Civil claims increasingly raise technical and scientific issues that require evidence from experts who can assist the court in understanding the key issues. However, the parties do not have a right to adduce expert evidence and the court’s permission will be required. Rather, the court will control the use of evidence. It will do this by restricting the use of expert evidence to that which is reasonably required to resolve the proceedings (CPR 35.1).
The underlying policy consideration in restricting the use of expert evidence is to reduce the inappropriate use of evidence. The recent decision of Alexander Brothers Ltd (Hong Kong SAR) v Alstom Transport & another [2020] EWHC 814 (Comm) serves as a useful reminder of the approach the courts will adopt when determining whether expert evidence is reasonably required.
Legal principles
CPR 35.1 provides that expert evidence is restricted to that which is reasonably required to resolve the proceedings. Judicial guidance on applying the test in CPR 35.1 was provided in British Airways v Spencer [2015] EWHC 2477 (Ch). In that case, Warren J held that the following questions should be asked by a court when determining whether expert evidence should be permitted: (i) is it necessary for there to be expert evidence before the issue can be resolved? If it is necessary, rather than merely helpful, then it must be admitted; (ii) if the evidence is not necessary then would it be of assistance to the court in resolving that issue? If it would be of assistance, but not necessary, then the court would be able to determine the issue without it; (iii) since, under (ii) above, the court will be able to resolve the issue without the evidence, the third question is whether, in the context of the proceedings as a whole, expert evidence on that issue is reasonably required to resolve the proceedings.
Facts
The defendants made an application to set aside an order made by Tear J pursuant to section 101 of the Arbitration Act 1996 allowing an arbitral award to be enforced against the defendants. The hearing for that application was listed for a later date. In connection with that hearing, the defendants made two applications. The first sought to extend the deadline by which an application for permission to rely on expert evidence can be made and to file and serve such evidence. The second sought permission to adduce expert evidence in French criminal law. This note is concerned with the second application.
The first defendant was a company incorporated in France and the second defendant was a company registered in England. Both were wholly owned subsidiaries of the Alstom group which is engaged in the supply of railway locomotives and stock.
The claimant (ABL) was a company incorporated in Hong Kong. Its principal acted for ABL as a consultant for the Alstom group in China between 2003 and 2012. In 2013, ABL brought ICC arbitration proceedings under Swiss law in Geneva to recover amounts which were alleged to be owing by the defendants under the consultancy agreements. ABL succeeded in part and the defendants were ordered to pay the claimant approximately €1.56m. ABL’s position was that the tribunal held, inter alia, that the defendants had not established the corrupt practices upon which they relied as a defence to the non-payment, a matter which would be considered in the set aside hearing.
The defendants applied to have the award annulled in the Swiss courts, which dismissed the defendants’ application and held that it was not able to re-examine the allegations of corruption. The claimant then sought to enforce the award in France; the Paris District Court granted an order to this effect. However, the Paris Court of Appeal held that it would be contrary to French public policy to grant the claimant permission to enforce the award because it found that the sums Alstom paid to ABL ‘financed and remunerated the bribery of public officials’ in China and that the award ‘orders Alstom to pay sums intended to finance or remunerate acts of bribery’. That decision is being appealed by the claimant to the French Cour de Cassation. The claimant then made its ex parte application to enforce the award in England and that led to the order of Teare J.
The defendants applied for an order to adduce an expert report in French criminal law. The expert’s report stated that, in light of the Paris Court of Appeal ruling, any payment made to ABL pursuant to an English court ruling enforcing the award would ‘create an obvious risk of prosecution in France and expose [the defendants] to severe criminal charges’.
The set aside application was made on two grounds: first, a failure by the claimant to give full and frank disclosure and, second, pursuant to section 103, that recognition or enforcement of the award would be contrary to public policy. Section 103(3) involves a two-stage process: (i) the court must determine whether it would be contrary to public policy to recognise or enforce the award; and (ii) if it would be contrary to public policy, whether the court should exercise its discretion to recognise or enforce the award.
Decision
Moulder J first dealt with the issue of discretion when applying section 103(3). It could not be said that it will not be necessary for the court at the set aside hearing to address the issue of whether to exercise its discretion. The court must therefore ask whether it is necessary for there to be expert evidence before that issue can be resolved or, if the evidence is not necessary, whether it would be of assistance to the court in resolving that issue. Applying the approach in Spencer, Moulder J explained that the court must carry out a balancing exercise having regard to the factors such as the value of the claim, the effect of a judgment either way on the parties, who is to pay for the commissioning of the evidence on each side and the delay, if any, which the production of such evidence would entail.
Moulder J held that the French expert evidence was reasonably required in order to resolve the proceedings because:
i. the discretion under section 103(3) is separate from the first stage; this court could not conclude that the need for such discretion to be exercised will not arise;
ii. if the court has to exercise its discretion, that discretion was not circumscribed by the Arbitration Act 1996 and the position under French criminal law may assist;
iii. the cost of the expert evidence was very modest;
iv. if the expert report in response is more extensive, the extent of the expert evidence on this issue is not likely to be so extensive such as to create a ‘confusing distraction’ (see RBS Rights Issue Litigation [2015] EWHC 3433 (Ch));
v. the significance of the proceedings to the parties and the implications for the defendants if enforcement is permitted may well have reputational significance which is broader than the penalties imposed by French law;
vi. allowing the expert evidence would not affect the timing of the set aside hearing.
In light of Moulder J’s conclusion on this first issue, it was not necessary for her to decide whether this evidence was also reasonably required in order to resolve the issue of whether enforcement of the award would be contrary to public policy. She did, however, make a number of observations on the court approach to the application of section 103(3). In Deutsche Schachtbau v Shell International Petroleum Co Ltd, Sir John Donaldson MR emphasised that ‘public policy could never be exhaustively defined…’ Further, the authors of Dicey, Morris and Collins (15th ed) have explained that ‘the court has to perform a balancing exercise between the finality that should prima facie exist particularly for those that agree to have their disputes arbitrated, against the policy of ensuring that the enforcement power of the English court is not abused: the nature of, and strength of the case for, the illegality, and the extent to which it can be seen that the asserted illegality was addressed by the arbitral tribunal are factors in the balancing exercise between the competing public policies of finality and illegality’.
Moulder J noted that the issue as to whether the exception in section 103(3) was established was both legally complex and fact-sensitive. The matter was for determination at a set aside hearing and this court could not prejudge the outcome of that balancing exercise. The question for this court was whether the expert evidence was or may be helpful and, if it may be helpful, whether it was ‘reasonably required’.
The decision in Alexander Brothers Ltd provides a helpful review of the court’s approach when applying the test under CPR 35.1 in determining whether expert evidence is required to reasonably resolve the proceedings. Clearly, every application will be fact-sensitive and the court will, following the guidance in Spencer, carry out a balancing exercise having regard to a number of factors (for example, the value of the claim, the cost of the evidence and counter evidence and the impact on hearing dates). Therefore, prospective applicants should carefully consider whether expert evidence is required and consider how that may affect the parties and the proceedings, applying the guidance in Spencer.
Masood Ahmed is associate professor in law, University of Leicester, and a member of the Civil Procedure Rule Committee
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