WLA Expert Determination
For a Definitive Resolution.

Expert determination is founded in contract. An independent third party will act as an expert rather than judge or arbitrator, and is appointed by the parties to decide the dispute privately. There is no right of appeal and the expert’s determination is final and binding on the parties save usually in the case of fraud or manifest error.

Parties will make written and oral submissions to the expert and he or she will then give a binding decision on the case. It is particularly used in disputes concerning valuation (for example rent reviews, share valuations or price adjustments) or technical disputes across a range of sectors (for example IT, accountancy, supply contracts, oil and gas).

The use of expert determination provides the parties with the means of resolving a part of a dispute about which they would prefer not to negotiate. This can arise where there is a need for an authority independent of the mediator(s) to give a binding decision on an important issue

We are often asked to provide expert determination services in conjunction with ongoing mediations. We leverage our expertise to break an impasse and allow the mediation to proceed without that blockage and it allows the mediator to remain completely impartial.

We also handle all aspects of the expert determination arrangements, including arranging document exchange, administering funds,and other activities as required.

Market participants are encouraged to avail themselves of this service in accordance with WLA Rules for Disputes Resolution. The terms and conditions of this service are set out in the FICM document.

About Expert Determination

Expert determination is quite different from any other method of dispute resolution. In this forum, the expert is appointed based on his or her knowledge and understanding of the particular issues in dispute in the field in which he or she is an acknowledged expert.

The expert agrees to a procedure with both parties and studies the parties’ respective position statements and any documents provided in support. There is usually no provision for the parties to change their position or amend their case during the process. The expert consults with the parties privately, and may consult with them both together, but is under no obligation to do so unless it is made a term of appointment.

In the role of investigator, the expert is required to find the facts and law in relation to the issues in dispute, to make enquiries, perform tests and calculations and to form his or her own opinion and decide upon the merits of the parties’ positions. Depending upon the issues, expert determination can involve extensive research and a hearing, and can take anything from a week to several months.

Given their authority in technical disciplines relevant to projects – from construction and manufacturing to processes and technology – WLA experts have determined disputes across a wide range of industry sectors.

The expert is required to act fairly and give each party a reasonable opportunity to be heard and respond to the other party. The determination of the dispute will be by an independent person with expertise relevant to the dispute.

When is expert determination appropriate?

When a fast solution is needed, expert determination is often the quickest and most inexpensive way of resolving disputes – particularly where the facts are agreed. It is carried out in private, and therefore can be guaranteed to protect confidentiality and commercial sensitivity.

Expert determination is appropriate for technical or valuation issues. For example, an IT specialist may be appointed in an IT supply and installation contract to determine compliance with specifications or an accountant may be appointed as an expert in a business valuation dispute.

 

Expert Determination Clauses

Expert determination clauses govern the jurisdiction of the expert and the conduct of the determination. They should typically cover:

the issue(s) to be determined (this must be carefully drafted)
the expert’s qualifications, appointment and his duty to act independently, and as an expert not an arbitrator

  • how the reference will be conducted
  • how the decision will be issued (in writing, with or without reasons) and that it will be final and binding save in the case of fraud or manifest error
  • provisions as to the due date for payment and the power to award interest (and sometimes costs)
    payment of the expert’s fees (these are usually shared between the parties with joint and several liability should one party fail to pay)

Enforcement of Expert Determination

In England and Wales, an expert’s determination can be enforced in court proceedings. However, as an expert’s determination may not be readily enforceable by courts in other jurisdictions, disputes that arise out of some international contracts may be better resolved by another method.

Who can be an independent expert?

A person agreed by the parties to be an expert qualifies as one. It could also be a person appointed for the purpose by the head of the appropriate professional body.

The identity of the independent expert may be agreed before any dispute arises – for example, a company’s articles of association may specify that on a transfer of shares a ‘fair value’ is to be determined by the company’s auditors.

Costs

Parties will have to pay for the cost of the expert, and parties will normally bear their own costs. There is no power for the expert to award costs in favour of the successful party, unless that power is specified in the expert determination clause or the terms of reference or if the expert is specifically authorised to award and assess costs.

Procedure

The procedure is normally dictated by the terms of the original agreement made between the parties, incorporating the expert’s terms of reference. These terms of reference set out the expert’s powers and duties in detail. Some experts may suggest additional terms, in particular a waiver of any liability from the parties.

The following points should be covered:

  • matters in dispute should be identified at the outset;
  • certainty should be provided in relation to the time at which the issues for decision have to be finalised. This will prevent parties from introducing new issues once the determination is in progress;
  • although neither party will have the burden of proving its case before the expert, the terms of reference should make it clear that the expert is required to make his decision on the basis of all the material before him;
  • scope of the expert’s function – does this extend to deciding issues involving how the contract itself is constructed? Can the expert appoint a legal adviser to assist with the process?

The terms of reference should also cover the procedure to be followed, for example:

  • the nature of any submissions to be made including guidance on the length, timing and content and the extent of the right of reply;
  • whether or not there should be an oral hearing and, if so, whether or not oral testimony will be permitted at such a hearing;
  • the means by which the expert will deliver the decision and whether or not it will be accompanied by reasons. Note that a reasoned decision may increase the risk of the determination being challenged in court on the grounds of ‘manifest error’, simply because it is then easier to show that an error is manifest or a mistake is obvious.