Independent expert determination and how it can help resolve disputes on your construction project
The construction claims market is constantly evolving, and while claims are almost inevitably going to continue to be part of the industry, a focus on conflict resolution and even prevention is very much in the interests of all parties. One method of trying to achieve that is with the support of Independent Expert Determination.
Falling under the banner of Alternative Dispute Resolution (ADR) methods, Expert Determination is a way of solving disputes in a manner that’s more cost effective and less damaging to the project. It allows parties to appoint an independent, neutral expert to determine issues in disputes and is one of the types of ADR suggested by courts to settle disputes in preference to litigation.
Independent Expert Determination has existed in one form or another for a long time. However, enshrining it in expertise, commitment, experience and the hallmark of industry approval with appropriate qualifications means that contractors and project owners are able to feel secure in the professionalism and decision making of the individual they employ.
Amongst our team of claims consultants, Phillip Smeed is certified in Independent Expert Determination, with qualifications from the Royal Institution of Chartered Surveyors (RICS). Phillip is also a qualified chartered surveyor, a Review Examiner for the Chartered Institute of Civil Engineering Surveyors and has a Certificate in International Arbitration from the Chartered Institute of Arbiters. That’s in addition to more than 30 years’ experience working in the construction industry. By being able to offer this service, he and the Tungsten Capital team can help more projects to stay on track, on time and on budget.
How does Independent Expert Determination work?
Independent Expert Determination is where an independent expert listens to both sides of a dispute and makes a decision on how it should be settled. You can have the process written into your contract, and how that’s done will impact how it works for you, or the parties can agree to this method to decide a dispute as an ad hoc agreement. The expert’s decision can be either binding or recommended until overridden by any other form of ADR resolution. In most contracts, it’s written as a binding decision with a view to keeping a project moving and preventing the escalated costs and potentially damaging circumstances of going to litigation.
What are the benefits?
The benefits of Independent Expert Determination are to help avoid the spiralling implications of a dispute that escalates towards arbitration. For example:
- To maintain confidentiality of the parties
- To maintain cashflow
- To prevent the project from coming to a stop
- To maintain relationships
The process is similar to arbitration but without the necessity of the restrictive rules that arbitration brings. The determination of the issues by the independent expert is not up for debate. That said, where a decision by arbitration is enforceable by a court, the decision of an independent expert is not. The agreement to follow the recommendation is largely contractual and a matter of good faith. That said, if the clause in the contract says that the decision of the expert is final and binding, that’s invariably what the courts are most likely to follow, assuming there isn’t any point of law for the determination not to be upheld or material departure from instructions in the making of the determination.
How effective is Independent Expert Determination?
Questions which often arise according to Clive Freedman and James Farrell’s Kendall on Expert Determination – Law in Practice:
- Whether, after a dispute has arisen between parties to a contract containing an expert determination clause, parties have a choice whether to comply with the expert determination clause or to disregard it
- Whether parties are looking for a simple decision without explanation, or a sophisticated document more like an arbitration award or court judgement
- What will be involved in the process, how much it will cost, and how much time it will take?
- The scope of the expert’s jurisdiction, in particular in relation to legal issues
- What standard of fairness is applied to the process?
- Whether expert determination guarantees a decision which will be final and binding
- If not, on what grounds a challenge can be mounted.
Ultimately, and with many variables in between, these issues would give rise to litigation, especially if a party’s desire for justice or overwhelming need not to lose at any cost, rather than resolution, is their motivation.
As with all things in ADR dispute resolution, its success hinges on the desire of both parties to seek a resolution. If that is the common cause, then Independent Expert Determination could be a helpful addition to your contract, processes and planning.