The Effective Use Of Experts And Expert Witnesses

Introduction

All construction projects are ultimately about using materials

and resources cost effectively to get something built. In achieving

those goals engineers and other construction professionals fulfill

a wide variety of roles providing technical expertise, project

management and contract administration. However, this will often

require them to become involved in disputes whether in respect of

certified sums, unpaid certificates, defective workmanship,

defective equipment, defective materials, or performance

shortfalls. In seeking to have those disputes resolved, engineers

and other construction specialists can and increasingly do play a

key role in the dispute resolution process.

In recent years, a growing range of preliminary dispute

resolution procedures have become available which are very

effective at screening out the vast majority of disputes. These are

principally adjudication, mediation, dispute boards and early

neutral evaluation. Many of these processes are consensual in

nature and none leads to a final and binding decision (unless the

parties agree).

However, there are three procedures which lead to final and

binding decisions by a third party: expert determination, court

litigation and arbitration. In the first procedure, it is the

expert who actually decides the outcome of the dispute. In the

latter two procedures, a third party (whether that be a judge or an

arbitration tribunal) will decide the outcome of the dispute based

upon the evidence before it, including consideration of any expert

opinion evidence provided by expert witnesses.

As engineers and other construction professionals participate in

these processes in two very different ways, this paper will seek to

identify the primary differences between those roles. It will

describe the role of an expert in the process of an expert

determination, and then consider the role of expert witnesses in

providing opinion evidence to assist a tribunal to reach its

decision (whether by way of litigation or arbitration).

Expert Determination

The term 'expert determination' describes a process

whereby the parties agree that a third party (the expert), who is

independent of the parties, is to be engaged to answer a particular

question or determine a particular dispute and that the parties are

to be bound by that expert's decision. The expert determination

process should, therefore, result in a fast, binding and final

resolution of the dispute referred to the expert.

The key distinguishing feature of expert determination is that

in general the expert is free to use his own knowledge, expertise

and experience to investigate the question that has been referred

to him, taking account of the submissions of the parties as he sees

fit, whereas judges and arbitrators are required to decide on the

basis of the submissions and evidence made by the parties. This is

one of the greatest strengths of expert determination, particularly

when the nature of the issue to be decided is technical, as the

expert will have been carefully selected because of his relevant

expertise. Therefore, the expert is not just appointed to hear the

parties' various contentions and to select between them, but to

investigate the facts and to apply his knowledge and expertise to

decide the answer to the question that has been referred to

him.

Expert determination is also very flexible. As it is based

entirely upon an agreement between the parties, they have an

opportunity to control and tailor the process to suit their own

particular circumstances or the facts and matters of the particular

dispute. This flexibility allows expert determination to be used in

a very broad range of matters, sometimes to avoid lengthy and

complex disputes from arising and at other times to resolve

disputes quickly and cheaply. It is not uncommon for parties to

agree that the whole process shall be concluded in a matter of days

after an expert has been appointed.

Having said that, the use of expert determination does carry

risks. The advantage of a final and binding decision carefully has

to be balanced against the risk of being unable to appeal or,

subject to only few very limited exceptions, to challenge the

expert's decision. The benefit of agreeing to a swift dispute

resolution process must also be weighed against the risk of the

procedure not allowing sufficient time for a full investigation

that other procedures might have allowed. Although experts must be

fair and impartial, they are not bound to observe due process or to

comply with the rules of natural justice. Since an expert is not

acting in a judicial capacity, the need for impartiality is also

more limited in scope when compared to judges and arbitrators, with

the result that an expert's decision will only be set aside if

actual bias is proved. This is illustrated in the recent case of

Owen Pell Limited v Bindi (London) Limited [2008] EWHC 1420

(TCC), where the parties agreed to have their dispute

determined by an independent expert. The defendant was unhappy with

the decision and refused to make payment contending that the expert

had not conducted himself in accordance with the principles of

natural justice, was biased or gave the appearance of bias, and

reached conclusions that were obviously in error or perverse. The

court reviewed the authorities and held that the expert's

decision was valid and enforceable, and that actual rather than

apparent bias was necessary to challenge an expert's

decision.

Types of dispute suitable for expert determination

Although parties may decide that any dispute arising out of a

project should be determined by an expert, it is more usual for the

parties to identify in their contract defined questions, issues or

subject areas about which a reference to an expert can be made.

Since one of the most significant benefits of expert determination

is that an appropriately qualified and respected expert will be

engaged to answer a question within his field of expertise, it can

easily be understood why this is the case. It may be relatively

easy for parties to agree, for example, that questions over whether

a complex piece of engineering equipment should be accepted as

complete could be resolved by an expert practising in the

particular field in question. However, it is quite another thing

for the parties to agree that every other potential dispute

including, for example, a dispute over the liability for and

consequences of delayed delivery should also be resolved by the

same individual.

For these reasons, expert determination is usually considered

most appropriate when narrow questions can be referred to an

appropriate expert be that an engineer, an accountant, a surveyor

or a lawyer. Some such issues can easily be identified at the time

that a contract is drafted. For example, it may be foreseeable that

there could be a dispute over whether a project had progressed to

the point where a completion certificate was due to an engineering

contractor, or over the appropriate price for a variation, or

deciding whether remedial work is required to engineering works, or

the appropriate accounting principles applicable to a valuation

exercise. By considering these issues pre-contract and by including

appropriate terms in the contract, both parties can enter into the

contract with the confidence of knowing that if certain disputes

arise they have the right to resolve those disputes through a

swift, relatively cheap and binding process, and that concerns over

lengthy and expensive litigation or arbitration can be put to one

side.

The Institution of Chemical Engineers (IChemE) has perhaps taken

the lead in developing a suite of standard term contracts where

expert determination is identified as a dispute resolution

procedure available to either party, and its experience suggests

that this has been very successful. Expert determination is

expressly identified as being available to the parties in respect

of disputes on subjects as diverse as objecting to a variation

order, disapproval by the project manager of documentation provided

by the contractor, whether a completion certificate or final

certificate should have been issued, the cost and time implications

of suspension orders and the amounts payable following termination.

The IChemE contracts provide that any dispute concerning one of

these identified subject areas shall be referred to expert

determination if one party serves notice to that effect on the

other. It also allows other issues to be resolved by expert

determination if both parties agree.

Agreements to refer issues to expert determination

Agreements that provide for an expert to answer a particular

question or to resolve disputes on particular issues vary widely in

their content and complexity. In the simplest of cases the parties

might merely agree, for example, that if they cannot agree on the

valuation of a particular property then the issue should be decided

by an independent chartered surveyor acting as an expert and not as

an arbitrator.

While such a simple agreement might be effective, experience

shows that it would leave many matters open to debate, so that some

of the benefits of expert determination could be lost. For these

reasons, it is common for parties to use one of the standard forms

to ensure that there is some certainty over the process and its

effectiveness.

The selection and appointment of an expert

Since the decision of the expert is to be final and binding, the

importance of the selection as to who to appoint or how that person

is to be selected cannot be overstated.

The courts do not have jurisdiction to select an expert for the

parties, so provision should be made naming the expert (and

possibly alternatives) in the contract or the contract should

provide reliable machinery for the selection and appointment of...