Fiduciary obligations of experts

The scope of an expert’s fiduciary duties in arbitral proceedings was considered by the High Court in A v X, Y, and Z [2020] EWHC 809 (TCC). The claimant made an application for the continuation of an injunction, granted by the court on a previous occasion, restraining the defendants from acting as experts for a third party in ICC arbitration proceedings against the claimant. 

The definition of a fiduciary was explained by Millett LJ in Bristol & West Building Society v Mothew [1998] Ch 1 (CA): (i) a fiduciary undertakes to act for a principal which gives rise to a relationship of trust and confidence; (ii) a distinguishing feature is the obligation of loyalty; and (iii) the principal is entitled to the loyalty of his fiduciary. A fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of loyalty. A breach of the rule automatically constitutes a breach of fiduciary duty.

It is important to draw a distinction between existing client conflicts, where the issue is whether there is a potential breach of the fiduciary duty of loyalty, and former client conflicts, where the issue is whether there is a risk of misuse of confidential information. This distinction was considered in a number of authorities.

In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (HL), Lord Millett explained the difference between the nature of the duty owed by solicitors to existing clients and that owed to former clients: ‘Where the court’s intervention is sought by a former client … the court’s jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence’ (emphasis added).

Clearly, expert witnesses also owe a duty to the court. In Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380 (CA), Lord Denning confirmed that the court has a right to ‘every man’s evidence’ and that ‘neither one side nor the other can debar the court from ascertaining the truth’. These principles also applied to expert witnesses. Further, in Jones v Kaney [2011] 2 AC 398 (SC), Lord Phillips held that there is no conflict between the duty that an expert owes to his client and the duty that he owes to the court when giving evidence.  

Finally, in Meat Corporation of Namibia Limited v Dawn Meats (UK) Limited [2011] EWHC 474 (Ch), Mann J declined to exclude the evidence of an expert who had been consulted by the claimant and was subsequently instructed by the defendant. The basis of the claimant’s application was the expert’s possession of confidential and privileged information derived from the initial consultation and her inability to act independently. Mann J distinguished Prince Jefri on the grounds, inter alia, that the House of Lords in that case was protecting a quasi-solicitor/client relationship and all the disclosure that went with that relationship. However, Mann J confirmed that the courts would intervene where the expert is likely to resort to privileged information when he should not do so (also see Lloyd’s Syndicate v X [2011] EWHC 2487 (Comm)). In these cases, there was no existing fiduciary relationship giving rise to a duty of loyalty (for example, because there was no retainer, or any retainer had been terminated). The issue in those cases was whether, in the absence of a duty of loyalty, an obligation to preserve confidential and privileged information should preclude the expert from acting, or giving evidence, for another party.

The claimant entered into two contracts with a contractor, contract A and contract B, for the construction of petrochemical facilities. Disputes arose between the contractor and the claimant concerning delays to both contracts. The contractor began ICC arbitration proceedings against the claimant, seated in London with an English choice of law clause (the Works Package arbitration (WP arbitration)). In the WP arbitration, the contractor claimed additional costs incurred for delays to its works, including the late release of drawings which were produced by a third party. The claimant position was that it would pass on any claims in respect of the drawings to the third party.

The claimant engaged the defendant to provide expert services and both parties signed a confidentiality agreement. The defendants commenced work in respect of the WP arbitration. The third party then commenced arbitral proceedings with a seat in London (the Engineering, Procurement and Construction Management arbitration (EPCM arbitration)) against the claimant for unpaid sums due to it from the claimant.

The defendants were approached by the third party to provide quantum and delay expert services in connection with the EPCM arbitration. The defendants informed the claimant’s solicitors of the potential instructions from the third party and that they did not consider that there was a conflict of interest. The claimant disagreed and argued that a potential conflict of interest did exist if the defendants agreed to be instructed by the third party.

The claimant was granted an interim injunction restraining the defendants from acting for the third party in the EPCM arbitration. The claimant made a further application to the court to continue the interim injunction, arguing that the engagement of the defendants to provide expert services gave rise to a fiduciary duty of loyalty. The defendants were in breach of that duty of loyalty by agreeing to provide expert services to the third party in circumstances where there was a conflict, or potential conflict, of interest. The defendants argued 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.

O’Farrell J held that the defendant group owed a fiduciary duty of loyalty to the claimant; the defendant group was in breach of that fiduciary duty of loyalty by accepting instructions to provide expert services in connection with the EPCM arbitration; and therefore the claimant was entitled to a continuation of the interim injunction to restrain the defendants from providing expert services to the third party in connection with the EPCM arbitration.

The first defendant was engaged to provide expert services for the claimant and, in doing so, to provide an independent expert report which complied with the duties set out in the CIArb expert witness protocol. It was also engaged to provide extensive advice and support for the claimant throughout the arbitration proceedings and, consequently, a clear relationship of trust and confidence existed which gave rise to a fiduciary duty of loyalty. O’Farrell J explained that 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 (Marks and Spencer Group plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741; Georgian American Alloys v White & Case [2014] EWHC 94 (Comm)). Thus, the corporate structure of the defendants meant that the fiduciary duty extended beyond the first defendant.

The decision is a helpful reminder of the scope of an expert’s fiduciary obligations during arbitral proceedings. An expert can be compelled to give expert evidence in arbitration or legal proceedings by any party, even in circumstances where that expert has provided an opinion to another party. When providing expert witness services, the expert has a paramount duty to the court or tribunal, which may require the expert to act in a way which does not advance the client’s interests. In circumstances where no fiduciary relationship arises, the Prince Jefri test based on an ongoing obligation to preserve confidential and privileged information does not necessarily apply to preclude an expert from acting or giving evidence for another party. Finally, the fiduciary duty will extend beyond the individual expert in circumstances where that expert forms part of a firm or company. 

Masood Ahmed is an associate professor in law at the University of Leicester and a member of the Civil Procedure Rule Committee