REUTERS | Jorge Silva

Walking the line: independence and the party-appointed expert

In the recent case of A Company v X, the English Technology and Construction Court granted an injunction to prevent an expert witness from acting for a party in arbitration proceedings in circumstances where a colleague of the expert at the same global consultancy firm was already acting for the other party in separate arbitration proceedings.

In reaching that decision, the court considered the relationship between an expert’s duty of confidentiality to their client and an expert’s overriding duty to the court or tribunal, which requires an expert to be independent.

This blog focuses on the concept of independence, and what it means for and requires of party appointed experts in arbitration.

Role of party-appointed experts in arbitration

Arbitral tribunals often require expert assistance to help them to understand complex, technical issues, particularly in specialist areas where they lack the relevant expertise. They may derive this assistance from party-appointed experts or choose to appoint their own expert.

There has been much debate on the upsides and downsides of party-appointed experts and tribunal-appointed experts. The debate centres around the importance of ensuring expert independence and the inherent tension between a party-appointed expert’s duty to assist the tribunal and his or her obligations to the party who is paying them. How can a tribunal be sure that a party-appointed expert is not just a “hired gun”?

Tribunal-appointed experts appear to offer a solution to this problem, but they come with problems of their own. High on that list is the concern that a tribunal may place too much reliance on the evidence of a tribunal-appointed expert, such that the expert essentially becomes a fourth arbitrator. Tribunal appointed experts are also unpopular in practice. In the vast majority of cases, parties want to retain autonomy over how they present their case and that means retaining their own expert. As a result, in the relatively rare cases where a tribunal appointed expert is used, it is not uncommon to see parties retaining their own experts as well.

With the trend very much toward party-appointed experts, the question becomes how best to ensure the independence of party-appointed experts.

Independence and disclosure

Both of the main guidelines in this area, the IBA Rules on the Taking of Evidence and the CIArb Protocol on the use of party appointed experts, use disclosure as a tool for safeguarding the independence of party-appointed experts. Both systems require an expert to disclose any relationships and to evaluate them in order to attest that he or she is independent.

The CIArb Protocol requires the expert’s report to state any past or present relationship with any of the parties, the arbitral tribunal, counsel or other representatives of the parties, other witnesses and any other person or entity involved in the arbitration (article 4.4(b)). It also requires the expert’s report to include a declaration confirming that the opinions expressed are his or her own, and that they are impartial and objective.

Article 5.2 of the IBA Rules requires a statement of independence to be submitted with the expert report. That statement must contain:

  • A statement regarding the expert’s present and past relationship (if any) with any of the parties, their legal advisors and the arbitral tribunal (article 5.2(a)).
  • A statement of the expert’s independence from the parties, their legal advisors and the arbitral tribunal (article 5.2(c)).

These provisions place emphasis on the duty of a party-appointed expert to evaluate the case in an independent fashion. They are not intended to exclude an expert with some connections to the participants or the subject matter of the case from acting as a party-appointed expert.

Instead, the onus is on the expert to assess whether a particular connection would impact his or her impartiality, while disclosure allows an opposing party the opportunity to scrutinise the expert’s self-assessment and, in some cases, to challenge it.

So what factors should a party-appointed expert take into account when conducting that assessment, and is more guidance needed to assist experts and to prevent unmeritorious challenges?

Walking the line

Financial: Both the IBA Rules and the CIArb Protocol are clear that receiving payment for services as an expert does not preclude independence.

Here the CIARb Protocol is more specific than the IBA Rules. Article 4.2 provides that payment of an expert’s reasonable professional fees shall not vitiate impartiality. This raises the question of what constitutes “reasonable” and whether anything beyond that could raise legitimate questions as to an expert’s independence.

Both guidelines require the expert to attest to his or her independence, something that the commentary to the IBA Rules recognises as meaning that the expert should have no financial interest in the outcome. The guidelines themselves don’t provide any specific examples of the type of financial interest that could raise legitimate questions as to an expert’s independence. However, examples might include situations where an expert:

  • Is paid on a contingent or conditional fee basis.
  • Owns shares in one of the parties.
  • Is connected to an entity funding a case or to an entity that has a duty to indemnify one of the parties.

Connections: Party-appointed expert must not have connections to the parties, their legal advisors or the arbitral tribunal that would prevent the expert from evaluating the case in a neutral fashion and providing an honest and frank opinion.

Here, the issue of repeat appointments is a key area of potential tension. The role of the party-appointed expert is to provide assistance in areas of specialist technical expertise, often in areas where there is a limited pool of suitably qualified experts, so repeat appointments are likely to occur.

There are two potential concerns with repeat appointments:

  • The financial benefit derived from repeat appointments and the extent to which this could translate into a financial interest in the outcome of the arbitration.
  • Previously acquired knowledge of case-relevant information that may have an impact on the expert’s ability to evaluate the issues in the present case in a neutral fashion.

The same issue arises in relation to repeat arbitrator appointments. In that context, the IBA Guidelines on Conflicts of Interest puts repeat appointments on the orange list and suggests that justifiable doubts as to independence do not arise unless the arbitrator has, within the past three years, been appointed as an arbitrator on two or more occasions by one of the parties or its affiliate, or if the arbitrator has, within the last three years, received more than three appointments by the same counsel or the same firm. Interestingly, however, there is no comparable guidance in relation to party-appointed experts, and no time limit to the relationships required to be disclosed.

So, is more guidance required in this area to allow experts to keep to the right side of the line, and to preclude unmeritorious challenges to an expert’s independence?

Policing the line

From the point of view of policing the line, it is arguable that no additional guidance is required.

Many experts belong to organisations with their own codes of practice and, beyond this, there is already a significant element of “self-policing”. If an expert is seen as taking a polarised or partisan approach, it can be hugely damaging to his or her reputation as an expert and could mean that the candidate is unlikely to be retained in future. Such an approach is equally damaging to an expert’s credibility before the tribunal and will not serve the interests of the client.

The role of a party-appointed expert is also very different to that of an arbitrator. The party-appointed expert will be presenting an opinion as part of the evidence before the tribunal, not adjudicating on issues. Within the arbitration process, there will be an opportunity for the opposing party to test that opinion in cross-examination and for the tribunal to question the expert. Ultimately it will be for the tribunal to assess the credibility of the experts and to decide what weight to give to each expert opinion.

That said, clearer guidelines could avoid unmeritorious challenges to an expert’s independence. By setting out clear criteria for experts to apply, and providing the sort of traffic light guidance offered for arbitrators, we could make it easier for experts to walk the line without fear of challenge.

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