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Part VII Witnesses and Perjury, 19 The Expert Witness in International Arbitration

Bernardo M Cremades

From: Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators

Edited By: Julio César Betancourt

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Jurisdiction — Witnesses — Arbitrators — Admissibility of evidence — Expert evidence

(p. 192) 19  The Expert Witness in International Arbitration

A.  Introduction

19.01  In his 1995 ‘Access to Justice: Interim Report’, Lord Woolf identified expert evidence as the major cause of cost increases in civil litigation, particularly by reason of its excessive or inappropriate use and the partisanship of experts. The aim of this chapter is to raise the question of whether this also applies today in international arbitration—that is, whether experts are necessary or indeed appropriate given the frequent criticism as to the high costs they generate and the inevitable delays caused by their participation in arbitration proceedings.

B.  Party and Tribunal-Appointed Experts

19.02  Parties, when presenting their claims, often have recourse to expert witnesses. Sometimes, they are appointed when a problem arises that may lead to arbitration. They are also often approached at the preparation stage of the claim, or again, when the arbitration proceedings are underway.

19.03  The party experts’ positions are sometimes so divergent that the tribunal needs to appoint an independent expert to assist it in assessing the parties’ respective positions. This raises the question of how the tribunal should appoint these experts: should it seek the approval, or at least the opinion, of the parties? The tribunal should set the qualifications required of the expert. Needless to say, it should only appoint the expert once the facts of the case are known so that it is better able to determine the expert’s exact mission.

19.04  The role that the expert witness should play is a perennial debate. Two very specific examples taken from procedural reform come to mind—namely, the reform of the English CPR in 1998 in England and Wales, and the introduction of the new Civil Procedure Law in Spain in 2000. In the United Kingdom, the solution lay in bringing expert evidence under the control of the judge. The Anglo-Saxon tradition of each party presenting their experts was, from the perspective of this reform, the root of the problem in civil procedure. The reform aimed at introducing the figure of a single joint expert, appointed by common accord and coming under judicial control—thus making the evidentiary phase more efficient. The aim was to secure greater impartiality, a reduction in costs, increased efficiency, party equality, and the potential to facilitate the settlement of disputes.

(p. 193) 19.05  In contrast, in Spain the historical position was to use court-appointed experts in civil proceedings. Judges tended to accept their conclusions, and on occasion without discussion. The delays involved in using the official lists of experts drew the proceedings out interminably and inevitably rendered them less efficient. For this reason, there is an increasing tendency towards party-appointed expert witnesses as well as an expert witness appointed by the judge of the hearing.

19.06  Consequently, the solutions in comparative law are aligned, but moving in opposite directions: in England and Wales, there is greater court control over expert evidence; while in Spain, the inefficiencies inherent in court-appointed experts have led to an increased participation by the parties in presenting expert evidence. In short, we are moving towards flexibility in the handling of expertise today, with greater objectivity resulting from the duties of transparency and disclosure of the circumstances surrounding the preparation of expert evidence, communication between the experts, and tribunal monitoring of the presentation of expert evidence.

19.07  Recently, attempts have been made to introduce the Australian practice of ‘expert conferencing’ as the solution to concerns about partisanship and the costs and delays attributed to expert evidence. Such Anglo-Saxon marketing initiatives are surprising when our procedural system has long been familiar with the practice of the confrontation of experts. This technique, however, is ever-more present in contrasting opinions, and cross-examination before the tribunal and in the presence of the parties.

C.  The Function of the Expert Witness in International Arbitration

19.08  The expert has the dual role of witness and expert in their field. As a witness, their role differs from that of an auditor, consultant, and, above all, party-appointed counsel. The auditor’s mission is to verify the company books and their opinion is a guarantee to third parties. Company investors and creditors feel secure in the knowledge that the accounts are accurate. The expert witness, in contrast, alerts the tribunal to any doubts that may exist regarding the accounting or financial situation of the company. They assist in the calculation of any losses or damages that may derive from any contractual agreement. Whereas the auditor attests the veracity of book entries, the expert witness’s role is to assist in the assessment of evidence.

