Rather than pursuing a more traditional dispute resolution process which may end up in time-consuming litigation, parties to a technical or legal dispute can refer it to an independent expert with specific experience in a particular field. There are many advantages: speed, accuracy, cost, privacy and objectivity. And because both parties have chosen this more conciliatory method of dispute resolution, their existing business relationship is more likely to remain intact.
Both parties to a contract or a dispute need to agree to use expert determination, either at the outset of the contractual relationship or after an issue has arisen. Usually, each party pays their own costs and half the expert’s fees. But they can agree that the expert may decide who pays his fees and who pays the costs of the process and in what proportion.
The technique is most effective as a final determination process – where the parties agree that the expert’s decision is final and binding and will not be challenged in court or arbitration.
But it is possible to ask an expert to make a non-binding early evaluation. This then gives an early indication of how matters might be resolved if the disputants did go on to spend time and legal costs on formal proceedings.
The parties can agree between themselves on a single expert. Or they can refer the matter to an independent body to appoint the expert. For example, the Institution of Chemical Engineers will appoint an expert and has a bespoke set of rules called the White Book (see also box) for expert determination.
LEGAL OR TECHNICAL EXPERT DETERMINATION?
Technical expert determination is particularly efficient in disputes over process plant, production engineering and utilities operations when a technical problem arises in the course of production or maintenance. The parties can agree the timescale for expert determination or refer to an existing set of rules. For example, it is not uncommon to require the expert to reach a decision within a fortnight. In complex, or less urgent cases, the process may take up to six months.
Disputes over contract terms or the application of regulations or statutory provisions are very suitable for legal expert determination. Often the specific wording in dispute is limited and a swift decision can be made. There are, of course, disputes over the interpretation of large contracts, which require the whole contract to be considered and even a surrounding ‘matrix’ of documents and facts. However, a trained expert lawyer can read documents very quickly and deliver a clear decision.
Legal disputes are often determined by a purely written process without the expense of a hearing. Alternatively, it is possible to have written submissions with a short hearing by videoconferencing software to resolve a legal argument.
The interpretation of statutes and regulations can be very important, for example, to utilities and contractor chains. Expert determination has helped local authorities resolve waste treatment and collection disputes on years-long projects.
DETAILS
Usually, experts will send out terms and conditions stating the basis on which they will charge fees. Fees are usually payable before a decision is delivered on a 50/50 basis – even if the expert has still to decide which party pays the fees. The terms and conditions will also provide that the parties agree that the expert has legal immunity and will not be sued by the parties as long as the expert acts in good faith.
In the report, the expert invariably gives some reasons for the decision. However, these can be brief. In engineering disputes, it is usually the ‘how’ and the solution that matters. ‘Why’ is interesting – but not the overriding concern. The purpose of the exercise is not about apportioning blame or deciding liability. It is about finding answers to problems.
For example, the technique was used when a dispute arose between a local authority and a major waste contractor over the application of EU directives and regulations to waste collection and disposal, including landfill and waste-to-energy. An expert was brought in, and the process of expert resolution involved effectively determining the waste collection and disposal strategy of this large local authority over many years. The process was concluded in six weeks following written submissions and a short hearing, with a formal written ruling. An arbitration would have taken at least two years and cost well over £1 million.
Elsewhere, a dispute arose over whether the Housing Grants, Construction and Regeneration Act 1996, as amended, applied to a production line for building products. The issue was whether a conveyor system and linked equipment was a structure forming part of the land. If it was, then the parties could resolve any differences by adjudication and apply the payment regime of the Act. The issue depended on the interpretation of case law, but it also involved deciding whether a production line was fixed to the land in a way which made it part of the land. This issue was resolved in four weeks. A court case would have taken over a year and cost more than £600,000.
MORE POWER TO YOU
Finally, in a third case, a dispute arose over a power station and its computerised controls. The legal issue was how to interpret the terminology used. This, in turn, then determined whether the system had been tested and completed, and so whether a stage payment was due. The expert decision also determined the precise nature of the technical specification and whether this had been met – which was central to the operation of the plant. The expert determination was completed from start to finish in six weeks. An arbitration would have lasted well over a year.
In conclusion, expert determination is an effective, sensible procedure. Overall, there are many practical advantages to having a quick expert procedure with a decision which gives certainty and finality. However, achieving a quality decision requires telling the expert precisely what it is that needs to be decided, so there are no surprises.
BOX: ABOUT THE WHITE BOOK
The latest version of the Institution of Chemical Engineers’ White Book dates back to 2016. This rule book, 13 pages, provides a set of procedures and rules governing the appointment, duties and actions of the expert. It is available as a digital download for £120, or £60 for 12 months’ access, via www.is.gd/imajopi.
The Institution says that the technique is particularly suitable for resolving single-issue technical matters or disputes over time or cost.
It adds: “Our Rules for Expert Determination (The White Book) and Rules for Dispute Review Boards (The Beige Book) are amongst very few sets of rules setting out how an expert determination or DRB should operate. The rules are incorporated by reference into the forms of contract; they may also be used with other contracts by agreement, such as FIDIC.”