Expert Examination in Arbitration Proceedings

 

May 23, 2022

BRACE Law Firm ©

 

Expert examination during the consideration of arbitration cases is one of the most common and significant pieces of evidence. The court may appoint an expert examination upon the motion of persons participating in the case, as well as on its own initiative. Furthermore, the absence of an expert examination in the case file often serves as grounds for canceling a judicial act and remanding the case for a new trial with instructions on the necessity to conduct the relevant examination.

This article discusses the specifics of appointing and conducting expert examinations.

Concept and Legal Regulation of Expert Examination

An expert examination is appointed to clarify issues requiring special knowledge that arise during the consideration of a case.

As a general rule, an expert examination is appointed upon (1) a motion of a person participating in the case, or with (2) the consent of persons participating in the case. If such a motion is not filed or consent is not obtained, the court assesses the claims and objections of the parties (3) independently, taking into account the provisions of Article 65 of the APC RF regarding the burden of proof based on the adversarial principle, according to which persons participating in the case bear the risk of the consequences of failing to perform the relevant procedural actions.[1]

The procedure for conducting an expert examination is regulated by Federal Law No. 73-FZ dated May 31, 2001, On State Forensic Activities in the Russian Federation (the "Law on State Expertise") and the APC RF. When appointing an expert examination, the court must be guided by the requirements of the legislation of the Russian Federation on forensic activities, as well as the provisions of the APC RF on ensuring the procedural rights of persons participating in the case. An expert examination may be conducted in (1) a state forensic institution, (2) a non-state expert organization, or (3) by engaging persons possessing special knowledge who are not employees of an expert institution (organization).

The court may not refuse to have an expert examination conducted in a non-state expert organization, or by a person possessing special knowledge who is not an employee of an expert institution (organization), solely on the grounds that the conduct of the relevant examination could be entrusted to a state forensic institution.[2]

However, only state institutions may conduct certain examinations. The types of examinations that must be conducted exclusively in state institutions are established by the Order of the Government of the Russian Federation.[3] Primarily, these are types of examinations in criminal law, as well as examinations within the framework of cases challenging the cadastral value of land plots. Thus, currently, there are no established types of examinations within the arbitration process that must mandatorily be conducted in state institutions.

The Expert in Arbitration Proceedings

An expert in an arbitration court is a person possessing special knowledge regarding issues concerning the case under consideration and appointed by the court to give an opinion in cases and in the manner provided for by the APC RF (Article 55 of the APC RF). Aside from possessing special knowledge regarding the case under consideration and the absence of grounds for recusal, the APC RF does not establish additional requirements for an expert. However, the arbitration court and the parties, when verifying the presence of special knowledge, have the right to clarify what education, qualification, work experience, and areas of specialization the person or expert organization proposed as a candidate for appointment as an expert possesses. In addition to the general conditions of qualification (relevant education), the court verifies the presence of special requirements. For example, when conducting an examination of market value, the expert must have the status of an appraiser.

A number of requirements apply to a state expert. Thus, a state forensic expert is an attested employee of a state forensic institution who produces a forensic examination in the performance of their official duties. The position of an expert in state forensic institutions may be held by a citizen of the Russian Federation who has a higher education and has received additional professional education in a specific expert specialty in the manner established by the regulatory legal acts of the relevant authorized federal state body. The position of an expert in expert units of the federal executive body in the field of internal affairs may also be held by a citizen of the Russian Federation having a secondary professional education in the field of forensic expertise.

Recusal of an expert is permitted in accordance with the provisions of the APC RF. In accordance with Part 1 of Article 23 of the APC RF, an expert may not participate in the consideration of a case and is subject to recusal on the grounds provided for in Article 21 of the APC RF. This article contains grounds for the recusal of a judge and also extends to experts in the arbitration process. In particular, the grounds for recusal of an expert are the following circumstances:

1. During the previous consideration of the given case, the expert participated in it as a judge, and their repeat participation in the consideration of the case is inadmissible in accordance with the requirements of the APC RF;
2. During the previous consideration of the given case, the expert participated in it as a prosecutor, assistant judge, court clerk, representative, expert, specialist, translator, or witness;
3. During the previous consideration of the given case, the expert participated in it as a judge of a foreign court, arbitral tribunal, or arbitration;
4. The expert acted as a judicial conciliator in the given case;
5. The expert is a relative of a person participating in the case or their representative;
6. The expert is personally, directly or indirectly, interested in the outcome of the case, or there are other circumstances that may cast doubt on their impartiality;
7. The expert is or was previously in service or other dependence on a person participating in the case or their representative;
8. The expert made public statements or gave an assessment on the merits of the case under consideration.

