The primary methods of presenting factual evidence in international arbitration are contemporaneous documents, testimony of fact witnesses and testimony of expert witnesses. Whereas contemporaneous documents tend to have the highest probative value when it comes to facts in general, expert witness testimony is the predominant means of evidence when it comes to technical matters.

In practice, depending on the nature of the dispute, parties to international arbitrations often appoint not one but several experts to give testimony in a variety of technical fields, ranging from quantum, foreign law to forensic accounting. For instances, the assessment of liability may involve law professors providing their opinion on a legal argument or engineers to render an opinion on whether a technical failure caused the damaging event. The quantum phase may require technical assessments, market evaluations and financial analysis, all of which is ultimately consolidated in the assessment of damages. Technical experts are typically engaged in insurance claims and construction disputes to assess malfunction of a device or the reason for the delay and disruption of a project. Purchase price disputes will regularly involve an accountant and loss profits claims will usually require a financial expert. Industry experts are being used more and more in disputes regarding the breakdown of commercial agreements, for example, whether reasonable efforts were used to develop or commercialise a new product or technology and what guidelines are used by the industry for commercial practices.

Against this backdrop, it is unsurprising that experts have become a routine feature in international arbitration, with the role of the expert witness being continuously refined by arbitration practitioners. Most arbitration rules, such as the International Chamber of Commerce (ICC) Rules or the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, contain provisions dealing with expert evidence. However, these institutional rules offer hardly any guidance as to how experts should be managed effectively. The International Bar Association (IBA) Rules generally reflect arbitral practice and expressly provide for the use of experts. The most elaborate rules on the use of experts in arbitral proceedings are set forth in the Chartered Institute of Arbitrators (CIArb) Protocol, which aim at supplementing the IBA Rules.

Expert evidence is generally a significant cost driver in international arbitration. This makes it all the more important that expert evidence is managed properly to ensure that it is of utmost benefit to a party’s proof of its case as well as the arbitral tribunal’s understanding of the technical issues in dispute. Determining the most efficient and successful methods for submitting and handling expert evidence is therefore essential.

Although appointed by the parties, experts are expected to perform an independent assessment of the case, with their ultimate duty being to the arbitral tribunal. The more objective and independent the expert appears, the more credible he or she is and the more weight the arbitral tribunal will give to the expert’s evidence.

Article 5.2c IBA Rules requires the expert to include in the report a statement of his or her independence from the parties, their legal advisors and the arbitral tribunal. The main purpose of this provision is not to exclude experts with any connection to the participants or the subject-matter of the case, but rather to emphasise the duty of the party-appointed expert to evaluate the case in an independent and neutral manner. In particular, a person would disqualify as party-appointed expert if he or she has a financial interest in the outcome of the case, or otherwise has relationships preventing him or her from providing his or her honest and frank opinion. Accordingly, Article 5.2a IBA Rules contains a duty of the expert to disclose any existing or past relationship with any of the parties, their legal advisors or the arbitral tribunal.

However, the value of such self-assessment by the expert might be criticized as limited, and party-appointed experts might be reproached for their apparent lack of independence, tailoring their evidence for the primary purpose of supporting the case of the appointing party.

Experts should therefore seek to ensure that he or she does not come across as biased. Experts are generally regarded as convincing if they can refrain from acting as advocate for the party that retains them and show a willingness to concede points where appropriate to do so.

Communications between lawyers and independent experts will usually be privileged and hence not liable to be produced for discovery if the dominant purpose of the communications was to provide legal services in relation to an actual or anticipated legal proceeding. It is generally accepted that the final expert report itself is not privileged since it is prepared for the dominant purpose of being put before the tribunal as evidence. However, issues arise as to whether the tendering or service of a final expert report on another party would result in waiver of privilege in relation to communications between lawyers and experts that influenced the substance of the report. These may include instructions, source of materials, other confidential communications with lawyers, drafts and internally generated working documents (“Associated Materials”).

The scope of privilege which long represents the resolution of a fundamental policy tension that on one hand, a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communications; while on the other hand, a desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues.

