INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH DIANE HUGHES 29
T I P S F OR A P P O IN T ING F ORENS I C A C C OUN T ING E X P ER T S
ST EWART Youmentioned liability claims where one party has failed to performa duty. Are there any such cases that you are currentlyworking on? DI ANE Yes, we are currentlyworking on an arbitration in an African countrywhich concerns prospecting for oil &gas. The Government of said country refused to pay an oil company that was contracted to prospect in several sites. Obviously, the machinery is phenomenally expensive and after the company completed two of the sites without finding oil the government refused to pay, claiming that the contractor didn’t go about it properly and then disallowedwork in the remaining sites. Unsurprisingly, the oil company insists that it did follow the correct processes. So the case has required experts in oil prospecting to determine whether there were any issues on site etc.
At AlixPartners, our specialist disputes team invests significant time internally bringing our sector expert colleagues up to speedwith the outputs required by the legal team. I think that’s quite powerful because oil &gas is one sector which has got many different aspects to it and sometimes a dispute can involve a very precise bit of downstreamexpertise, or a very precise bit of refining expertise. The nature of the sector is that most of these experts are not used to producing reports for court andwith a view that they canwithstand cross examination, so we canwork with them to ensure they fit the bill. Also, liability and damages can be inextricably linked – the very fact that costs have been incurred or losses suffered supports (if only partially) the point that a defendant is liable for the thing which is alleged (acting in bad faith or negligence or motive for breach etc). The oil &gas sector is one where joint venture arrangements are common. So, for instance, we may be asked to assist on a claimwhere one JV partner didn’t keep their side of the deal and this throws the whole project. It is critical for the claiming party to show that it was reasonable to expect certain outputs from the defending JV partner and to demonstrate how the venture would have operated and performed differently had the defending party not ‘let the side down’. The sector and damages experts need to work closely together, often on iterations of expert evidence as factual evidence emerges. Youmight think that this point applies in all types of dispute, but actually there are an awful lot of disputes that don’t involve an expert in a particular sector – for example, where the pure legal argument, if successful, requires a straightforward damages calculation.
ST EWART Do you have any advice for arbitrating parties appointing experts? DI ANE One piece of advice I would offer (uncynically) is that it’s really important to obtain the view of your forensic accountant as early as possible. One of the practical issues that we’ve been experiencing is that we’ve had extremely limited notice on large and complex claims well into the arbitral process. You know, instructions such as “Canwe send you the other expert’s report?We would like your report in three weeks”! I mean, it’s fantastic, and thanks for the work, but I have to tell you that threemonths’ notice would usually have been really helpful! This is not because we would be working for that whole time but because it allows proper thought to be given to the basis of damages and for the expert to give the party and lawyers appointing him/her an initial steer and a clear scope. The expert might require technical input or documents not readily available. Moreover, sector specific experts are often independent operators without support whomight not have immediate availability to consider the issues. ST EWART I would like that too! Is there anything else you’d suggest? DI ANE I mentioned just now technical/sector specialists. I think in cases where two experts are needed, it really assists the client froma practical and cost perspective when you have both the industry expert and the numbers expert coming from the same firm. This is because the industry expert you need typically isn’t promoting themselves as an expert for the purposes of dispute resolution.
L E T ’ S TA LK A BOU T F R A UD
ST EWART So, aside fromarbitration, what are you seeing in the distressed sphere? DI ANE Well, it is public knowledge that AlixPartners were appointed in 2015 as administrators of Afren plc. In fact, I understand that Clyde&Co has beenwriting to us on behalf of creditors, so I will make no comments on this case! However, I will say that there has been a rise in the number of companies in distress where wrong doing on the part of directors or employees or advisers becomes apparent. So there aremore investigations andmore claims, as well asmore stakeholders to deal with.
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