Arbitration Legal Articles Nigerian Law Procedural Law

EXPANDING THE FRONTIERS OF DISPUTE RESOLUTION: EXPERT DETERMINATION AS A TECHNIQUE.- ELIJAH AGBOOLA

INTRODUCTION
Countlessly, non-lawyers attempt to ridicule the necessity of the legal profession by suggesting that lawyers only exist because of disputes and societal frictions and chaos. They however fail to realise the practical impossibility of avoiding disputes. Disputes invariably arise springing up a matching need to resolve them either amicably or otherwise.
The oldest, traditional and commonest way of settling disputes is through litigation. On the alternate end of the table is Alternative Dispute Resolution (ADR) comprising arbitration, negotiations, conciliation, mediation among a few others. Meanwhile, an emerging area of dispute settlement suddenly appears – Expert Determination.

What does Expert Determination entail?
Expert Determination is a dispute resolution mechanism involving an independent Expert in the subject matter of the dispute appointed by the disputant parties to resolve the pending dispute. The appointed Experts decision is – by prior agreement of the parties – legally binding on the parties. Like all ADR processes, it is entirely confidential. In truth, Expert Determination seems to be an extension of ADR as all the advantages and disadvantages of ADR are obtainable in it.

Expert determination has very little in common with the conventional Court proceedings. Like an arbitrator, the appointed Expert can make inquests and investigations independently of the parties. This simply shows that Expert Determination is partly inquisitorial. However, unlike an arbitrator, an Expert does not need to refer back to the parties before making the decision. This results in huge cost and time savings.

A caution should be exercised here. Expert Determiners are not expert witnesses; and Expert Determination should not be confused with Expert Evidence/testimony. In an Expert Determination, the Expert constitutes the tribunal and makes the decision, and is not in any sense a witness.

Expert Determination can be used as a short cut to a binding decision – it is simpler and cheaper than a Litigation or Arbitration. There are no requirements to prepare pleadings, conduct detailed investigation of documents, cross-examine witnesses or conduct trial-type hearings.

When is Expert Determination necessary?
It is applied when a quick solution is needed. Expert Determination is easily the quickest and most inexpensive way of resolving disputes particularly where the facts are agreed. It is carried out in private, and therefore can be guaranteed to protect facts, communications and general details of confidentiality and commercial sensitivity.

Expert Determination is equally appropriate for technical and/or valuation disputes. If parties disagree solely or mostly on technical points, as opposed to a legal point, the parties may decide to jointly appoint an Expert Determiner to render a binding opinion regarding the queries. The opinion rendered may be limited to the establishment of one or several disputed facts or may in itself define and clarify the parties’ rights and obligations. For instance, an IT specialist may be appointed in an IT supply and installation contract to determine level or scope of compliance with specifications. An accountant may be appointed as an Expert Determiner in a business valuation dispute.

Why should Expert Determination be considered?
Expert Determination has the following advantages as compared to other methods of dispute resolution, in particular, Arbitration and Litigation:

  1. It allows the appointment of an expert who is familiar with the technical issues.
  2. It is usually cheaper, quicker and less formal than arbitration or litigation.
  3. It helps parties to maintain business relationships, as it is confidential and less adversarial than litigation or arbitration.
  4. The expert’s decision is normally final and binding because, unless the parties provide otherwise, the decision can only be challenged on limited grounds such as fraud or lack of impartiality.

Expert Determination and the Enforcement Question

England and Other Jurisdictions
In England and Wales, an Experts Determination is enforceable in Court. As far back as 1954, Lord Denning decided in Dean v. Prince (1954) 2 WLR 538 that an Expert Determination is binding and enforceable except on grounds of fraud and/or mistake or miscarriage. Meanwhile, in the latter case of Campbell v. Edwards (1976) 1 WLR 403, the Deans decision was repealed through the instrumentality of Lord Denning reflected in his words excerpted below:

“It is simply the law of contracts. If two persons agree that the price of property should be fixed by a valuer on whom they agree, and he gives a valuation honestly and in good faith, they are bound by it. Even if he makes a mistake they are bound by it fraud or collusion unravels enerything…” (underlining for independent emphasis)

Meanwhile, giving further life to the principle of enforceability of Expert Determination in England, the House of Lords in Nikko Hotels (UK) Ltd. v. NEPC Plc. (1991) EGLR 103 through the learned mouthpiece of Knox J quipped:

“If he has answered the right question in the wrong way, his decision will be binding. If he has answered the wrong question, his decision will be a nullity.”

This therefore explains that in England, where the Expert Determiner gives a determination by virtue of the agreement of parties, then such determination will be binding despite the inaccuracy of it. Conversely, where the Expert Determiner fundamentally deviates by failing to answer the question which forms the basis of the Expert Determination, then such decision would be held to be a nullity and liable to be set aside.

In addition, with respect to the applicability of rules of evidence to an Expert Determination especially fair hearing, actual bias rather than the mere appearance of bias can invalidate an Expert Determination Macro v. Thompson (No. 3) (2002) BCLC 36. Also, in Halifax Life Limited v. Equitable Life Assurance Society (2007) EWHC 503 (Comm), it was held that the Court had the power to require a reasoning or further reasoning to be provided by the Expert Determiner either based on the peculiarity of the provisions of the contract for Expert Determination, or simply by virtue of the exercise of the Courts case management powers or discretion.

