Expert witnesses owe a fiduciary duty of loyalty to clients

By Vijay Bange

A Company v XYZ [2020] EWHC 809 (TCC)

Overview

  • The expert witness owed a fiduciary duty of loyalty, arising out of an engagement to provide expert witness services, advice and support in connection with an arbitration.
  • The court allowed the continuation of an existing interim injunction refraining the defendant consultancy expert practice from providing expert services to another party in the arbitration.

The Case

The matter before the court concerned an application by the claimant for continuation of an injunction restraining the defendant from acting as experts for a third party in ICC arbitration proceedings.

The claimant was the employer, and the developer of a petrochemical plant.  Disputes arose between the claimant and a contractor. The contractor commenced ICC arbitration proceedings against the claimant, alleging that it had incurred additional costs by reason of delays to its works, including the late release of contract drawings (which were produced by a third party).

The claimant engaged the first defendant, a multi-jurisdictional and disciplinary practice providing a range of expert services to construction projects, on or around May 2019. In addition to the contract of engagement for expert services, the parties entered into a confidentiality agreement and a non-disclosure agreement. The claimant also made clear that expert services were to be provided by a specific expert from the defendant group.

The third party that produced the contract drawings commenced an arbitration against the claimant in summer 2019. This third party approached the defendants in October 2019 to provide expert witness services for the third party. The defendants had given assurances about confidentiality.

The entity engaged to provide expert witness services to the third party was a different entity to that engaged by the claimant in the first arbitration, however, the two entities both formed part of a larger group referred to as ‘the defendant group’, owned in part by a common holding company. The claimant objected to the engagement of the defendant by the third party on the basis that there was a clear conflict. The claimant did not take issue with the point of confidentiality.

The interesting issue before the court was whether independent experts, who are engaged by a client to provide advice and support in arbitration or legal proceedings, in addition to expert evidence, owe a fiduciary duty of loyalty to their clients.

The claimant’s case was that the engagement of the defendants to provide expert services gave rise to a fiduciary duty of loyalty, and further that the defendants are in breach of that duty of loyalty by agreeing to provide expert services to the third party in circumstances where there is a conflict, or a potential conflict of interest.

To this, the defendants position was that independent experts do not owe a fiduciary duty of loyalty to their clients, and that such duty is excluded by the expert’s overriding duty to the tribunal. Further, that an expert does not owe a fiduciary obligation of loyalty to his client because such duty would be inconsistent with the independent role of the expert.

Held

The judge concluded that:

  1. In common with counsel and solicitors, an independent expert owes a duty to the court that may not align with the interests of the client. However, as with counsel and solicitors, the paramount duty owed to the court is not inconsistent with an additional duty of loyalty to the client.
  2. Where a fiduciary duty of loyalty arises, it is not limited to the individual concerned. It extends to the firm or company and may extend to the wider group.
  3. That the defendant group owes a fiduciary duty of loyalty to the claimant arising out of the engagement to provide expert services. Further, that the defendant group was in breach of that fiduciary duty of loyalty, and that pending the trial of this matter the claimant was entitled to a continuation of the interim injunction.

Commentary

An expert has an overriding duty to the court or tribunal. However, in addition an expert may in certain circumstances have an additional fiduciary duty of loyalty to a client. The court did not accept that this overriding duty to the court trumped any duty of loyalty; and that such a duty of loyalty can co-exist and is not inconsistent with the duty to the tribunal. So, as well as ensuring there is no conflict of interest, there is a question as to whether there is a duty of loyalty that may prevent an expert from taking on the instruction to act. Its not enough to give assurances as to confidentiality. It may not be enough to give assurances as to information barriers between different offices/ related groups, nor that it is a different individual within a group. The duty of loyalty extends to the group organisation. For the defendant, Counsel made the analogy that within chambers there may well be counsel acting for different parties on the same project. The court did not accept this was relevant here.

The approach taken by the expert organisation here was arguably a pragmatic and commercial approach that is not unusual, where assurances are given as to information barriers.

With the possibility of challenges on experts (whether for legitimate concerns or tactical reasons), this is yet another issue, and a cautionary tale,  that warrants early consideration to avoid wasted/ abortive costs, and delays to the arbitration timetable.