Expert Evidence in Financial Disputes – Integrity Above All

 

Expert evidence plays a vital role in the resolution of financial services disputes. Whether the matter concerns a forensic analysis of complex transactions, accepted market practice, the interpretation of regulatory duties or the quantification of losses following mis-selling of financial products, courts and tribunals rely increasingly on the contributions of subject-matter specialists or SMEs. Yet, reliance on expert evidence also introduces risks: risks of partiality, methodological divergence and a drift towards advocacy. In the face of these challenges, the legal profession must remain vigilant in upholding the standards expected of expert witnesses and those who instruct them.

The position in English civil litigation is clear. Under CPR Part 35 and the well-established guidance drawn from The Ikarian Reefer [1993] Cresswell J, an expert owes an overriding duty to the court. This duty overrides any obligation to the party who instructs or remunerates the expert. The principle is straightforward but often bears repetition: the expert is not there to win the case, but to assist the court in understanding matters that lie outside its own expertise. In financial services disputes, where technical evidence can be decisive, the importance of this obligation cannot be overstated.

The duties imposed by the rules are not limited to abstract declarations. Experts are expected to make their methodologies transparent, to state clearly the factual and legal assumptions upon which their opinions rely and to draw attention to any material that might reasonably call their conclusions into question. They must also make plain where a matter falls outside their expertise and declare where their opinion is qualified or provisional due to limitations in available data. Perhaps most importantly, if an expert changes their view following exchange of reports or new information, this change must be communicated promptly, not only to the opposing party but, where necessary, to the court.

In a financial services context, these duties are especially relevant. Financial disputes frequently involve questions of valuation, such as those of companies, of derivative contracts, or of future cash flows; these valuations often rest on assumptions that are highly contested. The expert is therefore not simply applying a formula but is engaged in a process of judgment: deciding what inputs to include, how to weight certain risks, or how to account for market volatility. Where two experts arrive at significantly different conclusions, the explanation often lies not in the mathematics but in the assumptions underlying the model. It is precisely in this context that the court relies on the expert not to advocate for one version of events, but to assist it in understanding how different assumptions influence the outcome.

International arbitration presents an even greater challenge. Procedural safeguards applicable in English civil litigation, such as Part 35 declarations or structured expert meetings, are not always replicated in international proceedings. As Matthew Swinehart observed in his 2017 study of expert evidence (Michigan Journal of International Law), modern international adjudication is now regularly characterised by a “battle of the experts”. However, the increased use of experts has not been matched by procedural mechanisms capable of interrogating the reliability of their methods, or indeed their impartiality. Financial disputes in international arbitration are often characterised by extensive written submissions, complex expert reports and wide divergence in conclusions. Without a clear framework for assessing reliability, courts left to navigate conflicting technical opinions, tend to favour those grounded in established professional practice that are clearly reasoned and that acknowledge the limits of certainty.

From the perspective of those instructing experts, this requires careful thought from the outset of several practical considerations. Engaging with the expert early in the process is critical, as it allows time to identify the appropriate discipline, evaluate candidates and define the scope of work clearly. Instructions must be framed in a way that distinguishes legal assumptions, factual premises and matters reserved to the expert’s discretion. Transparency should be encouraged throughout, with experts expected to explain not only their conclusions but also the reasoning, sources and limitations that underpin them. Just as importantly, legal teams must monitor the scope of the engagement to ensure that experts remain within their mandate and are not inadvertently drawn into advocacy.

The selection of the expert must be informed not only by qualifications and subject matter expertise, but by an assessment of whether the individual understands the nature of their duty and can engage in reasoned analysis rather than adversarial positioning. Once appointed, the expert must be given clear instructions that define the scope of their opinion and distinguish between facts to be assumed and matters to be determined. Legal teams must also ensure that procedural obligations are observed and that the expert’s report is drafted in a manner that will withstand scrutiny.

Importantly, while solicitors and counsel may review draft reports to ensure clarity and completeness, they must refrain from influencing the substance of the expert’s opinion. The independence of the report is not only a formal requirement but a functional necessity. A court will be far more persuaded by a cautious, well-reasoned opinion that admits to uncertainty than by an unwavering conclusion unsupported by engagement with the complexities of the case.

Recent developments in procedural practice, such as the use of joint statements and court-appointed experts, aim to assist decision-makers in navigating competing opinions. These tools are particularly effective in financial matters, where experts may agree on broad methodology but differ sharply on implementation. A properly managed joint statement, for instance, can expose where the dispute lies not in principle but in the factual inputs, allowing the court to focus on resolving the underlying conflict.

Ultimately, the admissibility of expert evidence is rarely in doubt. The issue is the weight that the court places upon it. That weight depends not on eloquence or assertion, but on whether the opinion presented is reasoned, transparent and independent. As the use of expert witness in financial disputes becomes increasingly sophisticated, the expectations of courts and tribunals will only rise.

Legal practitioners, therefore, bear dual responsibility: to ensure that the experts they instruct are appropriately qualified and properly briefed and to ensure that their evidence meets the procedural and ethical standards required. In doing so, they contribute not only to the resolution of the individual dispute, but to the integrity of expert evidence more broadly.

At Objectivus, our team of independent and impartial financial service experts ensure that any consultancy or expert testimony we provide adhere to these high procedural standards at all times. Contact srb@objectivus.com or kmt@objectivus.com for further information.