EWJ 60 April 2025 web - Journal - Page 41
Court Finds Expert Determination
not Binding due to Manifest Errors
WH Holding Ltd -v- E20 Stadium LLP [2025] EWHC 140 (Comm)
In this case, the Court found that a reasoned expert
determination was not binding because it contained
manifest errors, which it defined as errors that
were obvious and obviously capable of affecting the
determination as to admit of no difference of opinion.
and, in the Court’s view, this clearly covered his
deciding issues of law.
The Court also highlighted that as the contractual
provisions prevented the parties from holding the expert liable for any act or omission “whatsoever”, their
only recourse was to establish manifest error that vitiated the expert determination.
As well as its bearing on agreements to expert
determination, the decision is also relevant to contracts
for the sale and purchase of crude oil and petroleum
products, which commonly provide that certificates of
quantity and quality are final except in cases of
manifest error or fraud.
The Court’s decision
The Court considered a number of authorities and
highlighted the key relevant principles as follows.
Where the parties had agreed that an expert would
determine their dispute, the starting point was that
they would be held to their agreement so long as the
expert had not departed from their instructions and
absent bad faith or fraud.
The background facts
The dispute arose out of a concession agreement that
gave the claimant a 99-year concession to run sporting
events at a London stadium.
The concession agreement provided that certain
disputes were to be referred to an expert, whose decision was to be final and binding “in the absence of
manifest error”. It stated that the expert would act as
an expert and not an arbitrator.
It was not the case that any mistake made by an expert
while loyally seeking to comply with their instructions
would vitiate the entire report. It had to be a manifest
error, i.e. plain or obvious. Furthermore, it was perfectly possible to be in error, particularly regarding the
law, without being negligent.
A dispute subsequently arose. The parties agreed to
put the dispute to an expert and entered into an
agreement with the expert that they had jointly chosen to determine the dispute. The expert agreement,
like the concession agreement, stated that the expert’s
decision would be binding on the parties save in the
case of manifest error. It also stated that the expert
would not be liable to the parties for any act or omission whatsoever in connection with their expert
determination.
Many expert determination provisions incorporated
a “manifest error” exception. The difficulty was in deciding what constituted a manifest error. In general
terms, a manifest error was one that was obvious or
easily demonstrable without extensive investigation.
What that meant may depend on the context in which
it was used, the particular contract, and the degree of
investigation which was permissible to demonstrate
the error.
The expert provided a reasoned written opinion in
favour of the defendant. The claimant argued that the
expert had made two errors which were manifest and,
therefore, the determination was not binding. It
sought a declaration from the Court that it was not
bound by the expert determination.
It was also relevant whether the parties had agreed, as
here, that the expert should give reasons for the conclusions they had reached because that meant that
they intended to examine the reasoning to determine
if it disclosed any manifest error.
Furthermore, and while finality was important, where
the parties had agreed on a reasoned determination
the Court was permitted to review documents expressly referred to in the determination and forming
an essential part of it. The Court could also consider
the terms of the expert determination agreement, as
well as any submissions expressly referred to.
Expert v. arbitrator
An arbitrator performs a quasi-judicial role and must,
therefore, decide matters on the basis of submissions
and evidence put before them. By contrast, an expert,
subject to the express provisions of their remit, may
carry out their own investigations, form their own opinion and come to their own conclusion regardless of any
submissions or evidence adduced by the parties.
Here, the Court was provided with a bundle of
documents containing a range of materials, some of
which must have been available to the expert. Consideration of these materials could not amount to an
impermissible “extensive” investigation. It must have
been investigation of the type that the parties had
agreed to in the event that one of them challenged the
outcome of a reasoned expert determination.
In this case, pursuant to the provisions for the expert’s
remit, the expert was not obliged to make his determination within the bounds of the submissions made
to him by the parties. He was retained to resolve the
dispute by using his expertise to make a correct determination. Furthermore, the expert’s instruction
was to decide any issues of opinion put before him
EXPERT WITNESS JOURNAL
39
APRIL 2025