A ground for recusal of an expert is also the conduct by them of an audit or verification, the materials of which served as the reason for applying to the arbitration court or are used during the consideration of the case.

Furthermore, by virtue of Article 24 of the APC RF, if the grounds specified in Articles 21–23 of the APC RF exist, the expert is obliged to declare a self-recusal. According to the Ruling of the Constitutional Court of the Russian Federation No. 1409-O dated July 17, 2012, Article 24 of the APC RF and Article 18 of the Law on State Expertise—which establish the expert's duty to declare self-recusal, as well as the mandatory nature of the expert's recusal from participation in the production of a forensic examination and the necessity of immediate termination of its production if entrusted to them, providing the grounds stipulated by procedural law exist, including interest in the outcome of the case—are aimed at expanding the guarantees of judicial protection of the rights and legitimate interests of participants in civil proceedings. The provisions of Article 24 of the APC RF do not imply its arbitrary application. If established grounds exist, the consideration of the issue of the expert's recusal is not a right, but an obligation of the arbitration court considering the specific case.

In the framework of a specific case, it was established that the expert was previously in service dependence on one of the parties to the case. The fact that the director of the expert organization was previously an employee of the plaintiff was not disputed by the parties and was confirmed by a copy of the employment record book submitted to the case file. Under such circumstances, considering that relations of service subordination between the director of the expert organization and the experts create a presumption of influence on the fulfillment by the latter of their labor function (which in this case consists of conducting the expert study entrusted by the court), which in itself casts doubt on the objectivity and impartiality of this study, the employees of the company could not act as experts in the present case and were obliged to declare self-recusal based on Article 24 of the APC RF. The case was remanded for a new trial.[4]

Moreover, the conduct by an expert of a pre-trial study on the subject of the dispute is also a ground for the recusal of such an expert.[5] Pre-trial contractual relations between the plaintiff and the expert, as well as the fact that their studies served as the basis for the plaintiff's application to the court with a claim, cast doubt on their objectivity and impartiality, in connection with which this person could not act as an expert in the case (even as part of a commission).

Appointment of Forensic Examination by the Arbitration Court

A motion to conduct an expert examination may be filed in the court of first instance or the appellate instance before the presiding judge declares the investigation of evidence completed in the court session, and in the event of the resumption of their investigation, before the additional investigation of evidence is declared completed.

A motion to conduct an expert examination in the appellate court is considered by the court taking into account the provisions of Article 268 of the APC RF. According to these provisions, additional evidence is accepted by the appellate court if the person participating in the case has justified the impossibility of presenting it to the court of first instance for reasons beyond their control (including if the court of first instance rejected the motion to appoint an examination) and the court recognizes these reasons as valid.

When deciding on the appointment of an expert examination, the court may engage a specialist (for example, to provide consultation on the possibility of conducting the examination or formulating questions for the expert). The motion for an expert examination must contain the following information:

• Justification for the necessity of conducting the examination (indication of the special knowledge possessed by the expert);
• The amount of the expert's remuneration;
• Questions that may be posed to the expert;
• Surname, first name, and patronymic of the expert.

If several persons participating in the case have agreed to the conduct of an expert examination, these persons, in the absence of a different agreement between them, are obliged to deposit equal shares of the monetary sums payable to the experts into the court's deposit account. This rule does not apply in cases where the reimbursement of expenses for the payment of the examination is made at the expense of the funds of the relevant budget.

The ruling on the appointment of an expert examination must contain the questions posed to the expert. According to Article 82 of the APC RF, the scope and content of the questions on which the examination is conducted are determined by the court. Determining the scope and content of the questions on which it is necessary to conduct an examination, the court proceeds from the fact that questions of law and legal consequences of the assessment of evidence cannot be posed to an expert.

