Practical Law

Expert determination clauses have proved popular in all sorts of contracts. This is because they offer the prospect of a cheap and relatively fast way of resolving disputes, unlike clauses providing for the resolution of disputes by arbitration or court proceedings. If such clauses also provide that the expert need not give reasons for their decision, it also means, in effect, that it becomes extremely difficult for the losing party to appeal the decision on substantive grounds. The jurisprudential basis for expert determination clauses was placed on a firm footing in Jones v Sherwood, where the Court of Appeal held that as a matter of contract law, where two persons agree an expert determination clause, they are bound by the outcome if the determination is made by the expert honestly and in good faith, even if there has been a mistake in the determination. The Court of Appeal expressly rejected the earlier authorities that had treated such clauses as mere machinery for calculation that could be automatically overridden by the courts if it appeared to be wrong. In light of this seminal case, one might have thought that subsequent litigation concerning expert determination clauses would have been limited, save in cases where dishonesty or bad faith is alleged against the expert. However, there has been a spate of recent cases concerning the logically anterior questions of whether, as a matter of contract:

• The expert has the jurisdiction (or put another way, has the authority) in fact to determine the dispute referred to them.
• If so, the circumstances in which a party to the contract could potentially waive their right to refer such a dispute to an expert.

Chancellor Vos considered the second of these two issues in the February 2017 unreported Chancery Division case George Scarr-Hall v ISS (UK) Limited. Continue reading →