In the recent decision of Zvi Construction Co LLC v. Notre Dame University (USA) in England  EWHC 1924, the Technology and Construction Court (TCC) had to consider whether a party had expressly or impliedly accepted the jurisdiction of an expert to decide a dispute in a case where the contractual position was unclear.
TJAC Waterloo LLC (TJAC) agreed to sell a property to the University of Notre Dame and the parties entered into a development agreement. TJAC contracted with Zvi Construction (Zvi) to carry out work to the property but Zvi also entered into a duty of care agreement with the University and became a party to the development agreement.
Zvi carried out the building works. However, on completion the University alleged that there were serious defects with the works amounting to around US$9 million. The contractual position as to the correct method of dispute resolution was unclear. The duty of care agreement specified that the English courts had jurisdiction whereas the development agreement provided for arbitration. Arbitration was intended where there was a dispute as to the meaning or construction of the agreement and determination by an expert surveyor was intended with regard to the parties' rights and obligations under the agreement.
The University asked RICS to appoint an expert. The expert issued directions and the parties served their submissions about the quality of the building works and the alleged defects. At no point did any of the parties raise an issue with the expert's jurisdiction to decide the dispute. There was even a three-day hearing and a final decision issued by the expert which found Zvi/TJAC liable for the defects. The University became concerned about the other parties' abilities to pay any debt and issued proceedings in the US to restrain them from disposing of their assets. It was only at this point that Zvi challenged the jurisdiction of the expert and sought an injunction from the TCC to prevent the University from enforcing the expert's determination.
Zvi argued that the expert had no authority to issue an award against it as Zvi had "no rights, duties and obligations" under the development agreement and, as such, the expert determination clause was not binding on it.
The TCC did not agree. The court highlighted that the expert determination clause referred to "any dispute arising between the parties". Zvi had fully participated in the expert determination process by exchanging correspondence and emails, serving submissions without reservation and agreeing that the expert should address liability and quantum separately. The deputy judge found that this amounted to a course of conduct from which it was inferred that Zvi had impliedly agreed that the expert would have jurisdiction under the agreement to deal with the dispute.
Zvi put forward some compelling arguments as to why the expert had no jurisdiction to deal with the dispute in the English courts and also challenged it in the courts in the US. However, the deciding factor for the TCC was that Zvi took several active steps that made it clear that it was submitting to the expert's jurisdiction to deal with the dispute between the parties.
Where a party is in any doubt about or wishes to challenge an expert's jurisdiction, the lesson from this case is that it must raise its concerns with the expert and the other parties as soon as possible, otherwise it runs the risk of accepting the expert's jurisdiction, either expressly or impliedly.