Grounds For Setting Aside An Expert Determination

There is no general obligation on an expert to apply the

rules of natural justice to the process of making an expert

determination. Provided the expert has answered the right

question then it will be enforceable even if the answer is

wrong. It may be possible to set aside an expert determination

if it can be shown that the expert was actually biased.

Expert determination is a means by which the parties to a

contract appoint an independent expert to decide a dispute that

has arisen. The particular advantages of this approach to

dispute resolution include the fact that the parties are free

to agree who the expert will be and the expert's terms of

reference. These will include whether the expert is merely to

provide advice or whether he is required to reach a decision

that is to be temporarily or finally binding.

In recent years there have been a number of cases where one

of the parties has not been happy with an expert determination

and has sought to have it set aside. Where the parties have

agreed that an expert determination is to be final and binding

then one would have thought that both parties would be stuck

with it.

In the recent Court of Appeal decision in Homepace Ltd v

Sita South East Ltd [2008], Lloyd LJ said at paragraph

18:

"Each case depends on the terms of the contract

under which the determination is made, both as to what it is

that the expert has to decide, and as to how far his decision

is binding on the parties. In each case it is necessary to

examine the determination, in order to see whether it lies

within the scope of the expert's authority. If it does not,

then it has no effect as between the parties. If on the other

hand it does, then the contract also governs the question

whether the determination is binding...."

The recent case of Owen Pell Limited v Bindi (London)

Limited, involved the expert determination of a dispute

concerning the final account and deductions for defects arising

from work carried out by Owen Pell at a property owned by

Bindi.

The expert was appointed under a relatively brief letter

which included the terms that the independent expert should

conduct the proceedings in any way that he saw fit subject to a

maximum timescale of 2 months. The parties agreed that they

should be bound by the decision of the expert and that the

dispute could not then be referred to a subsequent

tribunal.

The expert determined that the sum of £53,487.65 plus

VAT was due to Owen Pell, which Bindi refused to pay. Bindi

...