Whether an expert’s determination can be set aside for any error of law
The parties had referred a dispute to expert determination and one of the parties sought to challenge the expert’s decision. One of the issues considered by the Court of Appeal in this case was whether the judge had been correct to suggest that an error by the expert on any point of law arising in the course of implementing his instructions might justify setting aside the determination. The judge had treated this as an open question on the basis of certain comments made by Lord Neuberger MR in Barclays Bank v Nylon Capital (see Weekly Update 27/11). He had believed that there is a “powerful argument” for saying that (subject to the contract terms) a valuation by an expert (even where the valuation is agreed to be “final and binding”) can be challenged in court if it can be shown to have been arrived at on the basis of “a mistake of law” (emphasis added).
The Court of Appeal said that these comments had been obiter only and that neither of the other Court of Appeal judges had expressed agreement with them. It was concluded that “it is possible that the parties might by their agreement define the terms of the expert’s mandate in such a way that any error of law on his part rendered his decision invalid, but in many cases to do so would risk undermining the whole purpose of the reference. Ultimately, however….it all comes down to the construction of the contract under which the expert was appointed to act. Only by construing the contract can one identify the matters that were referred for his decision, the meaning and effect of any special instructions and the extent to which his decisions on questions of law or mixed fact and law were intended to bind the parties”.
On the facts of the case, the Court of Appeal held that the expert had not departed from his mandate.