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The Impact of Expert Determinations...

The Impact of Expert Determinations...

 ...on project performance and on a later formal dispute

There is a growing trend in the construction industry of contracting parties to use Expert Determination as a vehicle for dispute resolution. This article focuses on how the engagement of Expert Determiners may have an impact on:

  • The behaviour of the parties following the determination and up to completion of the project;
  • The possibility of challenging a determination; and
  • How a later dispute in Arbitration or Litigation may consider the determination.

Author: Khalid Yousri, Driver Trett Director – UAE Country Manager

According to the Chartered Institute of Arbitrators (“CIArb”), Expert Determination is a process where the parties to a dispute decide to engage (pursuant to the contract conditions or on an ad-hoc basis) an independent Expert to determine a dispute on a matter of fact, valuation, or law between the parties. It is important to note that the Expert Determination process by its very nature is usually binding and final (unless it is agreed otherwise), whereas, if it is only advisory and for guidance, it is an Expert Evaluation, as defined by the CIArb.

Often, parties to a dispute enter into an Expert Determination process under ad hoc agreements after failing to amicably settle the dispute under contractual claim and variation provisions. Alternatively, Expert Determination can be a contractual dispute resolution procedure. An Expert Determination process is typically structured and conducted in accordance with one of the many sets of rules that are available (e.g., the ICC Expert Rules), as follows:

  1. Appointment of an Expert;
  2. Preliminary meeting;
  3. Written submissions from the parties;
  4. Investigation and review; and
  5. Final determination.

Expert Determination is in most cases a more cost-effective procedure than arbitration or litigation, with the general practice being the disputing parties having joint responsibility for the Expert Determiner’s fees. Furthermore, Expert Determination can be a quicker procedure than Arbitration or Litigation; with often the overall duration being measured in months rather than years…

The appointed expert acts as an Expert Determiner and not as an Arbitrator; this being a typical contract term within the Middle East. However, the Expert Determiner, subject to the terms of his or her terms of reference, can sometimes obtain other Expert’s opinions in connection with for example technical and/or legal aspects of a dispute that may not be within the Expert Determiner’s own expertise.

The Expert Determination process maybe compared in terms of simplicity and required time for determination to the ‘Expedited Procedure Provisions’ which is included under the ICC Arbitration Rules. The Expedited Procedure can apply, pursuant to Article 30 of the ICC Arbitration Rules, if the dispute is under USD 2 million (if the arbitration agreement was concluded between 1 March 2017 and 1 January 2021) or under USD  3 million (if the arbitration agreement was concluded after 1 January 2021) and the parties have not opted out the Expedited Procedure Rules in the arbitration agreement.

However, the Expedited Procedures shall apply if the parties agreed to conduct it notwithstanding the amount of the dispute. It is simplified procedure which can be conducted with a sole arbitrator who has the right to decide on the parties’ written submissions and the final award should be released within six months from the case management conference.1 However, it might be challenging to the tribunal to meet the six months’ time limit, accordingly, it is often extended by the tribunal.

In general, according to CIArb the key differences between Expert Determination and Arbitration include, amongst other things, the following:

  • There is less emphasis on due process and natural justice.
  • There is usually no oral hearing.
  • The process is informal, quick, and cost efficient.
  • The Expert Determiner cannot rule on his or her own jurisdiction.
  • There are no international conventions for the recognition of enforcement of experts’ decisions.

Expert Determination is a process where if both parties in dispute show good intention and good faith in aiming to progress the works in a good manner and completing the project it is a process that can work well. It is a process where the parties agree that they require a third party who understands the dispute and has expertise in resolving such disputes considering the technical aspects of the dispute and can determine on matters of fact.

I also believe that if Expert Determination(s) is used during an ongoing project, it should have a beneficial impact on the parties’ behaviour afterwards. As when an independent selected specialist determines on a technical/contractual matter, the parties should be able to consider the determination and rectify any issues associated with their performance. Therefore, it should result in avoidance of further events which cause similar disputes and facilitate the progress of the project.

The question I have is to what extent Expert Determination should be considered and what if the Expert Determiner makes a mistake in his or her determination? The Expert Determiner’s mandate is limited to the tasks and matters set out in his or her terms of reference/ad-hoc agreement as he/she should act as an Expert and not as an Arbitrator.

In the case of Begum v Hossain [2015],2 the Court recalled the key case law on Expert Determination. The judgment distinguished between an Expert Determiner making a mistake, and an Expert Determiner departing from its instructions.

Accordingly, there are grounds where a court might set aside an Expert Determination when a challenge can succeed by demonstrating that the Expert Determiner considered incorrectly the rules or methods in its analysis and calculations or by not considering various information and records.

One of the main potential problems with the Expert Determination process is the very limited right to challenge. To overcome this issue, the parties should consider including, where it is appropriate and allowable, in the terms of reference/ad-hoc agreement that the Expert Determination is final and/or binding, but also defining clearly the scope of the Expert Determination, and what grounds there might be for any challenges to be made under.

The difficulty in challenging an Expert Determination is actually, in my point of view, one of the most important strengths of the process. Accordingly, the parties should clearly set out the mechanism and grounds for a challenge.

Notwithstanding that, according to the ICC Expert Rules the Expert Determiner’s findings, upon the agreement between the parties can be considered to be a contractually binding determination, but, it is not enforceable like an arbitral award. Unless otherwise agreed, the Expert Determination shall be admissible in any judicial or arbitral proceeding between the parties.

Arbitration is more suitable where the dispute involves complex legal issues, and the records and the evidence are not directly available. Expert Determination on the other hand can be highly suitable for simple cases and where the technical issues are more dominant than say the legal aspects of the dispute.

Where Expert Determination(s) is used during the progress of the project and then Arbitration is conducted after completion of the project, the existence of Expert Determination(s) would improve the process of Arbitration. The tribunal will have considered the Expert Determination and will seek to develop it by further and deeper investigation of the matter or matters in dispute. However, the parties may have included in the ad-hoc agreement that Expert Determination(s) shall not be considered in any subsequent dispute in which case this advantage may not accrue.

In conclusion, I think that the parties to an Expert Determination should be very careful in agreeing the terms of reference/ad-hoc agreement and which rules should apply to it… The success or otherwise of the Expert Determination will be dependent upon them.

Expert Determination is a valuable process that can lead to avoidance of more costly and time-consuming dispute resolution procedures and can enhance progress of the project and assist in the completion of the project. However, I also believe that if the parties to Expert Determination do not take sufficient care in the drafting of the terms of reference/ad-hoc agreements, they might end up with a determination that is inappropriate and/or difficult to challenge.

The case management conference should be made within 15 days from the date of transmitting the files to the tribunal.
Begum v Hossain [2015] EWCA Civ 717.


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