In our last issue of International Quarterly,<\/em> we discussed a recent TCC decision<\/a> concerning the
The case first came before the courts when the developer of a
At the time that the Expert was approached by the third party
“Unhappily, it appears that, not only did [one entity
The Court of Appeal tactfully describes this as “a risky
The TCC granted the injunction sought by the Developer,
\n<\/ul>\n Accordingly, the Developer was entitled to a continuation of the
The Expert appealed the TCC decision, with the Court of Appeal
\n<\/ul>\n In the spotlight was the TCC’s finding that a fiduciary duty
The finding that there was a fiduciary duty was of course open
One of the main arguments advanced by the Expert against the
Ultimately, the conclusion of the Court of Appeal (expressed by
“Depending on the terms of the retainer, the relationship
Regarding the second and third issues of whether a contractual
In considering the fourth issue, whether there was a conflict of
\n<\/ul>\n In the Court’s opinion the overlaps were all-pervasive and a
In some respects, the Court of Appeal declining to uphold the
The case should also assist multinational experts to manage
Footnote<\/strong><\/p>\n Secretariat Consulting PTE
\nextent of an expert’s duties to their client. In January 2021,
\nthe Court of Appeal released its judgment on the appeal of that
\ncase. While the outcome of
\nthe decision was consistent with the TCC, there were several
\ndifferences in reasoning that warrant discussion, including
\nimportantly a rollback on the TCC’s view that an expert owed a
\nfiduciary duty of loyalty to its client.<\/p>\n
\nlarge petrochemical plant in Asia (the Developer) sought an
\ninjunction restraining a delay and quantum expert (the Expert) from
\nacting as an expert witness for a third party in an ICC arbitration
\nagainst the Developer. The injunction was sought because the Expert
\nwas also acting as an expert witness for the Developer against a
\ndifferent party (a subcontractor on the project) in a dispute that
\nhad arisen under the same project with many overlapping issues.
\nAdding a layer of nuance to the matter is the fact that the Expert
\nis an international organisation, with different companies in the
\nbroader group providing the services to the different parties.<\/p>\n
\nthe Developer was told of the proposed engagement and was advised
\nby the Expert that they did not view it as a “‘strict’
\nlegal conflict”. Conversely, the Developer’s lawyers
\nindicated to the Expert that they believed there was a conflict. As
\nsummarised by the Court of Appeal:<\/p>\n
\nwithin the Expert group] continue to work on behalf of the
\nrespondent in connection with [the arbitration against the
\nsubcontractor], but that also, without any further reference back
\nto the respondent or its solicitors, [another entity within the
\nExpert group] began to do the same for the third party in [the
\nthird party’s arbitration against the Developer].”<\/p>\n<\/div>\n
\ndecision”.<\/p>\n
\nconcluding that:<\/p>\n\n
\narising out of its engagement to provide expert services in
\nconnection with the first arbitration it was instructed on;
\nand<\/li>\n
\n
<\/p>\n
\naccepting instructions to provide expert services in connection
\nwith the second arbitration.<\/li>\n
\ninterim injunction to restrain the Expert from providing expert
\nservices to the third party.<\/p>\n
\nbeing asked to determine:<\/p>\n\n
\nDeveloper owed a fiduciary duty of loyalty;<\/li>\n
\n
<\/p>\n
\nrespondent to avoid conflicts of interest;<\/li>\n
\n
<\/p>\n
\nExpert group; and<\/li>\n
\n
<\/p>\n
\ninterest in respect of the engagement of the Expert entity by the
\nthird party of the second arbitration.<\/li>\n
\nof loyalty was owed. Fiduciary duties are one of the most
\nsacrosanct relationships under law, and are typically confined to
\npre-existing categories. One of the main characteristics of
\nfiduciary relationships is that they exist where one party is in
\nthe vulnerable position of relying wholly on the other party and
\ntherefore an exceptional level of trust and confidence in that
\nparty is required, the most famous examples being the relationship
\nbetween a lawyer and a client, or a trustee and a beneficiary. It
\nis safe to say that, as Coulson LJ put it, “the expression
\n‘fiduciary’ is freighted with a good deal of legal
\nbaggage…”<\/em><\/p>\n
\nfor the TCC to make, on the basis that the exact definition of an
\nexpert’s relationship to its client had not been determined by
\nthe courts previously. However, the Court of Appeal in this case
\nultimately concluded that it might be inapt to import the
\naforementioned legal baggage into the client\/expert
\nrelationship.<\/p>\n
\nimposition of a fiduciary relationship between expert and client
\nwas that this duty would impinge on the expert’s overriding
\nduty to the tribunal. This argument was dismissed by the Court of
\nAppeal as it was settled law that while an advocate owes duties to
