In Secretariat Consulting PTE Ltd, Secretariat International UK Ltd and Secretariat Advisors LLC v A Company [2021] EWCA Civ 6, the Court of Appeal dismissed an appeal against the TCC’s decision in A Company v X, Y and Z [2020] EWHC 809 (TCC) and found that, on the facts, there was a conflict of interest where an expert organisation was acting for and against the same client on two separate but concurrent arbitrations concerning the same project and same/similar subject matter.

Background

The factual background of this case and our analysis of the first instance decision are set out in further detail in our previous blog post of 17 April 2020. In short, the judge at first instance found that company X, which was an entity within a global group of companies providing expert services, owed a fiduciary duty of loyalty to its client (the respondent). Accordingly, company Y, which belonged to the same group as company X, was precluded from providing expert services to a third party, who was bringing a claim against the respondent in another related arbitration concerning the same project and same/similar subject matter. Companies X, Y and Z subsequently appealed against the first instance decision.

The Court of Appeal’s decision

At the outset of its judgment, the Court of Appeal identified companies X, Y and Z as Secretariat Consulting Pte Ltd (“SCL”), Secretariat International UK Ltd (“SIUL”) and Secretariat Advisors LLC, respectively, on the basis that they were not parties to the underlying arbitrations and therefore the same considerations of privacy and confidentiality did not apply.

The Court of Appeal then considered the following issues:

  1. Did SCL owe a fiduciary duty of loyalty to the respondent?
  2. If not, did SCL owe a contractual duty to the respondent to avoid conflicts of interest?
  3. If so, was that duty also owed to the respondent by other Secretariat entities?
  4. If so, was there a conflict of interest as a result of SCL’s engagement in the first arbitration (i.e. the arbitration in which it was acting for the respondent) and SIUL’s subsequent engagement in the second arbitration (i.e. the related arbitration in which it was acting against the respondent)?

On the first issue, Coulson LJ, who gave the leading judgment, found that, depending on the terms of an expert’s retainer, the relationship between expert and his/her client may have one of the characteristics of a fiduciary relationship, i.e. a duty of loyalty or a duty to avoid conflicts of interest. In this case, however, it was not necessary or appropriate to find the existence of a freestanding duty of loyalty since there was a contractual obligation expressly dealing with conflicts of interest.

On the second issue, the Court of Appeal held that, based on the wording of SCL’s retainer, SCL owed the respondent a contractual duty to avoid conflicts of interest for the duration of its retainer. Further, in response to the third issue, such duty was also owed by the other Secretariat entities. This was because SCL had given an undertaking to avoid conflicts of interest on behalf of all the Secretariat entities by carrying out conflict checks that extended to the entire Secretariat group. The fact that the Secretariat group marketed itself as one global firm operating under a single brand also appears to have supported this conclusion.

As to the fourth issue, the Court of Appeal found that, on the facts, there had been a clear conflict of interest. In this context, Coulson LJ highlighted the “all-pervasive” overlaps in terms of parties, role, project and subject matter across the two arbitrations in question.

The appeal was therefore dismissed.

Analysis

The Court of Appeal’s decision has significant implications, not only for delay and quantum experts specialising in construction disputes, but also litigation and arbitration support/expert service providers of other disciplines.

As alluded to in the judgment, this is the first Court of Appeal authority that directly addresses the issue of whether an expert owes a fiduciary duty of loyalty to his/her client. In the present case, it was not considered necessary to determine this point due to the existence of a contractual obligation to avoid conflicts of interest. However, it was suggested that, depending on the nature of services provided and/or particular wording of the relevant expert retainer, a court may find that an expert is bound by a fiduciary duty of loyalty.

Another key takeaway is the Court of Appeal’s confirmation that there is no conflict between an expert’s overriding duty to the court and a duty of loyalty to the client. In fact, the Court of Appeal went so far as to say that complying with the overriding duty to the court could be said to be one of the prime reasons why the expert may owe a duty of loyalty to their client, and complying with the overriding duty is the best possible way in which an expert can satisfy their professional duty to their client.

Importantly, the Court of Appeal’s conclusion was not that experts would be bound by a general fiduciary duty of loyalty. The expert organisation in this case was found to owe a contractual duty, and the Court of Appeal emphasised several times that the issues in this case were resolved on their own particular facts and by reference to the terms of the relevant retainer.

Coulson LJ also noted that a conflict of interest is a matter of degree, and that an expert would not necessarily be precluded from acting both for and against the same client. Interestingly, the Court of Appeal suggested that it might be possible for an expert organisation to limit its representations/undertakings as to conflicts of interest to a particular company within its wider group. However, it remains to be seen whether stipulating a limitation of this nature would be feasible in practice, particularly for expert organisations for whom a key feature of their business is an integrated global offering.

James Doe
James Doe
Partner, Global Co-Head of Construction Disputes (West), London
+44 20 7466 2583
Noe Minamikata
Noe Minamikata
Professional Support Lawyer, London
+44 20 7466 2838