There is no simple answer to this dilemma. To explore this, we shall start with the fundamental component of privilege, i.e., confidentiality. [To recap on categories of common law privilege, please refer to our last article: 普通法大不同系列（2）——如何免于披露及对中企关键提示]. Accordingly, privilege may be lost/waived when the material/information is no longer considered confidential. Waiver of privilege can either be expressed or implied. Express waiver arises when a party deliberately and intentional discloses protected material/information. Implied waiver arises under the common law when there has been an intentional act which was inconsistent with the maintenance of confidentiality.

The issue of implied waiver was recently considered by the Australian Supreme Court in the case of Finance Guarantee Company Pty Ltd v Auswild [2019] VSC 665 which held that communications which the expert considered but which did not form the basis of the expert’s opinion do not need to be disclosed and privilege will not necessarily be waived in relation to those communications.

This is consistent with established law in relation to waiver of privilege. The Australian High Court in Mann v Carnell (1999) 201 CLR 1 determined that whether privilege will be waived in an associated communication or draft report by an action such as serving the expert report on the otherside will depend on whether it will be ‘inconsistent’ to maintain confidentiality in the communication or draft report following this action being taken. A simply example is where a party expressly states that they have relied on advice from their lawyers in making a decision or taking a particular action.  By expressly referring to the legal advice (or the substance or gist of it) as justification or explanation for their conduct, a court is likely to form the view that it is not permissible for the client to simultaneously withhold the advice from disclosure.  In some cases, it has been observed that implied waiver extends to associated materials which are necessary to thoroughly understand the report.

The courts have interpreted the relevant test for ‘inconsistency’ as not relating to some general notion of unfairness, but as depending on whether the communication or draft report influenced the substantive content of the final report. This means that there will be no waiver in relation to communications that have not improperly influenced the substantive content of the report. In New Cap Reinsurance Corporation (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 and subsequent cases, it was determined that disclosure of communications is not necessary in relation to communications that influenced substantive content but were properly referred to in the report. This would extend to communications that provided assumptions or material relied on in the report, which were properly explained and referred to in the final report.

The formulation of rules in relation to implied waiver involves striking a balance with respect to incommensurable policy considerations. Some policy considerations in favour of implied waiver in associated materials (following service or tender of the expert report) includes the important principle that there is no property in a witness, which means that an adverse party may subpoena an expert retained by the original party and require that expert to give all relevant information in his/her possession, including an expression of his/her opinion, to the court/tribunal, while others suggest that in the field of expert evidence, it is difficult to sever an opinion from the information and process upon which it is based. It would seriously jeopardise the proper testing of such witnesses if privilege were extended to documents upon which the opinion is based.

Some policy considerations weighing against waiver in relation to associated materials argue that the waiver of privilege with respect to drafts would inhibit the expert from changing his opinion or otherwise compromise the process of the formulation and articulation of expert opinion; or deter a party vigorously searching for evidence if there is a risk that he might be required to hand over unfavourable evidence to the adversary.

Suffice to say that experts should be engaged on the assumption that privilege may be waived in relation to Associated Materials. However, it appears that as long as the entire bases for all opinions in the report are adequately set out in it and there are no attempts to impair the impartiality of the expert, there will generally be no waiver of privilege in relation to proper communications with the expert upon tendering or service of the expert’s report.  That said, we set out below some strategies to maximise the scope of privilege and to minimise the prospect of waiver:

• Ensure that instructions (in the sense of directions as to the required scope and substance of the report and assumptions) are not recorded in the same document which also records other forms of prima facie privileged communications to the expert, over which the lawyer wants to retain privilege.

• Where reasonably possible, avoid briefing an expert with privileged source materials (such as draft statements). In the alternative, brief the expert with explicit assumptions upon which the report is to be based, and instruct the expert to base his opinions on those assumptions.

• If privileged source materials have nevertheless been provided to the expert, instruct the expert to identify with precision in the expert’s report the aspects of the materials on which the expert did (and did not) rely in the formation of the expert’s opinion.

• Until the drafting process is complete, limit instructions to the expert to the preparation of draft reports only, and instruct the expert to prepare the draft reports for the exclusive purpose of provision to the lawyers for review. Instruct the expert to prepare working notes for the exclusive purpose of facilitating the preparation of such drafts.

• Do not advise the expert to destroy internal working documents (or acquiesce in such conduct). Destruction might be contempt of a discovery obligations, and any involvement by lawyers in that process might constitute professional misconduct. At the very least, destruction may give rise to an adverse inference.