When Things Turn Sour Part 2
Finding resolution through independent expert determination
Last month we looked at solving a building contract dispute through mediation. This month we focus on another option – expert determination. Although not expressly mentioned in the JBCC (Joint Building Contracts Committee), this method of conflict resolution has many advantages and is in most cases very effective.
What does independent expert determination involve?
Expert determination is a process whereby an independent third party, acting as an expert rather than judge or arbitrator, is appointed to decide a dispute. He is chosen because of his technical skills, knowledge and experience in the building industry – he could be an architect, project manager or quantity surveyor. His appointment is clearly stated in the contract between the parties, which often provides for a nominated appointment. The expert's responsibility is to make proper and reasonable investigation into the dispute and to arrive at a non-negligent decision, based on his understanding of building contracts and his professional opinion. He will weigh up the evidence and arguments before him. However, unlike arbitration, he cannot usually be bound by the evidence presented by the parties involved in the dispute.
The role of the independent expert
An independent expert should be able to:
• Base his decision upon his own knowledge and his investigation to uncover all information pertaining to the dispute, including principles of law relevant to his valuation;
• Settle his own contractual terms with the parties, such as remuneration, extent of inspection and assumptions; and
• Execute the whole of the determination by himself.
Is the independent expert's decision binding?
Yes, the independent expert’s decision, known as a determination, is usually stated to be final and binding. There is no right of appeal unless the expert has answered the wrong question or there is evidence of fraud or bias, or there are clearly stated contractual provisions permitting the parties to challenge the decision. However, in the absence of any express contractual term to this effect, there is some legal uncertainty as to whether a determination is final and binding. Unlike arbitration the independent expert does not have the power to determine who pays the costs, unless the contract states otherwise.
What is the advantage of independent expert determination?
Firstly, it is much cheaper than litigation. As most disputes generally arise over technical rather than legal matters, the courts are ill equipped to deal with them. Expert determination is therefore well suited to disputes on discrete technical issues, including disputes of valuation or the quality of work and/or materials.
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