” Legal advisors should be fluent in current submarine cable industry practices and reflect them accurately in the drafting process. NDAs must strike a fair balance — protective, but not oppressive; clear, but not overly rigid. Otherwise, no email would be allowed to be sent without the often forgotten ´´Confidential Information´´ label.

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Andrés Fígoli is the author of the two-volume book “Legal and Regulatory Aspects of Telecommunication Submarine Cables” and is the director of Fígoli Consulting, where he provides legal and regulatory advice on all aspects of subsea cable work. Mr. Fígoli graduated in 2002 from the Law School of the University of the Republic (Uruguay), holds a Master of Laws (LLM) from Northwestern University, and has worked on submarine cable cases for more than 20 years in a major wholesale telecommunication company. He also served as Director and Member of the Executive Committee of the International Cable Protection Committee (2015-2023).

This article was first published in Submarine Telecoms Forum Magazine #145 – November 2025.