The scope of an professional’s fiduciary duties in arbitral proceedings was thought-about by the Excessive Courtroom in A v X, Y, and Z [2020] EWHC 809 (TCC). The claimant made an software for the continuation of an injunction, granted by the courtroom on a earlier event, restraining the defendants from performing as consultants for a 3rd celebration in ICC arbitration proceedings towards the claimant. 

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The definition of a fiduciary was defined by Millett LJ in Bristol & West Constructing Society v Mothew [1998] Ch 1 (CA): (i) a fiduciary undertakes to behave for a principal which supplies rise to a relationship of belief and confidence; (ii) a distinguishing function is the duty of loyalty; and (iii) the principal is entitled to the loyalty of his fiduciary. A fiduciary who acts for 2 principals with probably conflicting pursuits with out the knowledgeable consent of each is in breach of the duty of loyalty. A breach of the rule routinely constitutes a breach of fiduciary obligation.

You will need to draw a distinction between current consumer conflicts, the place the difficulty is whether or not there’s a potential breach of the fiduciary obligation of loyalty, and former consumer conflicts, the place the difficulty is whether or not there’s a threat of misuse of confidential data. This distinction was thought-about in numerous authorities.

In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (HL), Lord Millett defined the distinction between the character of the obligation owed by solicitors to current purchasers and that owed to former purchasers: ‘The place the courtroom’s intervention is sought by a former consumer … the courtroom’s jurisdiction can’t be primarily based on any battle of curiosity, actual or perceived, for there’s none. The fiduciary relationship which subsists between solicitor and consumer involves an finish with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the pursuits of his former consumer. The one obligation to the previous consumer which survives the termination of the consumer relationship is a unbroken obligation to protect the confidentiality of data imparted throughout its subsistence’ (emphasis added).

Clearly, professional witnesses additionally owe an obligation to the courtroom. In Concord Transport Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380 (CA), Lord Denning confirmed that the courtroom has a proper to ‘each man’s proof’ and that ‘neither one aspect nor the opposite can debar the courtroom from ascertaining the reality’. These rules additionally utilized to professional witnesses. Additional, in Jones v Kaney [2011] 2 AC 398 (SC), Lord Phillips held that there isn’t a battle between the obligation that an professional owes to his consumer and the obligation that he owes to the courtroom when giving proof.  

Lastly, in Meat Company of Namibia Restricted v Daybreak Meats (UK) Restricted [2011] EWHC 474 (Ch), Mann J declined to exclude the proof of an professional who had been consulted by the claimant and was subsequently instructed by the defendant. The idea of the claimant’s software was the professional’s possession of confidential and privileged data derived from the preliminary session and her lack of ability to behave independently. Mann J distinguished Prince Jefri on the grounds, inter alia, that the Home of Lords in that case was defending a quasi-solicitor/consumer relationship and all of the disclosure that went with that relationship. Nonetheless, Mann J confirmed that the courts would intervene the place the professional is prone to resort to privileged data when he shouldn’t accomplish that (additionally see Lloyd’s Syndicate v X [2011] EWHC 2487 (Comm)). In these instances, there was no current fiduciary relationship giving rise to an obligation of loyalty (for instance, as a result of there was no retainer, or any retainer had been terminated). The difficulty in these instances was whether or not, within the absence of an obligation of loyalty, an obligation to protect confidential and privileged data ought to preclude the professional from performing, or giving proof, for an additional celebration.

The claimant entered into two contracts with a contractor, contract A and contract B, for the development of petrochemical services. Disputes arose between the contractor and the claimant regarding delays to each contracts. The contractor started ICC arbitration proceedings towards the claimant, seated in London with an English alternative of regulation clause (the Works Bundle arbitration (WP arbitration)). Within the WP arbitration, the contractor claimed further prices incurred for delays to its works, together with the late launch of drawings which had been produced by a 3rd celebration. The claimant place was that it might go on any claims in respect of the drawings to the third celebration.

The claimant engaged the defendant to offer professional providers and each events signed a confidentiality settlement. The defendants commenced work in respect of the WP arbitration. The third celebration then commenced arbitral proceedings with a seat in London (the Engineering, Procurement and Development Administration arbitration (EPCM arbitration)) towards the claimant for unpaid sums as a consequence of it from the claimant.

The defendants had been approached by the third celebration to offer quantum and delay professional providers in reference to the EPCM arbitration. The defendants knowledgeable the claimant’s solicitors of the potential directions from the third celebration and that they didn’t think about that there was a battle of curiosity. The claimant disagreed and argued {that a} potential battle of curiosity did exist if the defendants agreed to be instructed by the third celebration.

The claimant was granted an interim injunction restraining the defendants from performing for the third celebration within the EPCM arbitration. The claimant made an additional software to the courtroom to proceed the interim injunction, arguing that the engagement of the defendants to offer professional providers gave rise to a fiduciary obligation of loyalty. The defendants had been in breach of that obligation of loyalty by agreeing to offer professional providers to the third celebration in circumstances the place there was a battle, or potential battle, of curiosity. The defendants argued that impartial consultants don’t owe a fiduciary obligation of loyalty to their purchasers and that such obligation is excluded by the professional’s overriding obligation to the tribunal.

O’Farrell J held that the defendant group owed a fiduciary obligation of loyalty to the claimant; the defendant group was in breach of that fiduciary obligation of loyalty by accepting directions to offer professional providers in reference to the EPCM arbitration; and due to this fact the claimant was entitled to a continuation of the interim injunction to restrain the defendants from offering professional providers to the third celebration in reference to the EPCM arbitration.

The primary defendant was engaged to offer professional providers for the claimant and, in doing so, to offer an impartial professional report which complied with the duties set out within the CIArb professional witness protocol. It was additionally engaged to offer in depth recommendation and help for the claimant all through the arbitration proceedings and, consequently, a transparent relationship of belief and confidence existed which gave rise to a fiduciary obligation of loyalty. O’Farrell J defined that the place a fiduciary obligation of loyalty arises, it’s not restricted to the person involved; it extends to the agency or firm and should prolong to the broader group (Marks and Spencer Group plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741; Georgian American Alloys v White & Case [2014] EWHC 94 (Comm)). Thus, the company construction of the defendants meant that the fiduciary obligation prolonged past the primary defendant.

The choice is a useful reminder of the scope of an professional’s fiduciary obligations throughout arbitral proceedings. An professional will be compelled to offer professional proof in arbitration or authorized proceedings by any celebration, even in circumstances the place that professional has supplied an opinion to a different celebration. When offering professional witness providers, the professional has a paramount obligation to the courtroom or tribunal, which can require the professional to behave in a approach which doesn’t advance the consumer’s pursuits. In circumstances the place no fiduciary relationship arises, the Prince Jefri check primarily based on an ongoing obligation to protect confidential and privileged data doesn’t essentially apply to preclude an professional from performing or giving proof for an additional celebration. Lastly, the fiduciary obligation will prolong past the person professional in circumstances the place that professional kinds a part of a agency or firm. 

 

Masood Ahmed is an affiliate professor in regulation on the College of Leicester and a member of the Civil Process Rule Committee