01 March 2018

One, two, three – inflation of experts in arbitration?

The Annual Conference of the Swiss Arbitration Association that took place in Zurich on 2 February 2018 (conference materials and some impressions from the conference) dealt with conflicting assumptions on expert evidence in arbitration and with the question of how to handle them in practice. During the lively debate, the "cultural clash" between the common law approach and the civil law position appeared more vigorous than I had anticipated.

The basic question is not a new one: is it better to have party-appointed or tribunal-appointed experts? The IBA Rules on the Taking of Evidence in International Arbitration, which often take an intermediary position between common law and civil law approaches, are of no help since they provide for both possibilities.

What seems clear to me: a merely quantitative answer (more is better) is ill-founded. I was indeed surprised when at the ASA Conference a participant with a common law background argued that he had difficulties seeing how one (tribunal-appointed) expert could provide a better (i.e. more accurate) result than two (party-appointed) experts. This argument was even more surprising since in England single judges decide on huge disputes while in countries like Switzerland, you would have a bench of three or even five judges in such cases. My conclusion was that this discussion is often based on each individual's education and the practice in their home country. One cannot change the habits of a lifetime.

In my view, it is simply impossible to decide which is the better approach. Yet, to overcome the difference, some participants suggested that tribunal-appointed experts could be, in particular, useful if the party-appointed experts did not agree and the arbitral tribunal was not in a position to decide which expert was right. This is when I thought that we need a halt.

From a Swiss perspective, the entire discussion started off – on the basis of our home court experience – with one (tribunal-appointed) expert being sufficient. We then had to learn (and actually did) that having two (party-appointed) experts may also produce good results. However, we are all aware that both approaches also have their deficiencies and now, some suggest that in order to overcome these deficiencies, the solution should be that the arbitral tribunal appoints a third expert?

I think this is a blunt misperception of reality. People advocating this position submitted that in cases with a tribunal-appointed expert, the parties would engage their own experts to support them anyway, so that the costs would remain the same. Admittedly, in the cases with billions in dispute, this assumption may be correct but in a normal commercial dispute, it is by no means obvious that each party would have its own expert in order to "control" a party-appointed expert. And even if they did, an expert whose role is more as an internal consultant to counsel will result in significantly lower costs than if he or she needed to write a full report, write a rebuttal report, meet with the other expert to agree on common position, and write a further report setting out the points of agreement and disagreement.

The practice of international arbitration shows that aggregating different approaches does not necessarily mean that the result is an even better, or more efficient, approach. For example the combination of the front-loaded approach of comprehensive written submission at the beginning of a case (civil law tradition) with lengthy hearings and substantial post-hearing briefs (common law tradition) often tends to increase costs and reduce the efficiency of arbitral proceedings.

Hence, it is my position that we should refrain from further inflating the number of experts by combining party-appointed and tribunal-appointed experts. Rather, we – sitting as arbitrators and acting as counsel – should choose wisely and knowingly between the two approaches, being aware of the advantages and disadvantages of both. There is no perfect model anyway. If we are involved in a case in which the combination of party-appointed and tribunal-appointed experts seems to be right, we can make an exception but this must not be the rule.

Our Dispute Resolution Team will be happy to answer any questions you may have on this topic.

Author: Christian Oetiker

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