Is It Possible to Appeal a Ruling on Appointing an Expert Examination?

A ruling on the appointment of an expert examination, as a general rule, is not subject to appeal, in connection with which objections regarding the appointment of the examination may be stated when appealing the judicial act that concludes the consideration of the case on the merits. However, in the event of the suspension of proceedings in the case due to the appointment of an examination, the appointment of the examination as a ground for suspension is subject to assessment by the courts of appellate and cassation instances when verifying the legality of the ruling on the suspension of proceedings. In this case, the court has the right to consider whether there was a necessity for appointing an examination for the consideration of the case and whether the procedure for its appointment was observed. The court also has the right to assess the necessity of suspending proceedings in the case based on the complexity of the expert study and the terms of its conduct.

Furthermore, the suspension of proceedings in a case due to the appointment of an examination is a right of the arbitration court, and the law does not require obtaining the consent of persons participating in the case to suspend proceedings in connection with the appointment of an examination. Moreover, if it is necessary to apply special knowledge for the correct resolution of the case, the court is obliged to take measures to appoint an examination, in particular, to put the issue of its appointment up for discussion by the persons participating in the case.[6]

By virtue of Article 9 of the APC RF, the arbitration court creates conditions for a comprehensive and full investigation of evidence, the establishment of factual circumstances, and the correct application of laws and other regulatory legal acts when considering a case. Within the meaning of Article 65 of the APC RF, circumstances relevant to the correct consideration of the case are determined by the arbitration court based on the claims and objections of persons participating in the case, in accordance with the applicable norms of substantive law.

From the content of the cited norms of law, it follows that the formation of the subject of proof during the consideration of a specific dispute, as well as the determination of sources, methods, and means of collecting objective evidence by which the factual circumstances of the case are established, are the exclusive prerogative of the court considering the dispute on the merits. In cases where the arbitration court needs to obtain a competent opinion on issues subject to resolution based on the subject of the stated claims and the specific circumstances of the case, the court has the right to resolve the issue of conducting a forensic examination in the case upon the motion of the parties.

The expert opinion serves as a means of proving circumstances essential for the resolution of the dispute that has arisen between the parties.

In the framework of a specific case, the court indicated that the requirements of arbitration procedural legislation when appointing a forensic examination in the present case were generally observed by the arbitration court of the first instance. Contrary to the assertion of the applicants of the cassation complaints, procedural legislation does not make the possibility of appointing a forensic examination dependent on the moment a third party is brought into the case. Such a person participating in the case has the right, before the resolution of the dispute on the merits, to independently exercise their procedural rights, including those related to initiating forensic expert studies if grounds exist (including repeat and additional examinations in cases provided for by law). Thus, the involvement of third parties in the case (after the appointment of the examination) is not a ground for canceling the ruling on the appointment of the examination.[7]

In the framework of a specific case, canceling the judicial act and remanding the issue for a new trial to the court of first instance, the higher court noted the following. The court concluded that the formation of the subject of proof during the consideration of a specific dispute, as well as the determination of sources, methods, and means of collecting objective evidence by which the factual circumstances of the case are established, is the exclusive prerogative of the court considering the dispute on the merits. In cases where the arbitration court needs to obtain a competent opinion on issues subject to resolution based on the subject of the stated claims and the specific circumstances of the case, the court has the right to resolve the issue of conducting a forensic examination in the case. The questions resolved by the expert must concern factual circumstances essential to the case and not touch upon any relationships and mutual claims of the parties against each other outside the scope of the dispute under consideration. Consequently, the statement of a participant in the process regarding the appointment of a forensic examination does not in itself create an obligation for the court to appoint it. Canceling the ruling of the court of first instance on the appointment of an examination and the suspension of proceedings in connection therewith, the appellate court concluded that there were no grounds for appointing a forensic examination because the questions posed in the motion would not essentially lead to the resolution of the dispute.[8]

In the framework of another case, canceling the judicial act, the higher court indicated that the lower court had not considered the opponent's arguments that the expert organization proposed by the party was a person knowingly interested in the outcome of the case.[9]

