Over the last 11 years, BCLP have conducted an annual survey on issues affecting the arbitration process. This year’s survey focuses on the role of the party-appointed expert in international arbitration, a topic that has been the subject of debate for a number of years.
The party-appointed expert is an established feature of international arbitration but the practice of selecting, instructing and paying an expert to give evidence is not without its challenges. The primary role of an expert is to assist the tribunal on matters outside the expertise of the tribunal on an objective and independent basis. At the same time, the party-appointed expert owes contractual duties to the appointing party and the role of the expert is often far broader than testifying before a tribunal. In many cases, experts are retained at an early stage of a dispute, in an advisory capacity, before becoming a testifying expert. Managing what can sometimes be conflicting obligations to the tribunal and to the appointing party can be difficult and it has been suggested that party-appointed experts are little more than “hired guns” or “advocates in disguise”.
In this year’s survey, we wanted to examine the perceived problems with party-appointed experts. Are the problems real or is it an impression derived from a small minority of cases? If the problems are real, are there measures that can be adopted to mitigate them and who should take the lead in implementing them? In other words, what can be done to save the party-appointed expert?
We asked arbitrators, corporate counsel, external lawyers, users of arbitration and those working at arbitral institutions for their views on these and other related issues. The geographical regions covered by our 289 respondents included Central and South America, North Africa, Western Europe, East and South East Asia, Australasia, the Middle East, Latin America, Eastern Europe (including Russia and CIS), West and East Africa and North America.
The Survey Report
This blog highlights some of the key findings of this year’s survey and the full survey report can be downloaded here.
Party-appointed experts may not need saving
The results of this year’s survey confirm that the party-appointed expert is very much an established feature of international arbitration. 96% of respondents thought it was important that parties should have the right to rely on the evidence of a party-appointed expert. The responses also highlighted the importance of party-autonomy when it comes to presentation of evidence on technical issues. 84% of respondents thought that it was a basic right of each party to rely on a party-appointed expert as a means of putting forward evidence on specific issues.
Alternatives to party-appointed experts
The most favoured (and least unpopular) alternative to the party-appointed expert was a tribunal-appointed expert selected by the parties (58%/19%), followed by a single joint expert selected and appointed by the parties (53%/19%). A tribunal-appointed expert selected by the tribunal was a less favoured (and more unpopular) option (41%/32%).
Options involving no expert evidence at all did not prove popular with respondents. Only 16% favoured the option of only the tribunal providing technical expertise as opposed to 75% who thought this was undesirable; 12% favoured party-appointed arbitrators providing technical expertise compared to 80% who thought this was undesirable; and just 14% favoured the employees of the parties giving technical evidence as opposed to 77% who thought this was undesirable.
One interesting finding was that 80% of respondents thought that replacing party-appointed experts by appointing arbitrators with the relevant expertise was undesirable. This finding might be viewed as surprising, given the traditional view that one of the benefits of arbitration lies in the possibility to nominate arbitrators with the expertise required for the resolution of the dispute at hand. It also suggests that expertise within the tribunal will replace the need for expert evidence in only a very few cases. However, there clearly remains a role for expertise on tribunals. Several respondents commented that expertise within the tribunal is helpful to assess the evidence of party-appointed experts and attribute appropriate weight to it.
Hired guns or advocates in disguise?
The biggest single criticism of party-appointed experts is that they are essentially “hired guns” or “advocates in disguise”. We wanted to find out whether this perception was real or just an impression derived from a small minority of cases. We found that opinion was more or less evenly divided with just over half of respondents, 51%, agreeing that party-appointed are “hired guns” or “advocates in disguise” compared with 46% who did not.
Of interest was the extent to which respondents perceived this to be a problem. Of the 51% of respondents who agreed that party-appointed experts are “hired guns” or “advocates in disguise”, 27% thought that this was a problem whilst 24% did not.
Analysis of response rates by reference to the role played by the respondent in the arbitration process showed that the “hired gun” perception is highest among in-house counsel (80%) and, perhaps unsurprisingly, lowest among experts (33%). However, it does reflect an important point, highlighted by several respondents to the survey, that many experts recognise that their primary duty is to assist the tribunal and that part of their role is to manage the expectations of those appointing them as a result of this.
Role of transparency in promoting independence
It’s been suggested that more transparency over the instruction of party-appointed experts would promote greater independence and objectivity on the part of the expert and limit lawyer influence over the content of expert testimony. We wanted to find out what level of disclosure respondents thought was appropriate.
The vast majority of respondents were not in favour of any broader disclosure beyond the instructions given to the expert. Just over a third (38%) were in favour of disclosure of the financial terms of the expert’s engagement; only 11% were in favour of disclosure of working papers; and just 6% were in favour of disclosure of draft reports.
Only 21% of respondents agreed that rules allowing disclosure of counsel-expert communications would promote greater independence and objectivity on the part of party-appointed experts. 84% of respondents felt that such rules were unnecessary as arbitral tribunals are generally capable of determining when a party-appointed expert is not being objective in their testimony. 61% of respondents felt that rules allowing disclosure of counsel-expert communication would adversely affect the quality of expert evidence and 81% felt that it would result in increased costs and inefficiency by increasing the use of “shadow experts”.
Sanctions for biased expert evidence?
In the light of judicial criticism of partisan experts, we were interested in exploring what sanctions, if any, a tribunal should adopt in cases where a party-appointed expert fails in their duty to remain independent and assist the tribunal. For comparison purposes, we also asked respondents to indicate whether they have seen any of these sanctions used in practice.
93% of respondents thought that an arbitral tribunal should give limited weight to the evidence of a party-appointed expert who fails in their duty to remain independent and assist the tribunal and 63% had seen this sanction used in practice. 75% thought that a tribunal should disregard the evidence of a partisan expert, but only 37% had seen this sanction used in practice. 58% thought that a tribunal should refuse to admit the evidence but only 11% had seen this sanction used in practice.
We also asked whether a tribunal should publicly censure a party-appointed expert. 36% of respondents thought this is desirable compared to 66% who did not. The responses to this question clearly highlighted the tension between the confidentiality of the arbitral process and addressing the issue of partisan experts. Some respondents took the view that there is no place for public censure in arbitration; others thought that there is scope for the arbitral tribunal to make any concerns clear in the award and that this might be desirable in cases where an expert has fundamentally failed to comply with their duty to remain independent.
The level engagement we received for this year’s survey shows that the debate over the role of party-appointed experts in international arbitration is far from over. Thanks are due to all those who responded to the survey and we look forward to participating in the on-going debate.