EXPERT DETERMINATION : AN OVERVIEW

Expert determination is a straightforward procedure by which (generally) valuation and technical issues are referred to a suitably qualified professional to determine “acting as an expert and not as an arbitrator”. Parties to a contract jointly instruct a third party to decide an issue.

The RIDR Rules say that the decision of the independent expert is final and binding; that is what the courts say it has to be, in the absence of fraud, partiality or mistake. A mistake has to be as fundamental as the independent expert making his decision about the wrong subject-matter; (any complainant will have to prove a “material departure from instructions”). Errors of fact, law or professional opinion (in other words, where the expert has answered the right question in the wrong way) will have to stand. Conflicts of interest giving rise to concerns about a lack of independence are insufficient to justify a court challenge to an independent expert’s decision: actual partiality, or a real risk of partiality, would need to be proved.

It is difficult for one of the parties to sue the independent expert for professional negligence, but it is still easier than proving that he has made a mistake of sufficient gravity to invalidate his decision. There is however little evidence of success in this area. Independent experts appointed under the RIDR Rules who do not have their own cover for professional negligence are covered by the RIDR Committee’s insurance.

Generally the parties will want an informal, non-legalistic meeting, if appropriate after the independent expert has carried out his own investigations, where the independent expert can hear what their non-legal representatives have to say. Such meetings are not ‘hearings’ in the litigation sense, and may include an element of mediation (unless both parties to the dispute agree they do not want this). The independent expert will want to be sure he understands the point of view of both of the parties and, in doing so, may decide to try to persuade one or both of the parties about the other’s position. He will also want to find the common ground shared by the parties and build on that. There is nothing to stop him discussing matters with the parties separately.

The decision of an independent expert is contractually binding on the parties but cannot be enforced without court action. Usually summary judgment can if necessary be obtained, and the decision can be enforced as a judgment, or sometimes by an injunction.

The independent expert may carry out investigations beyond the material submitted by the parties, or to confirm its accuracy, or may ask them to provide material sufficient for him to make a decision. He is not bound by the representations made to him by the parties to the dispute, and his decision is his own opinion. Any subsequent challenge that the independent expert was negligent in not carrying out his own investigations would be likely to fail on the defence of the plaintiff’s contributory negligence in not supplying the material now deemed essential.

However, the independent expert should take and retain adequate notes of what is said to him, of any investigation he undertakes, and of the reasoning and calculations that led him to his decision. This will make it hard for any subsequent claim for negligence to succeed. If legal advice is obtained, a copy of it should be given to the parties.

Normally the determination of an independent expert will be far briefer than an arbitrator’s award, which is similar in many respects to a judgment and provides to the parties the details of the case, their arguments and counter-arguments and an indication of the extent to which the arbitrator has accepted them.

The following table seeks to draw distinctions between expert determination and arbitration.

EXPERT DETERMINATION	ARBITRATION
Substance An independent expert may address issues which the parties have not drawn to his attention.	An arbitration must be addressed to a “formulated dispute”
An independent expert is more likely to be asked to determine future rights.	An arbitration is more likely to decide on ‘accrued’ rights.
The reference to an objective fact suggests an expert determination.	An arbitration is likely to involve the making of value judgments.
Procedure An independent expert is less likely to receive rival contentions.	An arbitrator is likely to seek submissions and responses from the parties.
An independent expert is not necessarily bound to hear the parties.	The parties to an arbitration have the right to be heard if they wish.
An independent expert will take his own view of the veracity of witnesses.	An arbitrator can call on the parties or witnesses to give evidence under oath.
The determination of an independent expert will be based on personal expertise. If one party declines to produce information, an independent expert may say that he will draw adverse inferences from such failure.	An arbitral award is more likely to be based on the submissions made by the parties, and to be governed by the dispositive rule, whereby an arbitrator’s choice is limited by fixed options determined by the opposing arguments of the parties.
An independent expert is less likely to be asked to spell out his reasoning.	An arbitrator will be required to give a reasoned judgment.

The RIDR Rules provide also for dispute determination by the RIDR Committee, which is in many ways a blend of expert determination, mediation and arbitration.

John Gott

April 2001