Technical disputes: the benefits of expert determination

When commercial disputes arise, companies often don't have the resources to finesse relationships and manage differing perceptions. They seek to enforce their rights, to preserve their position. Contracts may be suspended, business relationships strained, client relations stretched to the limit, and litigation ensues. However, since the implementation of the Civil Procedure Rules (CPR) in 1999 a party who refuses to proceed to mediation without good reason may be penalised and if parties turn down mediation out of hand they should be prepared to suffer the consequences; litigants can no longer simply pay lip service if they wish to avoid future costs penalties.

The generic alternative dispute resolution (ADR) hierarchy comprises negotiation, mediation, conciliation, expert determination, adjudication, arbitration and litigation, and, as an alternative to mediation, expert determination is a form of ADR that is particularly well suited to disputes of a purely technical nature, rather than a legal issue, and is suitable across a wide range of sectors. There is no need for parties to instruct their own individual experts and parties do not necessarily require a lawyer or advocate, although they are free to instruct legal advisers to represent them at the determination. The process is private and confidential, involves an independent technical expert who makes a binding decision (unless otherwise agreed by the parties at the outset) and who has the power to ask questions of the parties in dispute before giving his or her decision ?in writing.

Expert determination is a less formal procedure than arbitration and litigation and is most often used in technical disputes where an expert is appointed by the parties to determine an issue. The process permits the appointment of an expert familiar with the technical aspects of the dispute, it is considerably quicker and cheaper than arbitration or litigation, is confidential, is less adversarial and therefore less likely to result in a deterioration of business relationships. It is usually expressly catered for in commercial contracts, but it can also be set up by the parties on an ad hoc basis and agreed when a 'problem' arises.

An agreement adopted for expert determination sets out the framework and required timetable for the process and hence it is essential that the agreement is appropriate for all potential disputes which might arise under the contract. The scope of the expert's remit and jurisdiction must be clear and may need clarifying if a contract contains another dispute resolution clause in addition to an expert determination clause. Hence, careful contract drafting is essential and it should be noted that there is no international convention for enforcing an expert's decision in foreign jurisdictions.

Unless the parties are in agreement, valuable time and resources can be wasted in trying to agree who shall be the expert appointed to make the determination and where there is no quick agreement the erosion of goodwill is common. If the selection of an expert becomes a stumbling block, the appropriate professional body can often act as an appointing authority thus ensuring that the expert is not only knowledgeable but also totally independent.

The role

The expert does not act as an arbitrator or adjudicator, or as an expert witness, but does adopt procedures suitable to the circumstances of the particular case in order to provide an expeditious, cost-effective and fair means of determining the dispute between the parties. Unlike an arbitrator, an expert can take an inquisitorial approach to the dispute and their decisions and activities are not subject to control by the courts or to arbitration legislation

The expert must act with impartiality, with no vested interest in the outcome of the dispute and must not be biased in any way towards or against either party. However, if they become aware of any circumstance that might reasonably be considered to affect their ability to act impartially they must inform the parties immediately. The parties must then inform the expert whether or not they agree that the expert should continue the determination.

The expert is not required to refer their findings to the parties before making a decision and the decision is contractually binding on the parties and cannot generally be appealed. Indeed, unless the contract specifically provides otherwise, the decision of the expert can be challenged only under very limited grounds, which include a failure to follow instructions, fraud and partiality, since under such circumstances the expert can be said to have been in breach of the agreement to determination.

The expert owes a duty of care to the parties and if they get the decision wrong the expert is open to an action in negligence. Furthermore, unless the parties have agreed otherwise, an expert is not required to state the reasons for the decision and, since the expert is personally liable in negligence, it is vital that the expert adheres to the exact terms of the agreement that sets out what is required. Given the scope that written reasons give for a challenge, the expert should refrain from giving reasons or entering into explanatory correspondence regarding the decision.

The expert does not divulge, produce or disseminate any documents or information arising from the determination to anyone other than the parties and, unless otherwise determined by the expert and agreed with the parties, no one party or anyone acting on their behalf is permitted to communicate with the expert in the absence of the other party. Similarly, the expert must not consult with one party other than in the presence of the other party.

The expert may at any time allow or require further evidence, including the submission of documents or other information in a party's possession or control. They may also require statements or appearances by witnesses for either party; inspect or require the inspection of any site, property, product or process as they deem appropriate; and may carry out such non-destructive tests as they deem appropriate. If a party fails to provide information requested by the expert or fails to attend a meeting, the expert may serve a notice on the party stating that unless the information is provided within seven days or attends a meeting on a set date, the expert will determine the matter in the absence of the information/meeting. They are then entitled to draw adverse inferences, where appropriate, from the non-production of information or non-attendance at a meeting.

Confidentiality

Each person involved in the expert determination must maintain the confidentiality of the determination and may not use or disclose to any party the determination or any information concerning it. There are a few exceptions to this rule including where the parties have agreed otherwise in writing; the information is already in the public domain; or in connection with legal proceedings relating to the determination.

A party may choose to invoke confidentiality relating to information it submits for expert determination. The party needs to submit the information to the expert stating the reasons why it considers the information to be confidential. If the expert decides that the information is to be classified as confidential, they also decide under what conditions and to whom the confidential information should be disclosed.

As soon as reasonably practicable after receiving the submissions and evidence from the parties, the expert will determine the dispute and notify the parties in writing; as in other alternative dispute resolution processes the agreed determination should be reduced to writing and signed by all parties as well as the expert. The parties are jointly and severally liable for the costs of the determination, paying those costs in equal shares.

Expert determination brings technical disputes to a swift and early conclusion by using an appropriately qualified, knowledgeable, independent expert, avoiding the need for costly legal involvement and keeping protracted stand-offs to a minimum.

A health warning

If an expert determination clause provides that the expert should give reasons for their decision(s) the court will order that adequate reasons be given '“ the decision of the expert will not be binding unless the parties agree so beforehand. The agreement to seek expert determination of a dispute should as far as possible ensure that the parties will be bound, or if absolutely necessary should specify a time limit and method for challenging the determination by court proceedings. Careful consideration of the most suitably qualified expert of the dispute in question will be crucial to the acceptability of their findings and the likelihood that both parties will continue to be bound by these after the event. An expert cannot, unlike an arbitrator, make an award or order, and it is possible that the parties may agree only to be bound by the expert's determination for a limited time.