English High Court decision highlights the need for caution when drafting for expert determination

Speedread

The English High Court decision in Walton Homes Ltd -v- Staffordshire County Council is a useful reminder of the need for careful drafting where parties want the expert to decide legal as well as technical issues.⁽¹⁾

Facts

The dispute concerned the meaning and effect of an overage clause in an agreement for the sale of land. The agreement provided that where the parties were unable to agree the sums due under the clause, the matter would be referred to a surveyor as expert, whose decision was to be final and binding absent manifest error. The dispute concerned interpretation of how a certain sum was to be determined. Given the legal nature of the dispute, the expert retained Counsel to advise him. He based his Determination on that advice. This was then challenged in the High Court.

High Court Decision

One of the attractions of expert determination is the finality it offers. Unless the parties agree otherwise, there is no scope for judicial review. The only issue for the judge therefore was whether the determination (in effect, Counsel's opinion) was manifestly wrong. Although the judge considered that there were competing and legitimate arguments on both sides, he did not think that the decision could be considered "manifestly wrong". He therefore dismissed the action.

Comment

The nature of expert determination is such that once the expert gives his determination, there is very little a party can do to challenge that decision. Contracting parties may consider the quick solution expert determination offers to be worth that risk. However, careful thought should be given as to whether they want questions of law - where the arguments can be finely balanced - to be decided in this way.

If they do, thought should be given as to the identity of the expert to decide the disputes. As pointed out by the judge, expert determination may not be ideal where it leads to a surveyor deciding questions of law. Parties can cater for this by building in flexibility of choice as to the identity of the expert so that choice of expert is related to the nature of the dispute. Alternatively, provision can be made for the expert to appoint counsel to advise (as the surveyor did here) where the dispute raises legal questions.

Please click on the links below for the other articles in the November 2013 Arbflash:

• Arbitration in Australia and ACICA
• Anyone for baseball? The rise of "baseball arbitration" in FRAND patent disputes
• "Public policy of India" - not an easy excuse any more
• Australian Federal Court enforces LMAA award
• South Korea: Two arbitral awards refused enforcement this year
• International news

_{⁽¹⁾ [2013] EWHC 2554 (Ch)}