Expert Evidence In Engineering Based Arbitrations.' (Prepared for a 2012 conference)

'Expert Evidence In Engineering Based Arbitrations.'

By Arran Dowling-Hussey.

Author: Mr. Arran Dowling-Hussey is a Barrister and Arbitrator who practises in Dublin, Republic of Ireland and London, United Kingdom. He was called to the Bar in 2003 and is a former lecturer in Dispute Resolution at Dublin City University. He co-wrote ‘Arbitration Law’ (Thomson Round Hall, Dublin 2008) which has been cited before the Irish Superior Courts. A full summary of his professional details is available on www.arrandowlinghussey.com  

Summary of Paper-

The manner in which expert evidence is treated in an arbitration, whether it has a focus on an engineering related dispute or otherwise, can be of significant importance. The result of an arbitral reference, with millions of dollars and/or euros at stake in quantum and costs[1], can quite simply turn on which one of two or more conflicting experts is believed on the point/s at issue. If one expert is following a rubric of their own making which is unfair, inaccurate and can tend towards bias then the specific reference in which this occurs is as a whole undermined- but more importantly there are much wider reputational implications then the result of just one case. Guidance on how expert evidence is offered and treated by decision makers may arise in applicable governing legal instruments such as the UNCITRAL[2] Model law or the institutional arbitral rules applicable to the dispute be they the rules of the ICC[3] or some other institution. Any such guidance is often at best depending on the circumstances of the underlying dispute widely but not universally used.

In circumstances where the arbitration is not immediately subject to any of the provisions set out, especially when it is an ad hoc arbitration and not held under the auspices of an institution, guidance may need to be sought elsewhere. Whilst arbitration is self evidently a separate and distinct process a number of common law judgments since Ikarian Reefer[4] offer assistance on how to address expert evidence during the course of a hearing. Expert evidence which has been given in an untrammelled manner is potentially most dangerous for reasons which are elaborated on in the body of the paper. The instant paper also looks at the guidance offered by Ikarian Reefer and considers the position in this area of arbitration practice going forward.

Introduction

Why is there a need for expert witnesses?

Whilst it may seem obvious it is helpful to succinctly set out why expert witnesses are needed in the course of litigation conducted in a court room or before an arbitral tribunal. Quite simply an arbitral reference will often turn on a point or points that is/are technical in nature and it is necessary to hear from one or more experts representing the competing sides so as to allow the tribunal to make a determination on the matter canvassed before the tribunal. Sometimes agreement will be made, or it will be prescribed in the legal instruments governing the arbitration that there shall only be one arbitrator who is appointed by the Tribunal. In the latter scenario it is even more important then when there is two or more party appointed experts that the conduct of the expert in giving their evidence is such so as not to make the proceedings legally unfair.

How can an expert witness undermine the process of arbitration?

Whilst arbitrators are often senior professionals who started their careers as architects, engineers or accountants some significant arbitrations are heard by comparatively young men or women in their thirties. Expert witnesses in their fifties and sixties (indeed perhaps depending on the particular field of expertise that is being addressed people who may be even older) have the potential to influence arbitrators so as to lead to an unfair decision. Witnesses of the age just mentioned may well be the expert witness who never looked for preferment of this type.

They might have ‘fallen into’ work of this nature and as the years passed a certain critical mass developed such that they developed a reputation as a witness and this began to self perpetuate. Because of the manner in which they have developed their position there is a risk that they will not follow best practice. When an older expert who wishes to set their own terms meets an inexperienced arbitrator as can be expected problems will often arise. Whilst one would prefer that the position is otherwise, and it is perhaps diplomatic to avoid such thoughts- many arbitrators grow into their roles and are not as deft when they first ‘wear the arbitrators hat’  as they latter become. It requires a certain skill to avoid the scenario where one can not see that the expert before you is the type of expert described below:

‘Undoubtedly there is a natural bias to do something serviceable for those who employ you and adequately remunerate you. It is very natural, and it is so effectual that we constantly see persons, instead of considering themselves witnesses, rather consider themselves as the paid agents of the person who employs them[5].’ 