\nthe court this does not prevent them from fulfilling their
\nobligations to their client; the same is true for experts. The
\nCourt of Appeal went further to note that complying with the
\noverriding duty to the court is the best possible way in which an
\nexpert can satisfy his professional duty to his client.<\/p>\n
\nCoulson LJ) was that in the present case, there was no purpose in
\ndesignating the relationship as a fiduciary one, given that there
\nwas a contract in place between the parties with a conflict of
\ninterest provision that dealt with the matter at issue. Coulson
\nLJ’s parting observations on the matter leave the door somewhat
\najar for future attempts to be made to have aspects of the
\nrelationship recognised as fiduciary in certain circumstances,
\nnoting that:<\/p>\n
\nbetween a provider of litigation support services\/expert, on the
\none hand, and his or her client on the other, may have one of the
\ncharacteristics of a fiduciary relationship, namely a duty of
\nloyalty or, to put it another way, a duty to avoid conflicts of
\ninterest.”<\/p>\n<\/div>\n
\nduty to avoid conflicts of interest was owed by the Expert (in its
\nentirety), the Court concluded that under the retainer the Expert
\nowed a clear contractual duty to avoid conflicts of interest for
\nthe duration of their retainer. The Court also had no difficulty in
\nfinding that the distinctions between entities in the broader
\nExpert international group were immaterial. On the Expert’s
\nassertion that one entity was not bound by the conflicts policy of
\nthe other, both entities could conceivably act for different sides
\nof the same dispute, a conclusion that the Court labelled as a
\ncommercially unrealistic position.<\/p>\n
\nissue in this case, the Court of Appeal first identified the scope
\nof the different Expert entities’ works and then assessed
\nwhether there was a conflict in both these services being provided.
\nThe Court of Appeal concluded there was for four reasons:<\/p>\n\n
\nrelation to its commercial position as well as specifically
\nsupporting the arbitration; by assisting the third party in its
\ncase it would be giving advice opposing the Developer.<\/li>\n
\n
<\/p>\n
\nDeveloper’s project manager, or the Developer’s “alter
\nego” on the project. Coulson LJ observed that it was
\nimpossible to see how the same firm could act for the employer and
\nsimultaneously against the employer’s
\nrepresentative\/agent\/alter ego in respect of the same or similar
\ndisputes on the same project.<\/li>\n
\n
<\/p>\n
\nabout the design and construction of the project. If they were
\nengaged by the third party they would be advising on the same
\nsubject matter.<\/li>\n
\n
<\/p>\n
\nwas advising the Developer about these. If the Expert was then
\nengaged by the third party, they too would be giving advice about
\nthe causes of the same delays to the third party, and the extent to
\nwhich such matters were or were not the third party’s
\nresponsibility.<\/li>\n
\nconflict of interest existed. However, it was also observed that
\nnone of this should be taken as saying that the same expert cannot
\nact both for and against the same client. It is inevitable that
\nlarge multinational companies often engage experts on one project
\nand see them on the other side in relation to a dispute on another
\nproject. A conflict of interest is a matter of degree and in this
\ncase the overlaps were too significant. The Court of Appeal
\naccordingly dismissed the appeal.<\/p>\n
\nTCC’s finding that the relationship between expert and client
\nas fiduciary will assist in parties understanding their obligations
\ntowards each other as they do not have to worry about the
\n“legal baggage” of a fiduciary relationship. However,
\nthat is not to say that the relationship requires less onerous
\nobligations. The Court of Appeal’s focus on the contractual
\nrelationship between the parties will in most cases (particularly
\nwhere sophisticated multinational companies with detailed and
\nprescriptive terms of service are involved) mean the relationship
\nbetween the parties is comprehensively defined. It behoves parties
\nto be very familiar with these terms, particularly where conflicts
\nof interest are concerned.<\/p>\n
\nconflicts of interest, as the Court provided clear guidance on the
\nfactors it will look to in determining whether a conflict exists.
\nImportantly, parties will not be able to rely solely on the fact
\nthat a different legal entity is carrying out the work. They will
\nhave to carefully scrutinise their terms to determine if there is
\nan overlap in the services that will be a conflict. Another lesson
\nfrom this case would be that, when it comes to conflicts of
\ninterest, if faced with a “risky decision” it may pay to
\nerr on the side of caution.<\/p>\n
\nLtd & Ors v A Company<\/em> [2021] EWCA Civ 6<\/small><\/p>\n
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