What is expert determination in Scottish disputes?
A disagreement over completion accounts after the sale of a business can leave both sides convinced they’re right. The figures don’t match. Each accountant reaches a different conclusion. Court action looks expensive, yet neither party wants to compromise on a technical point. Situations like this often lead parties towards expert determination, particularly where the contract already provides for that route.
This article explains how expert determination works in Scotland, where it fits within modern dispute resolution, when it’s likely to be appropriate, and why choosing the correct procedure at the outset can save considerable time, expense, and commercial disruption.
What is expert determination?
Expert determination is a private method of resolving a dispute where the parties ask a suitably qualified specialist to decide a specific issue. Unlike court proceedings, the focus normally falls upon one technical or financial question rather than every aspect of the wider disagreement.
Expert determination is a form of alternative dispute resolution. It is frequently used to resolve issues involving specialist knowledge where legal argument plays a secondary role. The process depends upon the relevant contract, and many commercial agreements include an expert determination clause before any dispute arises.
The determination reached by the expert is often intended to resolve disputes quickly, particularly where the parties have agreed that the matter should not proceed directly to litigation.
How does an expert determiner differ from an arbitrator?
Many people confuse expert determination with arbitration, but they serve different purposes.
An expert determiner is selected because of technical expertise. The individual may act as an expert rather than deciding legal arguments in the same way as an arbitrator. For example, a chartered surveyor may determine a property valuation, while an accountant may determine completion accounts following corporate acquisitions, including M&A disputes.
By contrast, arbitration resembles private court proceedings. The arbitrator hears evidence, applies legal principles and reaches a reasoned award. Although the Arbitration Act 1996 applies in England and the courts of England and Wales, Scottish arbitration follows separate legislation under the Arbitration (Scotland) Act 2010. That distinction is regularly confusing.
Which disputes are suited to expert determination?
Not every dispute is appropriate. Some are well suited because they concern a technical nature rather than contested legal rights.
The use of expert determination commonly appears in construction disputes, rent reviews, disputes involving practical completion, a commercial lease, engineering specifications and accounting adjustments. These are examples of disputes of a technical nature where specialist knowledge carries more weight than lengthy legal submissions.
By contrast, expert determination is less suited where allegations involve fraud, dishonesty, negligence or extensive contract interpretation. Those cases often require witness evidence, legal analysis and procedural safeguards better provided through litigation or arbitration.
How does an expert determination clause work?
The starting point is always the written agreement.
An expert determination clause forms part of the contractual bargain. If a dispute develops, the clause may require the contracting parties to refer a dispute before raising court proceedings. The wording often identifies the type of issue covered, how to appoint an independent expert, applicable timescales and whether the expert’s determination will be final and binding.
Poorly drafted clauses can generate further disagreement about the expert’s jurisdiction, particularly if the parties disagree about whether an expert has authority to decide the issue presented.
How is the expert appointed?
The agreement between the parties usually sets out the appointment process.
Sometimes the parties agree upon a named professional. In other cases, an industry body will appoint someone if agreement cannot be reached. The expert is appointed because of recognised knowledge of the subject, not judicial experience.
Solicitors frequently instruct specialists long before any formal appointment. Documents are gathered, technical reports are examined, and the precise question for the expert to determine is carefully drafted. Small changes in wording can materially affect the resulting determination.
What evidence does the expert consider?
The procedure is usually more flexible than court litigation.
The process in which the parties exchange information depends largely upon the relevant contractual mechanism. The expert may request documents, financial records, technical reports and written submissions from the parties involved.
Unlike a judge, the expert can rely very heavily on specialist experience. But proof still counts. Some claims are initially quite convincing, but fall apart when project records or correspondence are dug up. Some are bolstered when missing documentation is discovered during pre-action investigations.
Is expert determination legally binding in Scotland?
Much depends upon the wording of the contract.
Where parties have agreed that the expert’s decision will be a binding decision, Scottish courts will generally respect that bargain. Expert determination is generally intended to provide certainty and finality, allowing commercial relationships to continue without prolonged proceedings.
That doesn’t mean every determination is immune from challenge. The court may still consider whether the expert exceeded the agreed remit or failed to follow the agreed procedure.
Can the expert’s decision be challenged?
Challenges are deliberately limited.
An error of law is not automatically enough if the parties agreed that the expert would decide the matter finally. Recent Scottish case law demonstrates that courts usually hesitate before interfering with contractual arrangements freely entered into by commercial parties.
Sometimes there are disputes when one side thinks the case should be settled in a different way. Seldom does dissatisfaction succeed alone. Just because the process had a defect doesn’t mean it was a great commercial result.
How does expert determination compare with mediation and arbitration?
Every method has strengths and weaknesses.
Mediation is meant to assist in coming to their own settlement. It doesn’t impose a result. Expert determination offers an answer to a defined technical question. Arbitration produces a formal legal award after a more adversarial hearing.
Choosing the correct way of resolving a dispute depends upon its character. A pricing adjustment may be suited to expert determination, while wider legal disputes involving multiple legal issues often require another means of resolving the disagreement. Some commercial contracts even require parties to refer a dispute to expert determination before any other step.
When should legal advice be obtained?
Timing matters. Once a dispute develops, obtaining advice early allows a solicitor to assess whether expert determination, mediation, adjudication, or court action provides the better route. Evidence can be preserved before documents disappear or witnesses become unavailable.
Professional negligence cases sometimes involve expert determination alongside wider civil claims. An experienced dispute resolution team can advise whether to refer a dispute to an expert, whether the process is quicker and cheaper, whether the matter avoids going to court, and whether another procedure would better resolve the particular issue. In Scotland, that assessment should always take account of the jurisdiction of the Scottish courts, prescription rules and the commercial objectives of those involved.
Contact SGT Law Firm Today!
If you are involved in a commercial, property, or technical dispute, obtaining legal advice at an early stage can help you identify the most effective way to resolve the issue. At SGT Law Firm, experienced dispute resolution solicitors advise clients throughout Scotland on expert determination, mediation, arbitration and court proceedings. Whether the dispute relates to a commercial lease, a construction project, completion accounts or any other contractual issue, the team can evaluate your position and talk you through the options available. Contact SGT Law Firm today to discuss your dispute and learn the best course of action to take to resolve it.
