23 February 2021
The UK Court of Appeal recently examined the issue in Secretariat Consulting Pte Ltd and others v A Company  EWCA Civ 6
Can an expert witness act both for and against the same client in two related arbitrations? Related to this issue, does an expert witness owe a fiduciary duty of loyalty to his/her client? These issues were recently considered by the UK Court of Appeal in Secretariat Consulting Pte Ltd and others v A Company  EWCA Civ 6,  4 W.L.R. 20, a case which concerned the engagement of delay/quantum experts in construction arbitrations. Although the Court of Appeal ultimately, found that it was unnecessary to find the existence of a fiduciary duty of loyalty owed by the expert to the client, it nevertheless found that an expert’s overriding duty to the court/tribunal and the duty which he/she owes to his/her instructing client are not inconsistent, and that depending on the circumstances, the relationship between an expert and his/her client may have one of the characteristics of a fiduciary relationship.
In that case, SCL and SIUL were entities belonging to the same corporate group (the “Secretariat Group”) that provided litigation support services in construction arbitrations. SCL was engaged by a developer (“C”) of a large petrochemical plant (the “Project”) to act as its delay expert in an arbitration brought by certain sub-contractors against C (“Arbitration 1”). SIUL was later engaged to act as a quantum expert for the third-party project manager against C in a separate arbitration (“Arbitration 2”) relating to the same Project.
C applied for an injunction preventing SIUL from doing any further work in Arbitration 2, on the basis that SCL had owed C a fiduciary duty of loyalty which prevented SIUL from providing similar services to the third party in a claim in a different arbitration against the same claimant arising out of the same development that involved the same or similar subject matter.
At first instance ( EWHC 809 (TCC)), O’Farrell J held that there was a clear relationship of trust and confidence between SCL and C such as to give rise to a fiduciary duty of loyalty, which was owed not only by SCL but also by SIUL as they were part of the Secretariat Group being marketed as one global firm and having a common financial interest. The judge went on to find that SCL and SIUL were in breach of the fiduciary duty of loyalty, in circumstances where SCL and SIUL were advising and assisting in arbitrations which concerned the same delays and accordingly there was a significant overlap in the issues. O’Farrell J thus granted the injunction. SCL and SIUL appealed.
The Court of Appeal dismissed the appeal albeit based on different reasoning. Referring to Lord Phillips’ dicta in Jones v Kaney  UKSC 13, Coulson, Males and Carr LJJ concurred that a fiduciary duty of loyalty or a duty to avoid conflicts of interest on the part of an expert to his/her client would not be contradicted by the expert’s overriding duty to the court or arbitral tribunal to give independent and objective evidence. Coulson LJ further said that “the expert’s overriding duty to the court could be said to be one of the prime reasons why the expert may indeed owe a duty of loyalty to his client”, as the client wants a “frank and honest appraisal” of his case by the expert. Moreover, it is in the client’s interest that the expert’s evidence is and is seen to be independent and unbiased. Thus, “complying with the overriding duty to the court is the best possible way in which an expert can satisfy his professional duty to his client”.
Notwithstanding, the Court of Appeal was reluctant to conclude that there was such a fiduciary duty of loyalty owed by the expert to the client, saying that such a conclusion may have many unseen ramifications and that a fiduciary duty relationship might not be the most accurate way of describing what a litigation support professional/expert does and should do when instructed in litigation or a commercial arbitration. Coulson LJ only stated as follows: “Depending on the terms of the retainer, the relationship between a provider of litigation support services/expert, on the one hand, and his or her client on the other, may have one of the characteristics of a fiduciary relationship, namely a duty of loyalty or, to put it another way, a duty to avoid conflict of interest. That is not contradicted by the expert’s obligation to the court. But, unlike the judge, I do not consider that it is necessary or appropriate to find the existence of a freestanding duty of loyalty in the present case”.
