This article is part three of a series of articles that examines the ways in which one can navigate expert reports issued for the purposes of construction arbitration. Piling works or foundation works are one of the common sources of construction disputes that are often subject to dispute resolution through arbitration. The resolution of piling issues can be particularly complex and tricky because the subject in dispute is often inaccessible physically due to being “buried underground” imposing limitations to availability of factual evidence for the arbitral tribunal to make a conclusive and proper determination. Therefore there is usually a heavier reliance on expert evidence to assist the tribunal in identifying the primary technical issues that ought to be distilled from the parties’ scope of disputes. In navigating an expert report, one has to be mindful that ultimately the experts’ role is to provide their evaluative opinions to facilitate the tribunal’s deliberation rather than to usurp the tribunal’s authority. Whilst such distinction is hardly contentious, it is not uncommon to find that expert reports are drafted in a way that stray beyond the expert’s scope of expertise by delving into legal issues on how contract terms ought to be construed as well as making determination on liability of parties. Ultimately whether or not there were procedural irregularities when adducing expert evidence will often turn on whether the technical issues were framed appropriately and if not, had the contesting party raised its objection in a timely manner. Further, it is not inconceivable that the piling expert will be expected to apply its technical knowledge based on his reading and understanding of the relevant specifications. 

The disputing parties as well as the tribunal should not be overly surprise that any determination on the piling issues is likely to be subject to challenge in an effort to set aside the arbitral award. This is due to the domino effect in that any finding of liability in respect of primary piling issue may give rise to adverse consequences on secondary issues such as delay, remedial costs, liquidated damages and/or loss and expense. Typically, if and when parties dispute over piling issues, the remedial efforts and contractual challenges that ensued can be time consuming and costly. Given that piling issues are so closely interwoven with other disputes, parties should rightly dedicate extra caution and procedural care in terms of how expert evidence is adduced on piling issues particularly the way in which the expert report is presented.

This article focuses on arbitration agreement under the main contract ie. between the Employer and the main contractor although it is entirely possible for piling disputes to arise at the subcontract level. Where the piling disputes emanate from the main contract, it is likely that the nature of such dispute involve the question of workmanship rather than design. Most piling construction works are procured under a provisional quantities arrangement where the main contractor is paid based on actual length of piles that had to be driven to achieve certain design capacities. Such capacities are established based on engineering design of the consultant engineer appointed by the Employer. 

In theory, any piling dispute could be caused by either design issue or workmanship issue or a combination of both issues. In practical reality however, if and when piling issues arise, the remedial efforts are usually led by the consultant engineer with disproportionate focus on workmanship issue as opposed to design issue. Some have argued that this is why much of the contemporaneous records surrounding piling disputes are produced with a certain presumption of default in workmanship. The main contractor is bound by the main contract terms to comply with instructions issued by the engineer or contract administrator to carry out certain investigative and remedial efforts even if main contractor disputes the line of enquiry. Where such efforts result in the main contractor incurring loss and expense including schedule delay, the main contractor will inevitably commence arbitral proceedings against the Employer for damages and compensation. The Employer will be expected to defend its position and initiate any counter claims. Even if the Employer is unsure whether any design issues could have contributed to the piling disputes, it is unlikely that it will be able to force its consultant engineer as the third party to the arbitral proceedings. This is could due to the absence of joinder agreement and the lack of authority by the arbitral tribunal to legally force such joinder. Therefore under main contract arbitration, the main contractor is likely to prove that the piling disputes were caused by design issues whilst the Employer will naturally look to establish otherwise. It is quite common that both contesting parties are looking to advance two very contrasting theories as to what was the root cause to the failure in piling works. It is interesting to note that design issues and workmanship issues are closely intertwined particularly as it relates to piling disputes. When one navigates such expert report, it should be noted that these two issues are essentially two opposite sides of the very same coin. In other words, both experts may not actually differ significantly on the material factual premise but have distinctively different theories on the perceived consequences arising from such factual premise. This will be elaborated further in the next section of this article.

Design Responsibility vs Workmanship Responsibility

As mentioned earlier the piles are designed to achieve certain loading capacities generally based on various engineering parameters such as dead load, live load and safety factor in accordance with the respective locations of the piles. These are design responsibilities of the consultant engineer. The main contractor (or its piling subcontractor as the case may be), is responsible for physically driving the piles into the ground and in the process of doing so perform certain specified tests and measurements. These data are tabulated and reported back to the engineer to enable him to decide whether the piles had been driven to sufficient depth that satisfies the design load. When it is subsequently found that certain problematic piles are unable to achieve the required load capacities, the disputing parties do not differ significantly in terms of the general factual premise e.g. location at which the piles were driven, the penetration depth achieved, the type of piles installed etc. The main contractor usually takes the position that it is merely responsible for driving the piles to the required depth as determined by the engineer based on its design parameters. In other words the main contractor assumes no design responsibility. On the other hand, the Employer (effectively representing its engineer’s position) argues that its ability to make the right decision is dependent on the accuracy and veracity of the data provided by the main contractor. Therefore the Employer, namely the engineer’s proxy assumes no workmanship responsibility.

