In our last issue of International Quarterly, we discussed a recent TCC decision concerning the
extent of an expert’s duties to their client. In January 2021,
the Court of Appeal released its judgment on the appeal of that
case. While the outcome of
the decision was consistent with the TCC, there were several
differences in reasoning that warrant discussion, including
importantly a rollback on the TCC’s view that an expert owed a
fiduciary duty of loyalty to its client.

The case first came before the courts when the developer of a
large petrochemical plant in Asia (the Developer) sought an
injunction restraining a delay and quantum expert (the Expert) from
acting as an expert witness for a third party in an ICC arbitration
against the Developer. The injunction was sought because the Expert
was also acting as an expert witness for the Developer against a
different party (a subcontractor on the project) in a dispute that
had arisen under the same project with many overlapping issues.
Adding a layer of nuance to the matter is the fact that the Expert
is an international organisation, with different companies in the
broader group providing the services to the different parties.

At the time that the Expert was approached by the third party
the Developer was told of the proposed engagement and was advised
by the Expert that they did not view it as a “‘strict’
legal conflict”. Conversely, the Developer’s lawyers
indicated to the Expert that they believed there was a conflict. As
summarised by the Court of Appeal:

The Court of Appeal tactfully describes this as “a risky
decision”.

The TCC granted the injunction sought by the Developer,
concluding that:

• the Expert owed a fiduciary duty of loyalty to the claimant
  arising out of its engagement to provide expert services in
  connection with the first arbitration it was instructed on;
  and




• the Expert was in breach of that fiduciary duty of loyalty by
  accepting instructions to provide expert services in connection
  with the second arbitration.

Accordingly, the Developer was entitled to a continuation of the
interim injunction to restrain the Expert from providing expert
services to the third party.

The Expert appealed the TCC decision, with the Court of Appeal
being asked to determine:

• whether the entity within the Expert group advising the
  Developer owed a fiduciary duty of loyalty;




• if not, whether that same entity owed a contractual duty to the
  respondent to avoid conflicts of interest;




• if so, whether that duty extended to all companies within the
  Expert group; and




• if the duty extended, did that mean there was a conflict of
  interest in respect of the engagement of the Expert entity by the
  third party of the second arbitration.

In the spotlight was the TCC’s finding that a fiduciary duty
of loyalty was owed. Fiduciary duties are one of the most
sacrosanct relationships under law, and are typically confined to
pre-existing categories. One of the main characteristics of
fiduciary relationships is that they exist where one party is in
the vulnerable position of relying wholly on the other party and
therefore an exceptional level of trust and confidence in that
party is required, the most famous examples being the relationship
between a lawyer and a client, or a trustee and a beneficiary. It
is safe to say that, as Coulson LJ put it, “the expression
‘fiduciary’ is freighted with a good deal of legal
baggage…”

The finding that there was a fiduciary duty was of course open
for the TCC to make, on the basis that the exact definition of an
expert’s relationship to its client had not been determined by
the courts previously. However, the Court of Appeal in this case
ultimately concluded that it might be inapt to import the
aforementioned legal baggage into the client/expert
relationship.

One of the main arguments advanced by the Expert against the
imposition of a fiduciary relationship between expert and client
was that this duty would impinge on the expert’s overriding
duty to the tribunal. This argument was dismissed by the Court of
Appeal as it was settled law that while an advocate owes duties to
the court this does not prevent them from fulfilling their
obligations to their client; the same is true for experts. The
Court of Appeal went further to note 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.

Ultimately, the conclusion of the Court of Appeal (expressed by
Coulson LJ) was that in the present case, there was no purpose in
designating the relationship as a fiduciary one, given that there
was a contract in place between the parties with a conflict of
interest provision that dealt with the matter at issue. Coulson
LJ’s parting observations on the matter leave the door somewhat
ajar for future attempts to be made to have aspects of the
relationship recognised as fiduciary in certain circumstances,
noting that:

Regarding the second and third issues of whether a contractual
duty to avoid conflicts of interest was owed by the Expert (in its
entirety), the Court concluded that under the retainer the Expert
owed a clear contractual duty to avoid conflicts of interest for
the duration of their retainer. The Court also had no difficulty in
finding that the distinctions between entities in the broader
Expert international group were immaterial. On the Expert’s
assertion that one entity was not bound by the conflicts policy of
the other, both entities could conceivably act for different sides
of the same dispute, a conclusion that the Court labelled as a
commercially unrealistic position.

In considering the fourth issue, whether there was a conflict of
issue in this case, the Court of Appeal first identified the scope
of the different Expert entities’ works and then assessed
whether there was a conflict in both these services being provided.
The Court of Appeal concluded there was for four reasons:

• First, the entity advising the Developer was advising them in
  relation to its commercial position as well as specifically
  supporting the arbitration; by assisting the third party in its
  case it would be giving advice opposing the Developer.




• Second, the Court observed that the third party was the
  Developer’s project manager, or the Developer’s “alter
  ego” on the project. Coulson LJ observed that it was
  impossible to see how the same firm could act for the employer and
  simultaneously against the employer’s
  representative/agent/alter ego in respect of the same or similar
  disputes on the same project.




• Third, the Developer had engaged the Expert to give advice
  about the design and construction of the project. If they were
  engaged by the third party they would be advising on the same
  subject matter.




• Fourth, the causes of delay are critical issues and the Expert
  was advising the Developer about these. If the Expert was then
  engaged by the third party, they too would be giving advice about
  the causes of the same delays to the third party, and the extent to
  which such matters were or were not the third party’s
  responsibility.

In the Court’s opinion the overlaps were all-pervasive and a
conflict of interest existed. However, it was also observed that
none of this should be taken as saying that the same expert cannot
act both for and against the same client. It is inevitable that
large multinational companies often engage experts on one project
and see them on the other side in relation to a dispute on another
project. A conflict of interest is a matter of degree and in this
case the overlaps were too significant. The Court of Appeal
accordingly dismissed the appeal.

In some respects, the Court of Appeal declining to uphold the
TCC’s finding that the relationship between expert and client
as fiduciary will assist in parties understanding their obligations
towards each other as they do not have to worry about the
“legal baggage” of a fiduciary relationship. However,
that is not to say that the relationship requires less onerous
obligations. The Court of Appeal’s focus on the contractual
relationship between the parties will in most cases (particularly
where sophisticated multinational companies with detailed and
prescriptive terms of service are involved) mean the relationship
between the parties is comprehensively defined. It behoves parties
to be very familiar with these terms, particularly where conflicts
of interest are concerned.

The case should also assist multinational experts to manage
conflicts of interest, as the Court provided clear guidance on the
factors it will look to in determining whether a conflict exists.
Importantly, parties will not be able to rely solely on the fact
that a different legal entity is carrying out the work. They will
have to carefully scrutinise their terms to determine if there is
an overlap in the services that will be a conflict. Another lesson
from this case would be that, when it comes to conflicts of
interest, if faced with a “risky decision” it may pay to
err on the side of caution.

Footnote

Secretariat Consulting PTE
Ltd & Ors v A Company [2021] EWCA Civ 6

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