Instead, the Court of Appeal based its decision on the expert’s contractual duty to avoid conflict of interests arising out of a conflict of interest clause in SCL’s retainer which was based on a conflict check carried out in respect of all the Secretariat entities. It was held that in light of the conflict check (and as the various entities within the Secretariat Group were marketed as one global firm), the undertaking given by SCL in its retainer bound all the companies in the group. The defendants’ argument that such a finding would amount to “piercing the corporate veil” was rejected on the basis that it was “a question of contract construction, informed by the factual background” and that it reflected “the reality of the scope of the conflict check actually undertaken”. Coulson LJ further said, and Males LJ agreed, that: “It is perfectly possible for a group like Secretariat, if it thought it commercially sensible to do so, to make plain that its representations as to conflict of interest and its undertakings for the future were based solely on the entity involved, and that, despite the scope of the conflict check that they had undertaken, no such representations or undertakings were given in relation to any other entity in the Secretariat Group”.
The Court of Appeal then turned to consider whether there was a conflict of interest in that case. Acknowledging that a conflict of interest was a matter of degree, the Court of Appeal considered the roles of SCL and SIUL as delay/quantum experts, which were to provide wide-ranging support and advice in arbitrations. The Court observed that delay/quantum experts are usually “retained at an early stage to sift through the reams of factual material, looking for particular events on which to focus”. They are “important resources for the lawyers and others responsible for the conduct of the case”, and they are rarely mere testifying experts but part of the client’s litigation team. Such roles and responsibilities had increased the risk that there would be a conflict of interest with such an expert, having been engaged by a client, employed by another party to carry out the same or similar wide-ranging role against the interests of that client. Further, and importantly, on the facts of the case, there was an overlap of parties, role, project, and subject matter. For such reasons, the Court of Appeal found a clear conflict of interest and a breach of the obligation to avoid conflict of interest.
It is noteworthy, however, that Coulson LJ stressed that: “None of this should be taken as saying that the same expert cannot act for and against the same client. Of course, an expert can do so. Large multinational companies often engage experts on one project and see them on the other side in relation to a dispute on another project. That is inevitable. But a conflict of interest is a matter of degree. In my judgment, the overlaps to which I have referred – of parties, of role, of project, of subject matter – make it plain that in the present case, there was a conflict of interest.”
Although this case was decided on its own facts, this decision is significant in at least four respects. First, as noted by the Court of Appeal in the judgment, this is the first direct English authority that considered the issue of whether an expert owes a fiduciary duty of loyalty to his/her client. Although the Court of Appeal declined to determine this point, the Court of Appeal recognised that it is possible that the relationship between an expert and his/her client may have one of the characteristics of a fiduciary relationship.
Second, the Court of Appeal did not only follow Jones v Kaney saying that there was no conflict between an expert’s obligations to the court and his/her obligations to his/her client, but it also went further to say that “complying with the overriding duty to the court is the best possible way in which an expert can satisfy his professional duty to his client”. Whilst the Court of Appeal did not consider it necessary or appropriate to find the existence of a freestanding duty of loyalty in this case, this dicta has removed a major obstacle facing the court in recognising a duty of loyalty owed by an expert to his/her client in an appropriate case in the future.
Third, from a more practical point of view, this decision illustrated how the Court would look at the contractual provisions in a retainer to find whether an expert owes any duty to avoid conflict of interest to his/her client, and depending on the wording and context, the Court may even find that the duty extends to other entities within the same corporate group. Providers of litigation support services/expert should therefore pay attention to any representations or undertakings that they may make to their clients as regards conflict of interest. As the Court of Appeal suggested, an expert witness group may, if it wishes, make clear that other companies in that group remain free to act for parties opposed to the client in the same or related disputes. It remains to be seen, however, whether this is feasible or commercially sensible in practice.
Fourth, although this case concerned delay/quantum experts, the Court’s analysis that a close working relationships between experts, lawyers and clients exacerbated the risk of conflict of interest and it should also apply to other disciplines where the experts are heavily involved in the preparation of their client’s case, and this case has wider implications which go beyond construction litigation/arbitration. However, As the Court of Appeal stated: “A professional expert witness offers his services in return for payment and the relationship between the expert and his client is essentially contractual. It is therefore necessary to focus on the incidents of that relationship, concentrating on the terms of the expert’s retainer and the role which he is required and expected to perform.” In other words, a conflict of interest is a matter of degree, and each case turns on its own facts and circumstances.
This article was authored by Jonathan Chan.