Disputes are increasingly resolved through arbitration, as it is considered one of the best ways that offers neutrality, impartial arbitration, expert assistance, confidentiality and global enforceability of the decisions. The purpose of using experts in dispute settlement is essentially to help the panelists to understand and evaluate the “technical aspects” of issues and claims. Including expert witnesses is a critical stage of the arbitration process which can be the determining factor in the outcome of the hearing. The popularity of the use of expert witnesses in arbitration hearings where the dispute depend upon the area of professional expertise requiring technical expertise has seen significant increase and more acceptance in such proceedings.
Our world has become so complex that a significant number of commercial disputes cannot be resolved without the assistance of one or more experts who can decrypt complicated technical issues in simple facts.
Disputing parties and their legal counsel frequently engage experts to provide assistance in evaluating the financial and related business aspects of issues in dispute. As the appointed arbitrators may not always be subject matter experts, they require assistance in assessing and weighing the complicated issues. For example, estimating damage compensation in international arbitration dispute involving an oil & gas industry requires significant understanding of industry peculiarities. While evaluating the damages, many important perspectives need to be considered as valuing future revenues as future expected profits might be affected. These disputes typically require the assistance of an expert.
There is a general rule that witnesses must state facts and not opinions. Therefore, the crucial difference with an expert witness and a factual witness is that an expert is entitled to express opinions on the facts. In doing so, the role of the expert is to give objective, unbiased assistance to the tribunal of facts on matters within the expert’s expertise.
The term ‘expert determination’ describes a process whereby the parties agree to appoint a third party (the expert), who is neutral and independent of the parties, to assist in the formulation and preparation of a party’s claim or defence and that the parties are to be bound by that expert’s decision.
The prominent feature of expert is that in general the expert is free to use his own knowledge, expertise, approach and experience to investigate the issue that has been referred to him, taking account of the submissions, whereas judges and arbitrators are confined to decide the issues on the basis of the submissions and evidence made by the parties. Particularly when the nature of the issue to be decided is technical, experts play very essential and crucial role as they have been carefully selected because of the relevant expertise they poses. This is one of the greatest strengths of expert determination.
The expert is appointed to investigate the facts and to apply his knowledge and expertise to decide the issue that has been referred to him.
Including an appropriate expert witness is a critical stage of the process which acts as a key in putting forward key arguments, facts and analysis which act as determining factors for outcome of the hearing. Aspects such as quantification of damages, market evaluation, financial analysis and loss of profit mainly require accounting expertise. However, having an appropriate expert may help parties in presenting the complicated issues in a simplified manner which can be easily accepted by tribunal.
Since one of the most significant benefits of expert determination is that an appropriately qualified and renowned expert should be engaged to answer a question within his field of expertise. It is always recommended to engage or retain experts in the early stages of a dispute which would result in finding crucial facts which may strengthen the case and analyse the weakness of the case can further highlight the lines of inquiry likely to be productive in identifying arguments.
The use of expert does not always end with the hearing. It is often necessary to resort to the expert’s knowledge to review parts of the records, documentation and comment on the testimony of the opponent’s expert. Without this assistance, it may be difficult for the lawyers to identify all weaknesses in this testimony for the preparation of post hearing submission.
Witness statements are particularly helpful for arbitrations that deal with complex issues that may be financial, technical or other commercial in nature. The work of forensic experts customarily related to the investigating, analysing and reporting on accounting and commercial expert issues for actual and potential use in dispute resolution process.
The skills and experiences of forensic experts differ significantly from those who primarily do conventional auditing; such specialists can be valuable in helping in evaluating the damages which are claimed at the stages of arbitration.
Forensic experts apart from knowing all the records prepared by the company will also request for the disclosure of documents and records which are available from all other sources and organization. In practical business environment the amount of electronically stored information in the form of financial information, emails, documents that are held within the company can be vast. Hence, working with the forensic expert will help in finding relevant information within the data, with their knowledge, skill and forensic technology.
During an accounting review, forensic experts can conduct accounting review to evaluate the damages and prepare claim and counterclaim, which will help them to become aware of the claims strength and weakness and impact of the quantum. For example, any dispute involving monetary damages, expert will calculate the value of the company by using well recognised valuation methodologies like projecting all cash flows multiple earning of the company and scrutinize all the transactions.
The parties appointing and instructing forensic experts to value businesses and damages should take particular care how to define the scope of their instructions to avoid situations where what is delivered is what was requested but not what was wanted and required. In such circumstances, the experts have a duty to guide and instruct solicitors on the various choices available.
In the proceedings of the arbitration it is the duty of the Counsel also to play a pivotal role and present the expert evidence to the best of their advantage. However, it is should be remembered that one should never lose sight of the fact that it is the expert’s duty to identify and highlight all the aspects that should be taken into consideration.
Forensic experts in commercial disputes could be investigators as well as accountants. This combination is very helpful in evaluating the quantum of damages, as deep technical expertise coupled with the ability of to conduct investigations, valuation result in the productive factual evidence report which will help the tribunal to determine the dispute.
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