In addition, a judicial act may be canceled if the court establishes that the resolution of the question posed to the expert can be resolved in another way, for example, by sending a request to an authorized body.[10]

Violation of the procedure for appointing an examination may also serve as a ground for canceling the ruling on the appointment of an examination, for example, in the absence of evidence of sending the motion for the appointment of an examination to persons participating in the case, or the absence of agreement on the cost of conducting the examination.[11]

Expert Opinion

The requirements for an expert opinion are set forth in Article 86 of the APC RF. An expert opinion does not have predetermined force for the court and is subject to assessment along with other evidence. The opinion of an expert or a commission of experts must reflect:

1. The time and place of the forensic examination;
2. The grounds for conducting the forensic examination;
3. Information about the state forensic institution and about the expert (surname, first name, patronymic, education, specialty, work experience, academic degree, and academic title) to whom the conduct of the forensic examination is entrusted;
4. Records regarding the warning of the expert in accordance with the legislation of the Russian Federation about criminal liability for giving a knowingly false opinion;

The absence of an expert's subscription regarding the warning about criminal liability in the proper manner is a ground for recognizing the expert opinion as inadmissible evidence.[12]

5. Questions posed to the expert or commission of experts;

The expert must answer the questions posed by the court. However, a modification of questions by the expert is not always a ground for disregarding the expert opinion. Thus, in a specific case, the questions were changed by the expert, but it follows from the content of the expert opinion that the posed questions were concretized by the expert in accordance with the requirements for formulations in technical-forensic examination of documents, the content of the questions was not changed, and answers to the questions posed by the court are contained in the opinion.[13]

6. Objects of research and case materials provided to the expert for conducting the forensic examination;

The submission of documents to the expert directly by the Institution without the participation of the court, and in the presence of a judicial act refusing to provide the expert with additional documents for conducting the examination, contradicts the provisions of Article 84 of the APC RF and violates the principles of equality of parties, adversarial proceedings, and legality.[14]

7. Content and results of research with an indication of the methods applied;

In the framework of a specific case, it was established that the expert opinion, in particular, did not indicate the methodology for conducting the examination, and the experts limited themselves to copying provisions of laws and by-laws, which is a violation of Article 86 of the APC RF and does not allow for establishing the validity of the experts' conclusions.[15]

8. Assessment of research results, conclusions on the posed questions, and their justification;
9. Other information in accordance with federal law.

Materials and documents illustrating the opinion of the expert or commission of experts are attached to the opinion and serve as its integral part.

If, during the conduct of the examination, the expert establishes circumstances that are relevant to the case and regarding which questions were not posed to them, they have the right to include conclusions about these circumstances in their opinion.

Upon the motion of a person participating in the case, or on the initiative of the arbitration court, the expert may be summoned to the court session.

After the announcement of their opinion, the expert has the right to give necessary explanations regarding it, and is also obliged to answer additional questions from persons participating in the case and the court. The expert's answers to additional questions are entered into the minutes of the court session.

An expert opinion is one of the pieces of evidence in the case; it does not have predetermined force, is not of a mandatory nature, and is subject to investigation and assessment by the court equally with other submitted evidence. In the event of doubts about the validity of the expert opinion or the presence of contradictions in the conclusions of the expert or commission of experts on the same questions, a repeat examination may be appointed, the conduct of which is entrusted to another expert or another commission of experts.

Additional and Repeat Examination

In the event that the appointment of an examination is prescribed by law or provided for by a contract, or is necessary to verify a statement about the falsification of submitted evidence, or if the conduct of an additional or repeat examination is necessary, the arbitration court may appoint an examination on its own initiative.

In case of insufficient clarity or completeness of the expert opinion, as well as when questions arise regarding previously investigated circumstances of the case, an additional examination may be appointed, the conduct of which is entrusted to the same or another expert. An additional examination is appointed in case of insufficient clarity or completeness of the expert opinion, as well as when questions arise regarding previously investigated circumstances of the case.

In the event of doubts about the validity of the expert opinion or the presence of contradictions in the conclusions of the expert or commission of experts on the same questions, a repeat examination may be appointed, the conduct of which is entrusted to another expert or another commission of experts. Furthermore, if violations are established during the conduct of the initial examination, it is advisable to raise the issue of conducting a repeat examination.

