Expert Determinations - Recent Developments - January 2014

Ireland adopts expert determination as a form of Alternative Dispute Resolution. Parties must agree to be bound by the decision of an expert to make a legally binding determination to resolve the dispute. The expert's jurisdiction arises directly from the appointment. Expert determination is used mainly for determining technical disputes, e.g. when calculating compensation for the acquisition of shares, rent reviews, and construction disputes.

If a contract provides for disputes to be resolved by expert determination, the court may enforce the expert's decision. If there is no provision in the contract allowing for challenge or appeal of a decision to the courts, no challenge or appeal can be made. However, if there is an obvious lack of bona fides on the part of the expert, or an allegation of fraud or an allegation that the expert exceeded his powers, the decision may be challenged in the courts.

The courts are generally reluctant to interfere with the procedures adopted by an expert provided that the expert has operated within the realm of instructions agreed by the parties beforehand.

The above principles have been applied by the Irish Courts in two more recent cases.

RELEVANT CASELAW

O'Mahony v O'Connor Builders (Waterford) Limited [2005] 3 IR 167

In O'Mahony, the High Court (Clarke J.) considered the enforceability of an agreement to appoint an independent quantity surveyor. Differences had arisen between the parties in relation to defective building works and the final sums owing to the Defendant.

An expert was appointed by agreement between the parties and he engaged in the process valuing the works and published an interim report to be agreed between the parties within 7 days. The Plaintiff failed to engage with the process in any way at this stage. The expert subsequently wrote to the parties to inform them that, in light of their failure to communicate as requested, his report should be considered final.

The Court held that the valuation was not binding on the parties in the following circumstances:

1. that, where a party was in default of making the representations which the agreed process entitled him to make, the expert was entitled to reach a final determination without reference to such representations.

   Whether a point had been reached which entitled the expert to make a final determination without reference to the representations of a party depended on all the circumstances of the case and in particular, the extent to which...