We have already outlined in an earlier article the different types of ADR and their benefits. Expert determination is another ADR process that is steadily increasing in popularity, particularly in the building and construction industry. Expert Determination involves an independent third party making a decision on behalf of the parties. Below, we explain how it works and when parties may prefer to resolve their disputes through this process.
What is Expert Determination?
Expert Determination is usually a creature of contract, and the contract’s clause governs the process as well as the expert’s jurisdiction. Minimally, the clause should cover:
- The expert’s qualifications and his or her appointment (part of the process’ flexibility is that the parties agree on the expert);
- How the determination process will be conducted;
- The issues the expert will determine;
- That the decision will be final and binding;
- How costs are to be awarded;
- How the money is to be paid from one party to another; and
- How the expert’s fees are going to be paid.
Expert determination works best where disputes between the parties are relatively simple in content or are of a technical nature. Expert Determinations are typically used in building disputes and where valuations are needed. As suggested by the name, an expert determines the questions the parties need answering. The expert needs to act as impartially as possible and usually gives the parties an opportunity to present their case and to make submissions.
Unlike the Court process, there is no formal evidence or cross-examination. Expert determinations avoid pleadings, witness statements, and hearings. The rules of evidence don’t apply, and because the process is comparatively informal, the determination can be both efficient and cost effective.
When Does an Expert Determination Work Best?
An expert determination can work well and benefit both parties for the following reasons:
- It’s impartial;
- The expert can act as an investigator;
- The process is quick and relatively inexpensive;
- The process is flexible, and parties have a say in how the process is set up; and
- The parties can select an expert together with relevant expertise.
What are the Disadvantages of Expert Determination?
If the losing party doesn’t comply with the expert determination, the successful party is then required to commence court proceedings to enforce the outcome. The Court proceedings would not involve a ventilation of all the issues in dispute between the parties, but rather simply seeks a declaration or an order for specific performance. A major downside for the parties is that there is no appeal process once the final determination has been made.
Expert determinations are gaining in popularity as parties increasingly look for a flexible and expeditious way to streamline resolving their contractual disputes. Once merely limited to discrete technical issues, it’s now gaining popularity in general disputes.
Questions about how you can draft a contract to include the appropriate ADR clause? Get in touch with our disputes lawyers.