Risk Update

Expert Witness Conflicts of Interest — Court of Appeal (England & Wales) Tackles Issue for First Time

Posted Dan Bressler

Excellent analysis by Clifford Chance Partner Marie Berard and Senior Associate Sam Brown: “Court of Appeal addresses expert’s duties and conflicts of interest” (for those not immersed in all things international: “The Court of Appeal is the highest court within the Senior Courts of England and Wales, and deals only with appeals from other courts or tribunals”) —

  • “In Secretariat Consulting PTE Ltd v A Company, the Court of Appeal considered for the first time the question of an expert’s duty to avoid a conflict of interest.(1) The Court of Appeal’s decision, while not deciding the point finally, means that it is unlikely that a court will now recognise such a duty as a matter of law.”
  • “The issue is a matter of contract. On the terms of the expert firm’s engagement in this case, the Court of Appeal upheld the High Court’s decision to grant an injunction restraining the firm from acting for a third party in a connected arbitration. The judgment contains a useful analysis of when conflicts can arise in related cases and the circumstances in which a large organisation offering expert or litigation support services may find itself conflicted.”
  • “At first instance, Mrs Justice O’Farrell (the judge) granted the injunction on the basis that the whole Secretariat group (including SCL and SIUL) owed Company A a fiduciary duty of loyalty.(3) This was the first time that an English court had recognised that an expert witness was subject to such a duty.”
  • “The judge noted the unhelpful dearth of authorities on the matter, and that those which were referred to in submissions did not deal with duties during the course of a retainer but the distinct obligation to protect confidential information after the engagement had ended.”
  • “The leading case in that area remains Prince Jefri Bolkiah v KPMG,(4) which concerned accountants providing litigation support services. That case clearly informed the position which Secretariat took in its communications with Company A, as it insisted that it had established appropriate information barriers to prevent Company A’s confidential information from being disclosed to the PM.”
  • “The judge saw no impediment to identifying a fiduciary duty of loyalty so long as there was a relationship of trust and confidence. The judge identified a fiduciary duty of loyalty on the basis that SCL had been engaged not only to provide a delay expert report, but also to ‘provide extensive advice and support for the claimant throughout the arbitration proceedings.'”
  • “The Court of Appeal agreed with the judge at first instance when it unanimously rejected the suggestion that there was no fiduciary duty because the expert owed an overriding duty towards the court or, as in this case, an arbitral tribunal.”
  • “Coulson LJ and Males LJ concluded that the clause dealing with conflicts in SCL’s engagement letter created an ongoing obligation for SCL to avoid conflicts of interest. The clause confirmed not only that SCL had no conflicts at the time of signing but also that it would ‘maintain this position for the duration of [SCL’s] engagement’.”
  • “Coulson LJ and Males LJ also agreed that SCL’s undertaking to avoid conflicts extended to all other entities within the Secretariat group (including SIUL). Coulson LJ held that this was a matter of contractual construction (dismissing arguments that it improperly pierced any corporate veils) and that it was the proper construction for a number of reasons.”
  • “The Court of Appeal’s decision is pragmatic and consciously seeks to avert further litigation on the question of whether a particular expert-client relationship gives rise to fiduciary duties. It leaves parties to protect themselves with suitable contractual terms but also empowers parties and experts to define the relationship most suited to their circumstances.”