Where it relates to piling disputes, it appears that the distinction between design responsibility and workmanship responsibility is not as clear as it would typically be. Under conventional circumstances, the contractor does not have any input on the design and is contractually bound to merely perform the works as closely as possible based on the given design. Such design are typically defined, developed and certain. Where it is found that the works failed due to construction works not being carried out strictly in accordance with the design, then it is most likely a workmanship issue. However this conceptual distinction appear to be blurred in the case of piling disputes because the contractor arguably has certain input to the engineer’s design decision. This is because whilst the engineer would have stipulated certain loading capacities for the piles, the engineer additionally had to make design decisions on site as to whether the piles had achieved its intended capacities primarily based on the depth of pile penetration, amongst others. The depth of pile penetration in turn affects the skin friction and end bearing resistance. The engineer is often dependent on the data provided by the contractor to make such decision. Additionally there are usually tests to be carried out by the contractor to validate some of these piling datas. Therefore if the engineer makes the wrong design decision on site, was the engineer misrepresented by the data produced by the contractor or was it a case of professional design negligence? This can potentially be a circular argument. After all, soil investigation reports commissioned by the engineer are usually provided to the contractor during tender indicating the likely toe level or hard stratum level located underground which then became the basis of the engineer’s design. It is not entirely clear if contractor can be made exclusively responsible for the underground conditions. 

It is quite clear from the above that the interpretation of the data and specifications are fertile grounds for experts to assist the tribunal based on their technical expertise. It is up to the tribunal to distil the right technical issues out of the factual matrix to make an informed and fair determination. Likewise it is up to the parties’ counsels to frame the technical issues in a manner that is most advantageous to their respective cases so as to put their best foot forward. 

Framing Of Expert Issues

As illustrated in the preceding section of this article, the main contractor is likely to demonstrate that the piles failed due to design issues whilst the Employer aims to prove that the root cause was a matter of workmanship. It is not uncommon for parties to therefore frame their respective technical issue as – “Whether the Claimant/ Respondent is responsible for the failure in the piling works?”. Some have rightly argued that the manner in which this issue is framed is intended to determine the question of liability which is reserved for the tribunal. After all the parties had not consented to appointing the experts to be the arbiter of their disputes. The experts’ role is strictly to assist the tribunal on certain technical issues (as opposed to liability issue) rather than to usurp the authority of the tribunal. Further, the broad manner in which this issue is framed entail examining both factual evidence and expert evidence. When the experts adduce their evaluative opinions, it is often premised on certain factual evidence that are assumed to be accurate and correct. 

The counsel’s ability to finesse the issue and to frame it within the context of a technical subject is therefore important. The very same issue could alternatively be broken down into two relevant sub-issues namely – (1) “Whether the technical requirements stipulated under the contract were appropriate?” (2) “If yes, whether the contractor was in compliance with those technical requirements?”. The former sub-issue is effectively to elicit expert opinion on whether there was any problem in the design whereas the latter deals with the question of workmanship. Such distinction may provide some clarity that could be of assistance to the tribunal in the course of its deliberation. 

Occasionally, one may also find that the expert issue could be framed as “What was the cause for the failure in the piling works?”. The framing of this issue suggests a fact finding query on a technical matter. It should however be cautioned that the experts’ assessments ought to be premised on factual evidence adduced by the parties rather than an alternative theory that is conceived as an afterthought. In this regard, expert may risks straying beyond the parties’ pleaded positions. By way of example, let us assume that the parties are factually in dispute over the interpretation of the piling data and how it may have led to inadequate pile penetration. This is corroborated by contemporaneous records, correspondences as well as pleading documents. If one of the party appointed piling experts opined that the piles’ failure was due to an alternative cause i.e. lack of protective coatings giving rise to corrosion and subsequent structural degradation, this may give rise to procedural irregularity. This is in spite of the fact that the expert through examining tangentially available data genuinely believes that this alternative cause provides a better technical explanation. Whilst such alternative cause amounts to a surprise to the counter party in dispute, it is in any case directly answering the expert issue of “What was the cause for the failure in the piling works?”. Therefore, in order to ensure that the evidence adduced are strictly within the scope of the arbitration, it will be wise for parties to frame the expert issues within the confines of the factual premise. 

