Manifest Error in Expert Determination: WH Holding v London Stadium
Expert determination is a popular mechanism for parties seeking a quick and final resolution of disputes. It has traditionally been used primarily for disputes involving technical or valuation matters where expertise beyond legal skills may be beneficial but, increasingly, in our experience is being used as a means of resolving more complex and higher value disputes.
In WH Holding Ltd v London Stadium LLP [2026] EWCA Civ 153 (CA), the Court of Appeal recently overturned the High Court in holding that an expert's determination was not invalidated by manifest error. This article examines the CoA's reasoning and its clarification of the correct approach to "manifest error" challenges.
Expert Determination: A Creature of Contract
Expert determination operates on a contractual basis. The parties' agreement defines the scope of the expert's mandate and the extent to which the determination will be binding. Unlike arbitration, expert determination does not involve an adjudicative process subject to statutory oversight; rather, it derives its authority and effect entirely from the contractual bargain struck by the parties.
The general rule is that an expert's determination is final and binding on the parties. However, parties may expressly reserve a right to challenge the expert determination on certain grounds. The most common reservation is for "manifest error", a narrow exception permitting challenge only where the expert's error is plain and obvious on the face of the determination.
Manifest Error: The Legal Test
The manifest error test sets a deliberately high threshold. An error is "manifest" if, after limited investigation, it is so obvious (and obviously capable of affecting the expert's determination) as to admit of no difference of opinion.
The parties in WH Holding Ltd v London Stadium LLP advanced arguments seeking to refine aspects of this test:
- The defendant's counsel submitted that "limited investigation" means "without the need for adversarial argument". The CoA judgment confirms that while courts should not engage in a detailed reappraisal of the merits this does not prevent parties from presenting their case fully at a hearing.
- The claimant's counsel argued that, where parties agree a contractual mathematical formula, the application of that formula will result in one correct answer, unless the formula is genuinely ambiguous (as opposed to being susceptible to an arguable alternative interpretation). Where a formula is unambiguous, the parties should not be bound if the expert does not produce the correct answer. The CoA held that there was no basis for treating contractual formulas differently. Where the expert's approach is based on an arguable finding, even if another view might reasonably have been taken, it is not so obviously wrong as to admit of no difference of opinion.
The Court's Decision
In the case, the dispute centred on the calculation of an overage payment due under a Concession Agreement following a transaction involving a sale of shares and the grant of a call option. The expert was required to determine whether the share sale and call option constituted a single "Qualifying Transaction" and how the definition of "Consideration" should be applied. The High Court found two manifest errors: first, that the expert improperly treated the word "or" in the Consideration definition as "and," thereby blending two valuations; second, that the share purchase and call option were wrongly treated as one Qualifying Transaction. As a result of the two manifest errors the High Court concluded that the parties were not bound by the expert determination.
The CoA disagreed on both counts. It held that the definition of Qualifying Transaction was sufficiently wide to encompass the whole transaction, and that the Consideration definition supported treating an option as part of a larger transaction. The word "or" in the Consideration definition could properly be read as providing alternative provisions for different elements of one Qualifying Transaction, without those alternatives being mutually exclusive. Crucially, the expert was entitled to consider the commercial purpose of the overage provision and conclude that the parties intended to capture all monies received by the Relevant Shareholders exceeding the threshold specified in the overage provisions. The expert's approach was not so obviously wrong as to admit of no difference of opinion and did not constitute manifest error.
Key takeaways
- Manifest error is a high bar. Parties who wish to achieve a genuinely final determination should take comfort from this decision. The courts will not lightly interfere with an expert's conclusions. If the expert has adopted a reasoned approach that is within the bounds of arguable interpretation, the determination will stand. For parties seeking certainty, expert determination with a manifest error carve-out remains an effective mechanism, although consideration should be given as to its appropriateness for complex, high value disputes.
- Appointing an appropriately qualified expert is critical. Given the limited grounds of appeal, it is important to remember the quality of the determination depends heavily on the expertise and diligence of the appointed expert. Careful drafting at the outset can help ensure that the parties' dispute is resolved by someone with the appropriate skills and knowledge.
- Expert determination is a creature of contract and can be tailored to suit commercial needs. Parties are free to expand or restrict the grounds on which an expert determination may be challenged. If a broader right of review is desired, this can be expressly provided for in the contract.
- Contracts should, at minimum, include clear manifest error wording. Ambiguity in the contractual framework for expert determination can lead to costly satellite litigation. Practitioners should ensure that the contract clearly addresses whether the determination is to be final and binding, and if so, whether there is a manifest error exception.
Other author: Brooke Driscoll, Trainee Solicitor
