THE AUTHOR: Havin Jagtiani, International Arbitration Associate at Mayer Brown
Introduction
Party-appointed experts are undoubtedly a firmly entrenched method of presenting expert evidence in international arbitration. However, their role has been a subject of contention in recent years. Rightly so, given the prevalence of, but inherent risks with, engaging party-appointed experts. It is crucial to properly manage party-appointed experts to ensure their value, both to the appointing party in putting their case forward appropriately, and to a tribunal’s understanding and consideration of the technical issues in dispute.
“Hired Guns” in Practice
The role of a party-appointed expert is unique. On one hand, they owe contractual duties to the party appointing them. Consequently, party-appointed experts are incentivised to back the position of the appointing party, either through having interacted with the appointing party prior to being instructed (for example, by providing advice at a pre-arbitration stage), or through the commercial incentive of potentially securing future instructions.
On the other hand, party-appointed experts owe a duty of independence and impartiality to the tribunal, and to assist the tribunal with providing their objective opinions on the subject matter of their expertise. Article 5(2)(c) of the IBA Rules provides that the expert report of a party-appointed expert shall contain “a statement of his or her independence from the Parties, their legal advisors and the Arbitral Tribunal“, but no further guidance is provided as to the notion of independence.
In the Annual Expert Witness Survey Report 2019, it was recorded that 25% of experts “felt pressurised to change their report in a way that damages their impartiality by an instructing party”, and 41% indicated that “they have come across an expert they considered to be a ‘hired gun’“.
Minimising Risks of “Hired Guns”
In the BCLP Annual Arbitration Survey 2021, 51% of respondents agreed that party-appointed experts are “hired guns” or “advocates in disguise” but, of that 51%, 24% did not think that this was a problem. Respondents were relatively evenly split as to whether there was a need for greater control over party-appointed experts: 52% of respondents did not think so, while 47% of respondents considered that the tribunal should have primary responsibility for controlling the use of party-appointed experts. Given the potential concerns about party-appointed experts being seen as “hired guns”, stakeholders in arbitration can utilise various tools to optimise the use of party-appointed experts. For parties who do not consider great control over party-appointed experts necessary, their interests are nevertheless best served if experts remain independent, and such independence can be encouraged through various methods outlined below.
Parties and counsel
One solution could be for a party to retain an expert advisor in the preparation of its claims and retain a separate expert for the purposes of giving evidence before a tribunal. Where one expert is advising a party on its claims during the pre-arbitration stage, and subsequently acts as that party’s expert in the arbitration, the risk of that expert being an “advocate in disguise”, or at least being perceived as one, increases. However, if two separate experts are appointed, the expert witness in the arbitration will more likely maintain their independence. If both experts eventually reach similar conclusions, their aggregate opinion may be of substantial assistance to the tribunal.
From counsel’s perspective, it is important that initial instructions to experts are clear and emphasize that the experts are to maintain their independence throughout the proceedings. Counsel may also need to manage their clients’ expectations that party-appointed experts are not acting for the instructing party, but are to provide an unbiased opinion on the issues in question. Early management of clients’ expectations may avoid clients pressurising experts to amend their reports in order to better suit their case.
Additionally, parties and counsel may adopt soft-law instruments to govern their arbitration. The CIArb Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration (the “CIArb Protocol“) establishes a “complete regime for the giving of … evidence [by party-appointed experts] and provides a procedure for … the independence of the experts, the contents of the expert’s opinions … and the manner of expert testimony.”
- Art. 4 provides for an expert’s duty of independence, a duty to disclose relationships, a duty to disclose party instructions and assumptions and a duty to disclose adverse information.
- Art. 8 expressly sets out the terms of the expert’s declaration. By comparison, the IBA Rules include an express provision that party-appointed experts reports shall contain the expert’s statement of independence from the parties, their legal advisors and the arbitral tribunal, highlighting the overriding duty of the experts to the tribunal. However, as mentioned above, the IBA Rules do not specifically explain how an expert can in fact maintain their independence from the appointing party.
Additionally, the CIArb Protocol goes further than the IBA Rules in that the former requires experts to hold an expert conference to identify issues upon which experts’ opinions are sought, identifying analyses which need to be conducted and seeking agreement on those issues and analyses. Further, these discussions are without prejudice to the parties’ positions and must not be communicated to the arbitral tribunal until the experts file a statement identifying areas of agreement and disagreement (Art. 6). In requiring such a statement, the CIArb Protocol allows the arbitral tribunal to be fully informed of the contentious matters and is better able to assess the veracity of the expert evidence. Such a process could also mitigate against the entrenchment of experts’ opinions with the position of their appointing parties.
Parties may also consider selecting arbitrators with a particular expertise in technical disputes. The evidence of a party-appointed expert may not necessarily be required should the tribunal already have the requisite expertise. However, in practice, a dispute may involve multiple technical disciplines that will not get resolved purely with the expertise of a tribunal. Additionally, parties will likely still wish to adduce expert evidence despite the tribunal’s knowledge and experience, in consideration of due process. Nevertheless, appointing a tribunal member with the relevant technical expertise will allow the tribunal to be in a position to test the credibility and partisanship of experts.