19.09  The role of the expert also differs from that of the consultant. The consultant’s mission is to assist the employer in finding the solution most in line with their business strategy. That is why it is difficult to reconcile the presence of the consultant—who in some cases is virtually an integral part of the company—in the preparation of arbitration claims. Natural resources and construction companies, for example, are the major client base of international consulting firms. In many cases they are already present at the outset of the dispute advising on how to prevent or organize the strategy of a future arbitration. Then, once arbitration proceedings commence, they appear as expert witnesses in the field.

19.10  The expert’s role in arbitration proceedings is to testify and assist the tribunal—not to instruct it. It is all too common to see party-appointed experts taking a position that is far more radical even than counsel’s. The expert is obliged to tell the truth in accordance with their professional ethics. Expert opinions, consequently, are subject to party questioning (p. 194) to check the veracity of the line of argument and conclusions. It is also true, however, that where there are lawyers with an Anglo-Saxon background, there is a risk that the lawyer’s desire to shine may predominate. Sometimes the Anglo-Saxon lawyer seems to consider more the written record than the efficiency of the expert questioning. Further, if his client is present he may be thinking more of the client’s satisfaction than the probative value of the expert evidence.

19.11  The expert is a witness, but, in contrast to the legal framework for experts in court proceedings, in international arbitration they do not have to be independent of the parties. The majority of experts appearing before arbitral tribunals are employees or habitual sub-contractors of one of the parties. The reason for this is that nobody is more familiar than they are with the circumstances surrounding the matter at hand. They are obliged to give full disclosure before the tribunal and the other party of the nature of the special relationship. The object of expert evidence is to place all possible elements of evidence before the arbitral tribunal so that it may undertake its assessment of the case.

19.12  Accordingly, this begs the question of whether an expert witness can be challenged, either for their disclosures in and of themselves or for any connections that come to light that were not initially disclosed. I am of the opinion that they should not. The tribunal, when the time comes, will assess the possible lack of objectivity that the special relationship with the appointing party may have given rise to and whether this has conditioned the expert evidence in any way. The possible challenge of a tribunal-appointed expert may have other connotations and above all different consequences.

19.13  Expert evidence, when proposed by a party, must be credible, and when designated by the tribunal, must additionally be prudent. On this basis, it is a great mistake for the expert to adopt the stance of a ‘guru’ whose mission it is to instruct the tribunal, believing it to be composed of three jurists unequipped with a technical mindset. This does not only happen with technical matters, however. Examples proliferate in accounting or legal issues with the ‘Taliban’ or ‘fundamentalist’ approach to the interpretation of FIDIC contracts. The expert’s role is not to impose their criteria or to instruct the tribunal, but rather to assist its members in their assessment of the circumstances surrounding the litigation.

D.  The Challenge of Expert Witnesses

19.14  The expert is a highly qualified witness and furthermore an expert in the particular field. Accordingly, a detailed CV reflecting specialist qualifications should be attached to his report. An engineer, for example, cannot be an expert in all areas, but rather only in those in which he has pursued his professional activity over the years. However, costs of the proceedings may oblige a party to request an expert to issue an expert opinion on technical matters beyond the scope of his usual specialty. The financial constraints of each of the parties determine the reach of the expertise. The tribunal must be alert to this fact to prevent the financially stronger party potentially submitting overwhelming evidence where the financially weaker party has had to limit expenditure in hiring and controlling the expert. The arbitrators here must exercise care and acknowledge that the only objective of evidence in arbitral proceedings is to convince the tribunal as to specific facts or assessments of this evidence.

(p. 195) 19.15  International arbitration today requires that the experts adopt a collaborative rather than a combative stance in their dealings with each other. They have to be aware that their role consists of assisting the tribunal in reaching a decision. For this reason, then, a seasoned arbitrator will strive to ensure that the party-appointed experts work together, or, failing that, at least work in collaboration with the tribunal-appointed expert(s). Experts are required to show the tribunal and the parties all the documentation used in the preparation of their reports, so as to fully understand the reality of the expertise.

