SCL Meeting Report: Expert Determination

July 9, 2012

On Monday 25 June, at the London office of Herbert Smith LLP, a seminar was hosted to consider the role of expert determination and other forms of dispute resolution in the context of IT disputes.  The meeting was chaired by James Farrell, a partner at Herbert Smith, and interesting presentations were provided on the nature and applicability of such procedures by Clive Freedman, a barrister at 3 Verulam Buildings, Dr David Sharp a partner and head of the expert witness practice of Charteris plc, and Alexander Hickey, a barrister at 4 Pump Court. 

Our first speaker, Clive Freedman, provided the audience with a general introduction to the differences between litigation and arbitration, and expert determination and adjudication.  Clive went on to discuss the strengths and weaknesses of expert determination. He focused on the limited ability to challenge a decision of an adjudicator or expert determiner, and set out the role that the courts play when an expert determination clause is included in a contract but one of the parties to the contract is obstructing its use.  Clive set out the grounds for challenge in more detail and the obligation that an expert’s decision must be made in accordance with the terms of the contract.  Clive concluded his speech by explaining how the courts had interpreted such provisions, including the recent decision in Barclays Bank PLC v Nylon Capital LLP. 

Dr David Sharp discussed an example of a recent dispute in which Charteris had been appointed as experts under a substantial outsourcing contract which contained an internal escalation process. If the parties were unsuccessful in their attempts to resolve any dispute, the clause allowed them to elect for expert determination.  Dr Sharp commented that, in this case, it became apparent that there would be a real benefit from early intervention by the experts into the expert determination process so as to facilitate the parties resolution of the dispute.  He considered that this provided more flexibility and meant that the parties were less likely to become entrenched in their positions.  He stressed that, during the course of the contract’s life, facilitation was used much more frequently than expert determination as the process allowed an independent verification of the obligations contained in the contract and avoided unnecessary escalation of disputes.  Consequently, it took less effort for the parties to set out their cases, as they would have had to in the instance of litigation, arbitration or expert determination, and the parties had the advantage of having an expert determiner who was independent and who was able to provide assurance on the contract terms. 

Finally, we heard from Alexander Hickey, who provided the audience with a detailed explanation of the rights and processes of statutory adjudication in the context of construction disputes, and how adjudication may be used in relation to IT disputes.  Alexander summarised some of the advantages of adjudication, such as the temporary finality of any award given, until such a dispute is progressed in litigation or arbitration, should that be the case.  Whilst commenting that the process is often ‘quick and dirty’, Alexander suggested that this was the very reason it had been so successful for the construction community, as it allowed the parties to get a quick decision on a dispute, and where necessary to claim monies they were owed.  Alexander emphasised that there were limited opportunities to challenge enforcement of such decisions and that the courts had been robust in dismissing such challenges. Alexander went on to describe how adjudication could work in the context of an IT dispute and how, without being bound by the terms of the Construction Act, the parties would be free to agree their own terms, but would have the advantage of a Technology and Construction Court that willingly recognises adjudication and a body of jurisprudence gleaned from the construction industry.   

At this point the panel took questions from the audience and a lively discussion ensued on the applicability of adjudication for certain types of IT contracts. 

Thanks go to all of the speakers who were able to talk so authoritatively and concisely on a topic of such interest to the attendees.    

Martin Hevey is an Associate in the Litigation and Arbitration Division of Herbert Smith LLP.