All about Expert Determination

Expert Determination is a form of Alternative Dispute Resolution (ADR) in which an independent expert in the subject matter of the dispute, is appointed jointly by the parties to decide on an issue within their technical expertise and resolve the matter.  It is widely used in the determining of rents, the valuation of properties, the sale and purchase of companies and many other assessments of value, turnover or profit in areas such as shipping, insurance, IP disputes, sports and broadcasting.  By prior agreement of the parties, the expert’s decision is  legally binding on the parties. Like all Alternative Dispute Resolution processes, Expert Determination it is entirely confidential.

When should you use Expert Determination?

Expert Determination is ideally suited to disputes and matters of valuation and/or which are primarily dependent on technical issues eg does the computer match the specification?; is the malfunction due to a design or a manufacturing fault?; valuations of shares; rent reviews and contract performance matters. It can also easily be used in many other areas such as insurance wording disputes, sale of goods disputes, fitness for purpose and boundary disputes.

Although Expert Determination is an Alternative Dispute Resolution process, it can also be used when there is no dispute, but a difference which needs to be resolved for example the valuation of a private business. Due to its flexibility, Expert Determination is ideally suited to multi-party disputes.

What happens if a party does not agree with the Expert Determiner?

The Expert Determiner’s decision is legally binding. There is only a very limited basis to challenge the determination. Therefore, it is very important that the parties select an expert who has both the relevant expertise and experience in addition to knowledge of the Determination process.

Occasionally, the expert’s decision is not binding, but advisory. This is known as Expert Evaluation. Although not binding the evaluation does often form the basis of a settlement.

How to start the Expert Determination Process

Expert Determination may already be a provision in the contract. If not, the first step is for all parties to agree to use Expert Determination.  Similarly all parties will need to agree the terms of the Expert’s appointment.  The next step it so appoint a suitable Expert to help resolve the problem.

How to appoint an Expert Determiner?

A solicitor can put the parties in touch with an Expert Determiner.

Or, the parties can contact The Academy of Experts direct, which has a wide ranging list of members who are experienced in their own fields and are trained in the skills and techniques of dispute resolution. Expert Determiner Members come from a wide variety of disciplines such as arboriculture, accountancy, insurance, medicine, surveying and valuation, and zoology.

The Expert Determines

Each Expert Determiner has his own approach.  However, in general:

• the parties must agree the exact wording of the question(s) to be determined by the Expert. They then provide the Expert with such evidence as they think necessary. The Expert may ask for any further evidence that he considers appropriate. He will decide whether or not to deal with the matter on a documents only basis or if it is necessary to hold a hearing and/or a technical examination. Sometimes the Expert may choose to hold a preliminary procedural meeting to deal with some of these questions.
• Once the Expert’s Determination is completed, he will issue his decision (the determination) in writing in accordance with the agreed procedures.

Costs

The costs of appointing an Expert Determiner will vary depending on the complexities of the matter, but are directly related to the decisions of the parties.

The Appointment fee, the Expert’s charges and costs, will be known in advance; other costs will vary with the extent of the written and other evidence the parties choose to submit. It is usual for the parties to share the Expert’s fees and other purely administrative costs equally.

Does it work?

Expert Determination has been used for many years in a large number of technical arenas.  Anecdotal evidence confirms the view of the Academy of Experts that Expert Determination has a good track record.

How long does it take?

The Expert Determination process can be quick and efficient and generally, takes much less time than the processes of arbitration or litigation.  Obviously parties must bear in mind that the time varies with the number of parties involved and the complexity of the dispute.  Notable examples in the past have dealt with very significant disputes which have taken many months, if not years, to complete.

Of interest is the recent Scottish decision of MacDonald Estates plc v National Car Parks Ltd (4 November 2009).  In this case, the process of Expert Determination was distinguished from the quasi-judicial process that is arbitration.  It was held that an Expert Determiner is not performing a quasi-judicial function in which the rules of due process apply but rather uses his or her expertise in the relevant field to resolve differences of opinion relating to technical issues.  What Expert Determination involves in any particular case depends upon the parties’ agreement and context. Whereas an arbiter sits in a quasi-judicial capacity deciding matters on the evidence and the submissions made to him, an Expert, subject to his remit, may undertake his own investigations and come to his own conclusions, irrespective of any evidence and submissions.

Summary of the advantages of Expert Determination:

• Expert Determination provides Cost Efficient Resolution for disputes and problems (however may not be suited to every dispute)
• Expert Determination is confidential and private
• The parties control the procedures to be used
• The process is quick and a mutually acceptable timetable can be set by the parties
• Matters are determined by an Expert.
• The outcome is final and binding, unless otherwise agreed in advance
• Expert Determination is controlled by the parties not court or arbitration rules
• Expert Determination can be inexpensive compared to other forms of ADR
• Expert Determination can work