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Tue June 02 2020

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14 Apr The duties of expert witnesses was central to a recent judgement in the Technology & Construction Court – A v B [2020] EWHC 809 (TCC). Mark Clinton and James Mapley from Irwin Mitchell’s construction team explain.

The Technology & Construction Court in London
The Technology & Construction Court in London

It is well established that an expert acting in a dispute owes a duty to the tribunal to provide evidence that is impartial and represents the expert’s independent opinion.  They should not act as a ‘hired gun’.  The expert also has a duty not to act where there is a conflict of interest.

It was in the context of a potential conflict of interest that the court was required to consider the duty of an expert to his client and how that sits with the expert’s duty to the tribunal in A v B.  On 3 April 2020, the TCC ruled that ‘where a clear relationship of trust and confidence’ arises in the course of instructing an expert, such expert will owe a fiduciary duty of loyalty to the client.

Who is a ‘fiduciary’ and what are their duties?

As established by Bristol and West Building Society v Mothew (t/a Stapley & Co) [1996], ‘a fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty’. The experts in this case were said to have a fiduciary duty to their clients and broadly can be said to have had two key duties:

  • experts must not put themselves in a position of conflict or potential conflict with their clients; and
  • experts owe a duty of confidentiality during their appointment.

Background

The Claimant (a Developer at a petrochemical plant) entered into two contracts with a Contractor, Contract Package A and Contract Package B, for the construction of facilities at the plant. The Contractor brought ICC Arbitration proceedings against the Claimant for project delays (the Works Package Arbitration). The delays included the late release of IFC drawings produced by a Third Party under a separate Engineering, Procurement and Construction Management (EPCM) contract with the Claimant. The Claimant intended that any additional costs they incurred as a result of the delays attributable to the Third Party, would be passed-on in another arbitration (the EPCM Arbitration).

Instructing the Experts

The Claimant instructed the Defendant Group of experts for the Works Package Arbitration to analyse and provide opinions on the delay events for the works, including the delay periods attributable to each work package. The Defendant Group was managed and promoted as one entity.

Related Information

During the early stages of the Works Package Arbitration, the Third Party contacted another company within the same Defendant Group of experts to provide quantum and delay expert services on the EPCM Arbitration. The Defendant Group accepted this instruction and justified their decision to the Claimant on the following basis:

  • each expert has a duty to act independently and to assist the tribunal;
  • the expert is not the company – it is the individual;
  • the experts work in different disciplines and are based in different geographic regions; and
  • the defendant company maintained confidential information barriers between experts and their teams.

The Claimant brought a claim to the TCC to continue the interim injunction preventing the Defendant Group from acting for the Third Party in connection with the EPCM Arbitration on grounds that do so would breach the Defendant Group’s duties of loyalty to the Claimant.

Ruling

Finding in favour of the Claimant, the judge ruled that the Defendant Group owed a fiduciary duty of loyalty to the Claimant under the Works Package Arbitration. The Defendant Group breached their fiduciary duty by accepting instructions from the Third Party to act on the EPCM Arbitration.

In retaining an expert for litigation or arbitration services, a duty of trust and confidence arose, which did not conflict with an experts’ duties to the Court or client. While the companies under which the experts were instructed were different, they formed part of the same group. The experts instructed by the Third Party had a ‘common financial interest’ in the holding company of the Defendant Group. The entire Defendant Group owed a fiduciary duty of loyalty to the client.

The issues on which the Defendant Group of experts was instructed concerned the same delays and issues. It was held there was a clear conflict of interest for the Defendant Group to be acting for the Claimant in the Works Package Arbitration and against the Claimant in the EPCM Arbitration.

Comment

Experts should be conscious of closely observing their fiduciary duties when taking instructions from clients. Subsidiaries of group companies and stakeholders with interests in multiple companies should be aware that simply installing confidentiality and privacy measures to prevent conflicts of interest arising, may be insufficient to comply with their fiduciary duties, particularly that of loyalty to the client.

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