‘Judicial Notice’

Not all matters need be proven. In many countries the idea of ‘judicial notice’ is commonly discussed and accepted amongst practitioners and users of the legal system as being an appropriate part of the process of litigation. In summary a court can accept during the course of a case the truth of a factual statement relied on without formal proof of the fact raised being needed as the point in question is within the knowledge of the court. As there are any number of ways in which this can arise in practice we will not herein offer any specific example of this widely applied idea. It also follows more relevantly for the subject of this paper that such a concept is applicable to arbitration.

However if one relied on this idea in its entirety it would not be possible to fairly conduct court based litigation or an international arbitration. As stated judicial notice is an exception to normal evidential rules and there are limit to this idea.

Scope of Doctrine Of Judicial Notice.

No one judge or neutral can fairly be able to determine all technical issues that may be raised before them. Thus for many, many years it has arisen that when there are issue/s in dispute both sides call expert evidence or the court or arbitration tribunal relies on one expert that such a body has appointed often with the agreement of the parties.

 The leading English case of Ikarian Reefer offers guidance on how such experts should conduct themselves when performing such a role. Decisions proffered in England and Wales are binding on the courts in that jurisdiction alone subject to the operation of the doctrine of stare decis as it applies in that country. However as is well understood much if not all of the world is divided into common law and civil jurisdictions and England is an example of the former. Thus English decisions have what is termed persuasive authority in other common law jurisdictions such as Canada, India and Ireland and are often but not always followed in those countries due to a shared legal tradition.  

It can be seen that this rule or idea of judicial notice which is an exception to the normal evidential principles which suggest that any statement of fact which is offered before the court or arbitral tribunal as being true and relevant to the issue/s being determined should be proven. Secondly it follows that the person who decides what is or is not within the scope of judicial knowledge is the judge themselves. This discretion just mentioned is normally drawn widely; for as Issacs J noted in an Australian case-  “no exhaustive list can be compiled of things that are open to judicial notice.’

Ikarian Reefer: What Was Decided?

It is necessary to look at what this well known case decided. In making the judgment the Court took the chance to set out what it thought were relevant principles that would govern the giving of expert witness. Problems with expert witnesses have as has already been touched on for many, many years. Indeed before looking at the seven points that form the ratio decidendi of Ikarian Reefer we might just revisit the problems associated with bad expert witnesses.

As a court many years ago noted:

“A man may go, and does sometimes, to a half-a-dozen experts. I have known it in cases of valuation within my own experience at the Bar. He takes their honest opinions, he finds three in his favour and three against him; he says to the three in his favour, will you be kind enough to give evidence? And he pays the three against him their fees and leaves them alone; the other side does the same. It may not be three out of six, it may be three out of fifty. I was told in one case, where a person wanted a certain thing done, that they went to sixty-eight people before they found one.’[6]

Ikarian Reefer tried to address these and other well established problems; the court noted that it would be best practice if-

• Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation.

• An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise. An expert witness in the High Court should never assume the role of an advocate.

• An expert witness should state the facts or assumptions upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion.

• An expert witness should make it clear when a particular question or issue falls outside his expertise.

• If an expert’s opinion is not properly researched because he considers that insufficient data are available, then this must be stated with an indication that the opinion is no more than provisional. In cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report.

• If, after exchange of reports an expert witness changes his view on a material matter having read the other’s side expert’s report or for any other reason, such a change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the court.

• Where expert evidence refers to photographs, plans calculations, analyses, measurements, survey reports or other similar documents, these must be provided to the opposite party at the same time as the exchange of reports.