In one of the considered cases, the court, when appointing an additional examination, established violations of legislation on valuation activities expressed in the conduct of measurements of a vehicle during the forensic examination. Considering the foregoing, the appointment of an additional examination in the case was erroneous; the court should have put the issue of appointing a repeat examination up for discussion by the parties.[16]

Grounds for appointing a repeat examination include an indication of such deficiencies in the first examination that render such evidence unusable as the basis for a judicial act.

To neutralize examinations, a review of the expert opinion is often used. A review represents the opinion of a specialist regarding the presence of flaws in the conduct of the expert opinion and is written evidence.

An expert opinion does not have priority over other evidence submitted to the case file and, consequently, is subject to assessment in aggregate and mutual connection with other evidence. As the Constitutional Court of the Russian Federation indicated in Ruling No. 2380-O dated December 24, 2012, resolutions of arbitration courts of the appellate instance must respectively contain the motives for which the appellate court rejected certain evidence and did not apply laws and other regulatory legal acts cited by persons participating in the case. The cited legal provisions do not permit their arbitrary application by arbitration courts and imply the consideration by the court of the relevant instance of all arguments of persons interested in the review of the judicial act and their reasoned rejection in case of unfoundedness.

In the framework of a specific case, the court of the appellate instance, despite the presence of relevant arguments in the appeal complaints, reviews, and results of a repeat examination that differed significantly from the results of the examination conducted initially, limited itself to the conclusion that Opinion No. 1 complied with the current legislation on valuation activities and did not assess the review submitted for Opinion No. 2. This circumstance served as a ground for canceling the judicial act.[17]

What to Look for When Challenging an Expert Opinion?

1. Errors in the formatting of the expert opinion.

• Absence of signature regarding criminal liability of the expert. Despite the fact that the absence of a signature regarding the warning about criminal liability is a remediable violation, such an absence of subscription can often serve as grounds for canceling a judicial act.[18]
• Conduct of the examination by an expert other than the one indicated in the court ruling on appointing the examination. Since each party has the right to challenge the expert if grounds exist when an expert is appointed, the identity of the expert matters. However, the conduct of an examination by a person other than the one named in the ruling on the appointment of the examination is not always a ground for disregarding the expert opinion.

In the framework of a specific case, the court, rejecting the party's arguments that the examination was conducted by a person other than the one indicated in the ruling, stated that the examination was conducted in execution of the court ruling and the expert was warned about criminal liability before the commencement of the studies. An expert opinion must be based on provisions enabling verification of the validity and reliability of the conclusions made on the basis of generally accepted scientific and practical data. An expert opinion must reflect the entire course of the expert study: the names of materials received for examination, their inspection, comparative study, experiment, description of applied methodologies, assessment of results, and statement of the expert's conclusions (judgments). Documents confirming that the expert had the necessary education and sufficient qualifications to conduct such an examination were presented in the case materials. Considering the absence of contradictory conclusions in the expert opinion, as well as considering the completeness of the answers to the questions posed to the expert, the court considered the indicated opinion to be reliable, admissible, and sufficient evidence in the case.[19]

2. Comments on the substance of the expert opinion.

2.1. Absence of indication of methodology.

A violation of the methodology for conducting an examination will constitute grounds for recognizing the evidence—the expert opinion—as unreliable.[20] The court's evasion of a party's arguments regarding methodological violations during the conduct of the examination will serve as grounds for remanding the case for a new trial.[21]

2.2. Identification of contradictions in the expert opinion.

If contradictions are established in the conclusions of an examination, a repeat examination is subject to appointment.[22] In the framework of a specific case, it was established that, when filing a motion for the appointment of an additional examination in the case, the company "BPPK" indicated that the opinion of the expert of the South Urals Chamber of Commerce and Industry contained contradictions and inaccuracies requiring additional explanations. In particular, to answer the question regarding the amount of the plaintiff's expenses for rolling stock rental, the expert indicated the necessity of presenting a justification for the rental rate; however, the expert did not disclose the format and structure for providing information. The expert completely excluded the company's expenses for rolling stock rental and payment for the services of the company "RZD" from the calculation of the claim price, motivating the conclusions by insufficient documentary confirmation of the economic justification of the "RZD" company's rates. At the same time, the expert indicated that the subject of the examination was the study of the actual expenses of the company "BPPK" for their justification, and, consequently, the rates of the company "RZD". The explanations received from the expert did not eliminate the contradictions in the expert opinion.[23]