19.16  At times, relations between the party-appointed expert and the appointing party are less than simple. Counsel pursuing a particular line of argument may restrict the information provided to the appointed experts with a view to retaining control over strategy. This is a big mistake. Sometimes during the arbitration proceedings a critical opinion of the expert might turn out to be in direct conflict with the position of the party that appointed them, thus necessitating the party’s in-house lawyer to step in to smooth over a conflict that could have potentially devastating effects. This has, on occasion, led to the replacement of the expert, although it is difficult to understand why such a substitution might negate all the opinions and interpretations of the former expert already admitted by the tribunal. And if, in the interim, a partial award has been issued, it could also be considered that the former expert evidence, for the very nature of its inclusion in the award, could constitute res iudicata. Any error that may be detected in the expert reports may constitute sufficient basis to request the correction of the award or even its annulment.

E.  The Rise of the So-Called Star Expert

19.17  The ‘artisan’ style of arbitration that I experienced at the beginning of my career has become an important and often very lucrative industry. Today, we are increasingly witness to mega commercial and investment arbitrations. Some decades ago, natural resources arbitration acquired very great importance. Much more recently, it is investment protection arbitration based on bilateral and multilateral treaties which has given arbitration its extraordinary economic, cultural, and even political thrust.

19.18  The players in these mega-arbitrations form an extraordinarily competitive market. Today, the figure of the individual expert is giving way to the organizational expert. Many employers find it much more convenient to propose to the board of directors the appointment of a well-reputed team of professionals. If things do not work out, it will not be the employer’s fault or that of their internal advisors. They prefer to pay the high costs of an external organization that will allow them to shift any eventual responsibility.

19.19  It is not uncommon now to find expert evidence in the hands of a team of experts. The manager of the team which the company in question habitually hires distributes the work among the team members. Part of the team is in charge of drafting the expert report, working alongside the team of lawyers appointed by the company to defend its interests in the arbitration. In the hearing itself, an expert giving oral testimony will have the technical know-how, but also possess excellent communication skills and be adept at convincing arbitral tribunals. In short, there are experts who are skilled report drafters and others who have the powers of persuasion. The expert who invariably appears before the tribunal as the ‘star’ witness is simply presenting the efforts of the whole team.

(p. 196) 19.20  With this backdrop, it is worth asking whether the expert’s participation in the design of the strategy for the arbitration, and the fact that the same counsel and expert appear repeatedly in different proceedings, do not call into question the true function of the expert witness both as witness and as an expert collaborating with the tribunal in its mission to ascertain the truth on which to base its decision.

F.  Conclusion

19.21  I do not know if Lord Woolf in his 1995 analysis was right or not. What is clear, however, is that today arbitration is losing sight of its original function as it becomes a major industry. Arbitration proceedings are both protracted and costly. If we wish to guarantee access to arbitral justice we must reconsider arbitration as it is today, bearing in mind the very significant role played by expert evidence.

19.22  The work of an arbitrator and an expert witness is often inseparable. The sectors with which the arbitrator comes into contact most frequently are construction, energy, telecommunications, and concessions. Regardless of an arbitrator’s background, they will require the support of an expert in the field. However, within this new industry of arbitration, we are losing sight of the personal and truly artisan character of the expert. The proliferation of expert witnesses in arbitration proceedings, and above all the teams of experts, is often the cause of confusion and, of course, delays. Based on my own experience of excessively lengthy and costly arbitration proceedings, I can’t help but feel that we are killing the goose that has laid the golden eggs. This tension between the arbitrator and the expert witness brings to mind a huapango written by Rubén Fuentes and popularized by Miguel Aceves Mejía, which goes:

  • With you or without you
  • my troubles have no cure.
  • With you, because you kill me
  • and yet without you, I’d die for sure.