Conclusions

Whilst arbitration is an international tool it is difficult to set out entirely prescriptive rules and regulations in any one area of this dispute resolution process which can be used around the world in a universal sense. This is specifically true in the area of the use of expert evidence. The existence of different cultural and legal traditions seep into how an arbitration is conducted in one jurisdiction as against what may happen in a different country. Any attempt at setting out what is best practice in an international arbitration is to some degree aspirational and is a work of art and not science. There will as in most other areas of the law continue to be pressure to review and update the practices followed in relation to the presentation of evidence in international arbitration. The latter process as many will readily accept has been seen over the years not to be static in nature. Notwithstanding all the foregoing points whilst the 7 guidelines set out on page two of this paper have been much discussed and criticised- what are often called the ‘Cresswell principles’ after the presiding judge in the Ikarian Reefer case which saw the principle set out, are as good a starting point as any when one considers how to ‘police’ the conduct of the expert witness. Whilst the ‘Cresswell principles’ may seem to be governed by common sense, and state what perhaps need not be stated, the case law in both domestic and international arbitration is replete with challenges to an arbitrator or a tribunal of arbitrators  that have arisen when fairly basic procedure that is well established has not been followed. The importance of expert evidence can be best seen by analogy when cause celebres in the world of civil and criminal law in America are considered.

The damage in its own way could be as significant in an arbitration as when what Americans call ‘junk science[7]’ has led experts in that jurisdiction to unfairly stand up the convictions of those who did not commit the murder for which they have been imprisoned or to win or defeat a tort claim of doubtful merit.

Mr. Arran Dowling-Hussey

Barrister-at-Law and Arbitrator.

September 15, 2012 Dublin, Republic of Ireland.

(adhussey@lawlibrary.ie)

[1] In 2011 there were at least 113 live arbitrations were the dispute saw US$1 billion at issue. Due to the nature of arbitration reliable statistics in this area are difficult to collect but this particular figure was widely reported in online journals such as Global Arbitration Review on more than one occasion. It follows that because of the aforesaid nature of arbitration that there would have likely been more than 113 cases. Likewise because of the confidential nature of these processes one can only say that the legal costs arising from a US$1 billion claim will not be cheap.  By analogy the legal costs for the dispute over some of London’s best known hotels during 2012 which was conducted in the London High Court was said to total US$33 million- the cumulative value of the hotels running into the hundreds of millions of dollars but not exceeding US$ 1 billion- see Irish Independent newspaper on September 11, 2012.

[2] United Nations Commission On International Trade Law ‘UNCITRAL’ adopted a Model Law on International Commercial Arbitration in 1985 which is now widely used so as to promote best practice in this area. Many countries have revised their domestic and/or international in the last couples of years and have adopted UNCITRAL into their national laws either in whole or with the slightest amendments e.g. see the Republic of Ireland’s 2010 Arbitration Act.

[3] Pre-existing dispute resolution clauses in a contract may set out that the parties who signed the agreement will subsequently if and when a dispute arises conduct an arbitration under the rules of an international body such as the International Chamber of Commerce’s “ICC” International Court of Arbitration (see  http://www.iccwbo.org/court/ accessed on September 15, 2012) or the London Court of International Arbitration (see http://www.lcia.org accessed on September 15, 2012).) In circumstances where there is no pre-existing dispute clause the parties may make use of what is called a submission agreement after the dispute has broken out and agree by consent to use say the ICC rules notwithstanding the lack of an existing agreement to that end. Sometimes however for various reasons the arbitration will be conducted on what is called an ad-hoc basis and no rules be they the ICC or LCIA, or other comparable documents, will be binding on the hearing.  

[4] ([1993] 2 Lloyd's Rep. 68)

[5] Lord Arbinger v Ashton (1873) 17 LR Eg 358 at 374.

[6] See Thom v Worthing Skating Rink Co (1877) 6 Ch D 415 at 415n.

[7] The United States Department of Justice 1985 Tort Policy Working Group noted in part ‘The use of such invalid scientific evidence (commonly referred to as ‘junk science’) has resulted in findings of causation which simply cannot be justified or understood.’