When conducting arbitration proceedings, it is advisable to use such evidence as an expert opinion. At the same time, when appointing an examination, it is important to know all the nuances of appointing an examination. Receipt of a negative expert opinion does not yet mean a lost case, since the arsenal of means for neutralizing an expert opinion is quite broad.

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References

[1] Clause 3 of Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 23 dated April 4, 2014, On Certain Issues of Practice of Application by Arbitration Courts of Legislation on Expert Examination.

[2] Clause 1 of Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 23 dated April 4, 2014, On Certain Issues of Practice of Application by Arbitration Courts of Legislation on Expert Examination.

[3] Order of the Government of the Russian Federation No. 3214-r dated November 16, 2021, On the List of Types of Forensic Examinations Conducted Exclusively by State Forensic Organizations.

[4] Resolution of the Arbitration Court of the West Siberian District No. F04-1687/2021 dated June 15, 2021, in case No. A67-10703/2019.

[5] Resolution of the Arbitration Court of the West Siberian District No. F04-4479/2021 dated August 11, 2021, in case No. A45-10144/2020.

[6] Ruling of the Supreme Court of the Russian Federation No. 305-ES15-16158 dated March 31, 2016.

[7] Resolution of the Arbitration Court of the West Siberian District No. F04-5228/2021 dated August 23, 2021, in case No. A81-179/2021.

[8] Resolution of the Arbitration Court of the Urals District No. F09-5615/21 dated July 26, 2021, in case No. A76-27196/2020.

[9] Resolution of the Arbitration Court of the Urals District No. F09-6039/20 dated July 14, 2021, in case No. A47-8897/2019.

[10] Resolution of the Arbitration Court of the Urals District No. F09-5185/21 dated July 1, 2021, in case No. A50P-484/2020.

[11] Resolution of the Arbitration Court of the Central District No. F10-3868/2021 dated September 7, 2021, in case No. A83-1829/2020.

[12] Resolution of the Arbitration Court of the North-Western District dated February 19, 2015, in case No. A56-79234/2013.

[13] Resolution of the Federal Arbitration Court of the Urals District No. F09-3966/11-S3 dated July 4, 2011, in case No. A60-22160/10.

[14] Resolution of the Arbitration Court of the Far Eastern District No. F03-3934/2017 dated October 10, 2017, in case No. A24-2610/2015.

[15] Ruling of the Supreme Court of the Russian Federation No. 305-KG16-15981 dated December 26, 2016, in case No. A41-47572/2014.

[16] Resolution of the Arbitration Court of the Volga District No. F06-16746/2022 dated May 6, 2022, in case No. A65-14547/2020.

[17] Resolution of the Arbitration Court of the Volgo-Vyatsky District No. F01-2555/2021 dated July 12, 2021, in case No. A82-19903/2019.

[18] Ruling of the Supreme Arbitration Court of the Russian Federation No. VAS-7112/14 dated June 18, 2014, in case No. A21-5252/2012.

[19] Resolution of the Eighteenth Arbitration Appellate Court No. 18AP-1270/2021 dated March 9, 2021, in case No. A07-29881/2018.

[20] Resolution of the Arbitration Court of the Volgo-Vyatsky District No. F01-4566/2019 dated November 1, 2019, in case No. A79-10168/2014.

[21] Resolution of the Arbitration Court of the Urals District No. F09-7420/18 dated December 4, 2018, in case No. A60-26370/2016.

[22] Ruling of the Supreme Court of the Russian Federation No. 304-ES21-25268 dated December 24, 2021, in case No. A75-5352/2020.

[23] Resolution of the Arbitration Court of the Urals District No. F09-6323/15 dated August 6, 2019, in case No. A76-12166/2014.