The obligations of an expert services provider to avoid a conflict with its client’s interests should be assessed by reference to the expert’s retainer and not (as was held at first instance) by reference to a freestanding fiduciary duty of loyalty. This case provides clarity for the first time on the English court’s approach to conflicts of interest where a multi-jurisdictional expert services firm seeks to provide expert services on both sides of active, related dispute proceedings. Where two experts from different entities within the same global organisation were engaged to testify in related arbitrations that involved overlapping facts and issues, but for clients pursuing conflicting claims, a conflict of interest was found to exist: Secretariat Consulting Pte Ltd & ors v A Company [2021] EWCA Civ 6

Contractual duty to avoid a conflict of interest bound entire group

The Court of Appeal preferred instead to analyse the expert’s obligations based on the terms of the expert’s retainer. The terms of SCL’s retainer dealt expressly with conflicts of interest and required SCL to avoid conflicts for the duration of the retainer. Males LJ noted that it would be unusual nowadays in any substantial litigation or arbitration for an expert to be retained without a retainer that addresses conflicts.

The court held that SCL’s contractual undertaking to avoid a conflict of interest bound all of the companies in the group, including SIUL. Similarly, the first instance judge had found that a fiduciary duty of loyalty extended to the broader group.

On the specific facts in this case, the wide scope of the conflict check that had been carried out by Singapore-based SCL suggested that SCL was giving the undertaking in the retainer on behalf of all Secretariat entities. This was supported by the fact that the Secretariat Group was marketed and managed as one global group of companies and that its clients and SCL’s testifying expert did not distinguish the individual entity in the Secretariat structure that was retained.

Coulson LJ rejected the Project Manager’s argument that this finding had the effect of piercing the corporate veil; this was a question of commercial construction of the engagement terms that was informed by the factual background and the commercial reality of the parties’ positions.

Expert’s conflict of interest existed

The Secretariat Group argued that the appointment of SIUL and M did not give rise to a conflict, as M was to be instructed in a separate arbitration, M was an expert in a different discipline from K, and M was employed by a different company to SCL. The Court of Appeal, like the first instance judge, rejected these arguments, finding that a conflict of interest, which is a matter of degree, did exist.

The court stated that the overlaps in this case were “all pervasive”, as there was an overlap of parties, role, project and subject matter. For example, while SCL was giving advice to support the Developer, SIUL would be giving advice on the same or similar disputes and issues opposing the Developer. The court noted the breadth of the roles of SCL and SIUL, who were engaged to be more than simply “testifying experts”, which exacerbated the risk of a conflict of interest. It was also relevant that the Developer considered that there was a conflict and that the Secretariat Group appeared to accept that there was, or might be, a conflict.

Comment

The facts of this case are distinctive, involving two live arbitrations and an expert services provider that was seeking to act for and against its client’s interests in relation to disputes concerning the same project and the same or a similar subject matter. However, the case is noteworthy for the guidance that it provides to experts and their clients in litigation and arbitration matters on on the court’s approach to assessing a potential conflict of interest in a time when multi-jurisdictional expert services firms now regularly operate and market themselves as one firm.

The case clarifies that the obligation of loyalty owed by an expert to its client will be determined by the expert’s terms of engagement rather than the designation of the relationship as a fiduciary one. The decision to overturn the first instance judgment on this issue will be welcomed by experts, who will have feared the legal ramifications of the attachment of the “fiduciary” designation. They may, however, be less welcoming of the court’s decision to extend the duty to avoid conflicts to the whole of the Secretariat Group; this may trigger a rethink over how cross-jurisdictional expert groups market themselves and present their terms of engagement.

The court’s emphasis on the contractual position as the basis for assessing the scope of an expert’s duty to avoid conflicts of interest suggests that careful attention must be paid to the precise words proposed by an expert in its retainer. The users of expert services should be alert to expert groups seeking to limit the representations and undertakings that they offer in relation to conflicts of interest to the specific entity involved. While a party will need to accept that an expert that it has previously engaged may appear on the other side of a dispute in relation to a different project, it will wish to ensure that the expert and the expert’s group cannot be retained against its interests where the proceedings relate to the same or a related project.