Independent Site Inspection And Agreement to Protocol

The accuracy of the piling data and documents provided to the experts by the parties are not infallible. Therefore in order to undertake a comprehensive assessment, the experts may request for access to the site concerned so as to carry out an independent survey including obtaining of samples for further laboratory examination. The obtaining of supplementary factual evidence in all likelihood may provide a further veneer of credibility to the subsequent expert evidence. Provided that the application for site inspection is not done belatedly and relevant to the scope of arbitration, the tribunal is likely to accede to such request given the paramount need to provide parties with reasonable opportunity to present their case. In this regard, it is important to put in place a joint site inspection protocol that is mutually agreed including the choice of any laboratory that will carry out any tests that may be required. This goes beyond a mere administrative matter, because of the importance to having an effective and neutral protocol that ensures a transparent chain of custody of evidence. 

There are certain procedural risk if the purpose of such inspection is not precisely defined. As alluded to earlier, experts have to exercise caution in not straying beyond the parties’ pleaded positions by venturing into alternative theories that are not within the scope of dispute. If an alternative theory is deemed a technical necessity, the party responsible should be ready to amend its statement of claim or defence as the case may be including a reasonable proposal to mitigate any impact on the procedural timetable. The venture into an alternative theory that significantly departs from the scope of arbitration is rare since it is customary for the party applying for such site inspection to be precise with the purpose of such visit. The counter party responding to such application is likely to raise its objection if the purpose of such visit strays beyond the terms of reference of the arbitration. 

A joint inspection by both parties’ experts is usually the preferred option particularly if an experts’ joint statement is expected subsequently. This will help funnel the issues into categories of ‘points of agreement’ and ‘points of disagreement’. Such delineation will help the tribunal to focus only on the necessary points in contentions and make a determination accordingly. This also helps to facilitate a more narrow line of cross examination during the subsequent evidential hearing. 

Another reason why a joint site inspection is necessary and particularly beneficial for the main contractor (likely a Claimant) is that most of the investigate and remedial efforts undertaken prior to commencement of arbitral proceedings are led by the consultant engineer. As alluded to earlier the consultant engineer may be inclined to focus more on workmanship issues. Therefore most of the contemporaneous factual data and documentation are unlikely to be supportive of any finding that may suggest default in design responsibility. An appropriately focused site inspection may level the playing field.

Presentation of Expert Evidence – Witness Conferencing/ Hot Tubbing

Where the technical issues are complex resulting in parties unable to join issue, the tribunal may enlist the assistance of both the party appointed experts by having their evidence presented through witness conferencing. This is also known as ‘hot-tubbing’ of expert witnesses. In essence, this is a format where both experts give their evidence concurrently. The detail protocol can either be mutually agreed by the parties or directed by the tribunal in accordance with its requirements. 

In general the experts will take turns to present an overview of their respective positions following which each expert will be given an opportunity to ask a question directed at the opposing expert. Upon responding to such expert directed question, an opportunity will be given to each expert to comment on those responses. At any point in time during the expert conferencing, questions may be raised by the tribunal on specific matters raised so that the tribunal may narrow the scope in dispute, discover points of agreements and understand the rationale behind the experts’ conclusion or opinion. The parties’ counsel may elect to ask questions during the conferencing or to cross examine the experts after the conclusion of the said conferencing. The tribunal may favour eliciting expert evidence using this format rather than cross examination because it allows a general appreciation of the overall picture of the technical matters in dispute. Cross examination on the other hand typically assumes that the tribunal would have thoroughly digested the issued expert reports in advance and that the only outstanding matter was for the party’s counsel to challenge the opposing expert on certain narrow and specific scope of evidence included in the report. This may not be entirely helpful particularly when the expert reports are meant to address technical issues for the benefit of the tribunal with pure legal background. Whilst the counsel for the purposes of cross examination may put emphasis on least credible parts of the report, the tribunal may only wish to place more focus on actual issues in contention. 

Therefore the way in which expert reports may be drafted could differ depending on whether an expert conferencing is required. Experts who anticipate the need to provide an oral “opening statement” on its expert report may put more emphasis on having an executive summary based on the strength of its analysis. However counsels may be concerned over not having control over the manner in which expert evidence is elicited especially if the expert conferencing is reduced to an “open discussion forum”. There may be risk that the parties in dispute may not be given reasonable opportunity to either present its case or to respond to allegations made against it if the format appears “free for all”. This should also be a concern shared by the tribunal due to law of natural justice.

Conclusion

The technical knowledge of an expert directly affects the strength of logic, weight of evaluative opinion and persuasiveness of such evidence. On the other hand, when one runs afoul of any rules of arbitration and law of evidence it inevitably give rise to procedural irregularity. Whilst technical knowledge is of paramount importance as regards the provision of expert evidence for piling issues, the expert’s appreciation of basic rules of arbitration and law of evidence are crucial as well. It is often the latter that exclusively determines whether any arbitral award is in danger of being set aside.



Koon Tak Hong Consulting Private Limited