Expert determination is an alternative dispute resolution process, distinct from litigation or arbitration, whereby an independent third party expert makes a decision in relation to a dispute between the parties.
How does Expert Determination arise?
Expert determination arises as a result of a dispute resolution clause in commercial contracts, where the parties agree to pursue expert determination as opposed to litigation if they have a dispute. The expert determination clause may specify which expert determination rules should apply.
Who is the expert?
The expert is someone with recognised expertise and technical knowledge relevant to the dispute. Once a decision is made, it is final and binding on the parties (assuming that is the parties’ intention in the relevant contract).
There is no procedural code for expert determination and little control by a court as it is generally determined between the parties.
What is the process for Expert Determination?
The process for expert determination depends on what is agreed between the parties in the relevant contract. Usually, the parties in dispute would provide written submissions outlining their case, and the expert would come to a decision on those submissions, setting out the reasons for their decision. Sometimes, the parties might also present oral submissions, similar to appearing in court.
Any decision in relation to the costs of the process is determined by the parties, e.g. each party pays their own costs of the expert, or the losing party pays the costs of the expert.
Pros and Cons of Expert Determination
The advantages over litigation or arbitration include the speed of determination and cost savings for the parties. It is also usually confidential. Nevertheless, there can be some uncertainty surrounding expert determination.
However, there is generally no right of appeal, as expert determination is binding unless the contract states otherwise or if the determination is not in compliance with the requirements of the contract. If the expert makes an incorrect decision it may be difficult for the aggrieved party to rectify it (unless there are certain factors such as fraud or a failure of the expert to act within the terms of their appointment).
Who chooses the Expert?
The parties would agree on the particular expert to be appointed. However, given there is scope for disagreement as to the expert to be appointed, the expert determination clause should provide that, if the parties are unable to agree on an expert within a certain timeframe, the expert must be appointed by an authority, e.g. the Law Society of NSW or a alternative dispute resolution body such as the Institute of Arbitrators and Mediators Australia.
Some contracts provide that managers or CEOs of relevant businesses should firstly meet before expert determination to attempt to resolve any dispute before the expert determination procedure. If successful, this can ultimately save costs. If any such meeting is unsuccessful or does not take place, then the parties would proceed to expert determination.
LegalVision has a team of highly competent dispute lawyers who can advise you about resolving disputes through expert determination or other alternative dispute resolution methods. We can also advise you on inserting dispute resolution and expert determination clauses in your commercial contracts. Get in touch today for a fixed-fee quote.