A question of expert determination
Wednesday 2nd October 2024
Head of Property Disputes, Paul Joyce, looks at the outcome on a recent contract dispute
In the recent judgment in Dandara South East Limited v Medway Preservation Limited & Anor [2024] EWHC 2318 (Ch) the High Court held that an expert determination clause within a contract will survive the termination of the contract itself and the parties will remain bound by its terms.
Background
The parties exchanged a contract for sale of land and the Claimant subsequently sought to terminate. The Claimant issued a claim at Court seeking the return of the deposit and the Defendant disputed the jurisdiction of the Court, arguing that the contract contained a mandatory expert determination clause and the Court claim should be stayed to allow expert determination to proceed. The Claimant’s main counterarguments were that:
- The true construction of the contract meant that it did not extend to the dispute at hand, and
- As the contract had terminated, the parties were no longer bound by the expert determination clause.
Decision
On the construction point, the Court held that whilst there was a tension between the expert determination clause and a separate jurisdiction clause conferring exclusive jurisdiction on the Courts. The Court held that the expert determination clause took precedence – the parties were commercial entities who must have intended that the clause would have effect. It was wide ranging “a one stop shop” type clause, and whilst it was unusual that there was no separation between disputes to be referred to the expert and to the Court, this lack of carve out suggested that the parties had intended the expert to deal with all disputes. This interpretation was determined to not rob the jurisdiction clause of effect, as there may be situations where the Court was required to give effect to the outcome of an expert’s determination.
On the separability point, the Court concluded that where the parties have created a “one stop shop” expert determination clause there should be a presumption that the parties would have intended for all disputes to fall within that clause regardless of timing. There is therefore a presumption of separability and survival of an expert determination clause, and it is for the party arguing against it to convince the Court otherwise. In this case, the Court found that the Claimant had not done so, and stayed the claim to allow the expert determination to proceed.
Comment
It is perhaps surprising that there was no existing authority on the survival of expert determination clauses. The Court’s decision on both the jurisdiction point and separability makes sense and aligns with the position on arbitration clauses – s.7 of the Arbitration Act 1996 expressly states that arbitration clauses are separable and treated as distinct from the underlying agreement. It should be noted however, that much of the reasoning turned on the fact that in this case the parties had agreed a very wide-ranging expert determination clause and this is relatively unusual. In circumstances where the scope of an expert determination clause is more limited, the presumption of separability may be weaker and there may be room to argue that it does not survive termination of the underlying contract.
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