Asia Pacific, UK & Europe
Projects & Construction
A recent English Court of Appeal judgment provides important guidance on the role of expert witnesses in international arbitration, with an emphasis on potential conflicts of interest and duties owed by expert witnesses to their clients.
The English Court of Appeal in Secretariat v A Company  EWCA Civ 6 upheld an injunction granted by the English Technology and Construction Court (TCC), preventing an international consulting firm from providing expert witness services for opposing sides in two separate but closely related international construction arbitrations. This is the first occasion on which the Court of Appeal has been required to adjudicate (i) duties imposed on an expert concurrently engaged in two potentially conflicting retainers, and (ii) whether those duties shackle all relevant entities within the expert organisation.
Company A, the developer of a large petrochemical plant, is the respondent in two separate ICC arbitrations involving delay and disruption claims brought against it by a subcontractor (Arbitration 1) and the project manager (Arbitration 2), respectively. Company A retained Secretariat Consulting Pte Ltd (SCL), a Singapore-based entity within the Secretariat group, to provide arbitration support and delay expert services in Arbitration 1. The retainer terms included a confidentiality agreement and conflicts of interest clause, confirming that SCL had no conflicts of interest and that would remain so for the duration of its engagement.
Several months after its Arbitration 1 retainer, Secretariat notified Company A that Secretariat International UK Ltd (SIUL), a UK-based entity within the Secretariat group, had been approached by the project manager to provide arbitration support and quantum expert services in Arbitration 2. Company A objected to this arrangement on the basis that it constituted a conflict of interest. Even so, SIUL was retained by the project manager in Arbitration 2, while SCL continued its engagement for Company A in Arbitration 1.
In March 2020, Company A made an urgent ex parte application to the TCC for an interim injunction against Secretariat. The injunction was granted, thereby preventing SIUL from further working in Arbitration 2. The first instance judge continued the injunction on the basis that SCL owed a fiduciary duty of loyalty to its client extending to the Secretariat group, which it had breached by virtue of SIUL accepting the Arbitration 2 engagement. Accordingly, the key issue on appeal was whether SCL owed a contractual duty to Company A to avoid conflicts of interest and, if so, whether this duty extended to the other Secretariat group entities.
In lead judgment, with which the other justices agreed, Lord Justice Coulson dismissed Secretariat's appeal and maintained the injunction. The Court held it was unnecessary to uphold the first instance finding as to fiduciary duties, expressing reservations regarding the implications of such a finding given that the term "ʽfiduciary’ is freighted with a good deal of legal baggage" unnecessary to carry into a relationship between a client and an expert. Rather, the Court based its decision on the express terms of the retainer between SCL and the respondent which, construed in context, prohibited conflicts of interest for the full engagement duration.
Whilst the retainer was concluded by a specific company within the Secretariat group, the Court held that SCL's undertaking bound all the Secretariat entities. One of the key reasons being that the conflict check undertaken prior to confirming the engagement had been carried out across all companies in the Secretariat group. The arrangements by which Secretariat managed its business were also relevant:
“[i]n considering what the parties would reasonably have understood, it is significant that companies within the group share the same name and are managed and marketed as a single global firm. They have a single website for the group as a whole, treating it as a single business in various jurisdictions […] the undertaking given by Secretariat Consulting not to accept instructions which would give rise to a conflict of interest can readily – and in my judgment must – be understood as having been given on behalf of the group as a whole.”
The Court held that the overlap of parties, roles, projects and subject matter was "all-pervasive" and a clear conflict of interest arose resultant of SIUL's accepting the Arbitration 2 engagement. The overlap meant that the two Secretariat experts could plausibly find themselves supporting opposing positions on the same or substantially similar issues. The Court also considered whether the nature and scope of the services had any bearing on the existence of a conflict of interest. Although the Court rejected the argument that a strict distinction could be drawn between a "testifying" expert and an expert with a wider advisory role, it acknowledged greater conflicts of interest risks arising where an expert had been involved in the preparation of the client's case from an early stage.
Notably, the Court stressed that existence of a conflict of interest is a matter of degree, and that its observations in the present case should not be taken as concluding that the same expert cannot act both for and against the same client in relation to a different project.
This important decision provides useful guidance on the relationship between clients and experts, bringing to light several issues of particular interest to cross-border disputants involved in major international projects: