June 3, 2024
Whilst mediation may provide an opportunity for the parties to agree on a certain resolution or way forward, the parties may not always be able to reach such an agreement.
In these circumstances, parties may elect to adopt more determinative dispute resolution processes. These processes allow an independent third party to step in and make a decision based on information put forward by the parties, without needing to progress to litigation.
Expert determination is a common approach adopted by parties to a construction contract in this respect, ordinarily used to resolve disputes which have a high degree of complexity.
What is Expert Determination?
Expert determination is a process where a dispute is referred to a third party (referred to as the “expert”), who then makes a determination based on the material put before them and their own understanding of the technical matters in dispute. To this end, the expert will often have particular subject matter knowledge over a specific area, which are normally technical in nature.
Expert determination is government by an agreement between the parties (either within the contract or on subsequently agreed terms), which can extend to matters including:
- what specific disputes shall be determined by an expert;
- the process for appointing an expert;
- the procedural requirements for the submission of material each party considers relevant to the decision-making process;
- how the decision is to be given, including if reasons are required; and
- if the decision will be binding.
If the procedure for conducting the expert determination is not enshrined within the contract, the parties will often be required to agree on, at a minimum, the process for appointing the expert (which may include a nominated third party selecting the expert). Following such, if the parties cannot agree on a process moving forward, the expert will be able to dictate the steps which each party must follow.
Whilst parties may consider leaving procedural matters to the expert, it is beneficial to prescribe a process that both parties consider appropriate and reasonable in the contract. By doing this, parties can ensure there are sufficient allowances for the submission of evidence (on both lay and technical matters), that the expert will be able to take into consideration when making their determination.
Benefits of Expert Determination
Key benefits of expert determination include:
- Efficiency: the dispute will often be resolved on an expedited basis, which will also allow for the parties to minimise their respective costs, as all steps occur within a relatively short period of time;
- Flexibility: parties remain in control of the dispute process, allowing for an approach tailored to the specific issues in dispute. For matters that require a particular expertise, an expert can be selected accordingly. Similarly, the process for the submission of materials can be tailored to allow pertinent information to be presented to the expert in an easy-to-understand manner;
- Confidentiality: any dispute, and the subsequent determination, will remain confidential, which may be of particular importance based on the parties involved and the nature of the dispute; and
- Less Adversarial: as compared to processes such as litigation or arbitration, expert determination is less adversarial.
Limitations of Expert Determination
Notwithstanding the key benefits of progressing with expert determination, there are a number of limitations which parties should consider including:
- Suitability: expert determination is often best suited to disputes that are technical or complex in nature. Where disputes are largely in respect of factual circumstances (include where the parties disagree on such facts), expert determination is ordinarily not an appropriate forum; and
- Finality: the finality of expert determination will be determined by the parties. Where it is pre-agreed that a decision will not be final, then expert determination may merely be a procedural step that parties do not intend to be bound by, and therefore fails to offer any value in the dispute resolution process.
Ultimately, the limitations of expert determination may be mitigated by the parties, through including appropriate terms in the relevant contract, if a decision is to be final and what matters are to be referred to an expert. Hence, where parties turn their minds to these matters during contract negotiations, expert determination can offer a valuable process that can be adopted in isolation, or as part of a wider tiered dispute resolution process.
LPC Lawyers
The LPC Lawyers team have a wealth of experience to assist across contractual drafting and dispute process. Through providing clients support across the duration of a project’s lifecycle, we can assist in ensuring a project’s successful and efficient delivery.
If you have any questions or concerns about your current or future projects, please do not hesitate to contact LPC Lawyers for a discussion on how we can assist.
The contents of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
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