Experts
A significant number of experts are members of professional associations. Many of these professional organisations have established codes of conduct that set out ethical rules for their members serving as expert witnesses in litigation or arbitration proceedings (see, for example, the Expert Witness Institute’s Code of Professional Conduct or the EuroExpert Code of Practice). An expert who is best able to maintain genuine independence in accordance with their respective codes of conduct will convey a sense of credibility that would ultimately be of benefit to the tribunal.
Guidance on experts’ contrasting duties to appointing parties and the tribunal was also provided in a recent case involving an eminent international expert services firm. In Secretariat Consulting PTE Ltd and others v A Company [2021] EWCA Civ 6, the English Court of Appeal considered that an expert’s overriding duty is to the court or tribunal, compliance with which “is the best possible way in which an expert can satisfy his professional duty to his client” (para. 62). Ultimately, a tribunal will be more convinced by an expert’s independent and impartial opinion over one that is tainted by an instructing party’s bias.
Tribunal
From the tribunal’s perspective, it should be ready to give limited weight to the evidence of a party-appointed expert who either fails to remain independent or breaches their overriding duty to assist the tribunal in their subject-matter expertise. This is the ultimate deterrent to parties who seek to rely on partisan experts to further their case. According to the BCLP Annual Arbitration Survey 2021, 93% of respondents agreed with such a measure.
Further sanctions were also supported by respondents, such as cost sanctions (62% of respondents) and public censure of party-appointed experts (36% of respondents). The former may be a palatable option to arbitrators, especially in addressing fundamental breaches of experts’ duties, but the latter is likely not conducive given arbitration’s confidential nature. In any event, these sanctions ought to be exercised in addition to, and not as alternatives to, the tribunal’s powers to disregard or give limited weight to an expert’s tainted opinion.
Alternatives to party-appointed experts
Going beyond the above suggestions to mitigate the risks of “hired guns”, alternatives to party-appointed experts include the possibility of (a) a tribunal-appointed expert selected by the parties or the tribunal itself and/or (b) a single joint expert selected and appointed by the parties. These alternatives have their own drawbacks that need to be considered should parties choose to deviate away from party-appointed experts, such as whether there are concerns that a tribunal’s decision making is delegated to the tribunal-appointed expert, and whether these alternatives restrict party autonomy: one of the reasons parties choose arbitration over litigation in the first place.
One solution that has not been at the forefront of arbitration practice is “expert teaming” as suggested by Dr. Klaus Sachs. Expert teaming seeks to combine the advantages of party-appointed and tribunal-appointed experts, and also mitigates the risks of “hired guns”. He proposed that each party provides a shortlist of independent candidates, and the tribunal selects an expert from each list to form an expert team. The tribunal, parties, and expert team will then meet to finalise the expert team’s terms of reference. The team then prepares a preliminary report, which is circulated to the tribunal and the parties for comments, following which the experts prepare a final joint report. The experts will present at the hearing and can be questioned by the tribunal and the parties.
Dr. Sachs recommends that the experts’ terms of reference provide, inter alia, that (i) both experts must be impartial and independent, (ii) each member of the expert team shall refrain from communicating separately with the parties, the tribunal or any third party, and (iii) the expert team shall examine all pleadings and documents submitted by both parties and address the parties’ views.
The principal advantage to expert teaming is that it removes the perception of “hired guns” and the risks of experts being advocates in disguise. The experts are appointed by the tribunal and are subject to duties of independence and impartiality as specifically set out under their signed terms of reference. Therefore, experts will not be inclined to favour one party over the other. Furthermore, the experts will not be paid by the party who proposed the expert but will be jointly paid by both parties, subject to any decision on costs. This removes any potential incentive for experts to favour the party paying them.
Such a solution may not have garnered traction, but users should not be shy to challenge the status quo and to take advantage of the flexibility that international arbitration offers to adopt unconventional practices that may work for the benefit of all parties and the tribunal.
Conclusion
If party-appointed experts are used with integrity, they are an asset to complex and high-value proceedings and will greatly assist a tribunal with their findings. However, the unrestrained use of partisan experts will only subvert the effectiveness and economy of arbitration proceedings, diminishing the utility of international arbitration as a viable means of dispute resolution. With better tribunal leadership and active case management, coupled with parties’ willingness to adopt the flexibility that arbitration offers, the solutions to minimise the risks of “hired guns” and maximise the efficient use of experts are available to be utilised.
ABOUT THE AUTHOR
Havin Jagtiani is an International Arbitration Associate at Mayer Brown. He represents parties in commercial, construction, infrastructure and energy disputes before major arbitral institutions such as the ICC, LCIA and ADCCAC, as well as under the UNCITRAL Arbitration Rules, and across various jurisdictions such as Abu Dhabi, England, France, Hong Kong, India, Jordan, Panama, and Saudi Arabia.
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