It has been opined that since an Expert’s Determination may not be readily enforceable by Courts in other jurisdictions, disputes that arise out of some international contracts may be better resolved by another method. This opinion is understandable in view of the need for abundant caution in commercial circumstances.

Federal Republic of Nigeria
In truth, there is presently no regulation or law specifically providing for Expert Determination in Nigeria. Meanwhile, it is respectfully submitted that there is a convincing possibility that Expert Determination will enjoy enforcement in Nigerian Courts.

First, by extant laws, it appears that where parties agree to refer their dispute to Expert Determination in a dispute resolution clause, that agreement, like any other contractual obligation, is final and binding on the parties. The Courts will generally not interfere with, displace or rewrite such agreement, or imply terms into it. A fortiori, the permission of the Court is not even required for the decision of the Expert to be enforced, unlike in Arbitration where the award will be endorsed by the Court, or Conciliation where both parties have to agree before the decision of the conciliator is binding.

This submission is further nourished by the authority of Adetoun Oladeji (Nig.) Ltd. v. Nigerian Breweries PLC. SC 91/2002 where Niki Tobi, JSC stated the law as follows:

Where there is a contract regulating any arrangement between the parties, the main duty of the court is to interpret that contract to give effect to the wishes of the parties as expressed in the contract document. See Oduyev. Nigeria Airways Limited (1987) 2 NWLR (Pt.55) 126. In the construction of documents, the question is not what the parties to the document may have intended to do by entering into that document, but what is the meaning of the words used in the document. See Amizu v. Dr. Nzeribe (1989) 4 NWLR (Pt.118) 755. However, where the meaning of words used is not clear, the court will fall back on the intention behind the words. Above all, it is not the function of a court of law to make agreements for parties or to change their agreement as made. See African Reinsurance Corporation v. Fantaye(1986) 1 NWLR (Pt.14) 113.

Who can be an (Independent) Expert Determiner?
An Expert mutually agreed by the parties may qualify as one. It could also be a person appointed for the purpose by the head of the appropriate professional body. The identity of the Independent Expert may be agreed even before any dispute arises – for example, a company’s articles of association may specify that on any dispute arising from the transfer of shares, a ‘fair value’ is to be determined by the company’s auditors.

What are the Procedures?
The procedure is normally dictated by the terms of the original agreement made between the parties, incorporating the Expert’s Terms of Reference. These Terms of Reference set out the Expert’s powers and duties in detail. Some Experts may suggest additional terms, in particular, a waiver of any liability from the parties.

The following points should be covered:

  1. Matters in dispute should be identified at the outset.
  2. Certainty should be provided in relation to the time or stage of the Determination at which the issues for the determination would have been settled or finalized. This will prevent parties from introducing new issues once the determination is in progress.
  3. Although neither party will have the burden of proving its case before the Expert, the Terms of Reference should make it clear that the Expert is required to make his decision on the basis of all the material evidence or facts before him;
  4. Scope of the Expert’s function does the Determination extend to deciding issues involving how the contract itself is constructed? Can the Expert appoint a legal adviser to assist with the process?
  5. The Terms of Reference should also cover the procedure to be followed, for example, the nature of any submissions to be made including guidance on the length, timing and content and the extent of the right of reply;
  6. Whether or not there should be an oral hearing and, if so, whether or not oral testimony will be permitted at such a hearing.
  7. The means by which the expert will deliver the decision and whether or not it will be accompanied by reasons. Note that a reasoned decision may increase the risk of the determination being challenged in court on the grounds of ‘manifest error’, simply because it is then easier to show that an error is manifest or a mistake is obvious.

Who Shoulders the Attendant Costs?
Parties will have to bear the cost of the Expert Determination; of course, parties would normally bear their own costs. The Expert has no power to award costs in favour of the successful party, unless that power is specified in the Expert Determination Clause or the Terms of Reference, or if the Expert is specifically authorized to award and assess costs.

Conclusion
Expert determination is an emerging market in the Nigerian legal space. This market is one of the few untapped dispute resolution techniques in Nigeria. It is submitted that Expert Determination would further assist in resolving disputes quicker and more efficiently. This is however subject to the compatibility of the dispute in question with the Expert Determination mechanism.

Endnotes

(i) https://www.sutori.com/story/the-history-of-litigation–KKeE3HhCjpdTHczY91Ly4giw

(ii) http://www.academyofexperts.org/alternative-dispute-resolution/what-expert-determination

(iii) https://www.ciarb.ie/services/expert-determination.236.html

(iv) https://legalvision.com.au/alternative-dispute-resolution-what-is-expert-determination

(v) http://www.out-law.com/topics/dispute-resolution-and-litigation/alternative-dispute-resolution-and-mediation/expert-determination

(vi) http://www.dispute-resolution-hamburg.com/expert-determination/what-is-expert-determination/

(vii) http://www.out-law.com/topics/dispute-resolution-and-litigation/alternative-dispute-resolution-and-mediation/expert-determination

(viii) https://www.pinsentmasons.com/out-law/guides/expert-determination

(ix) https://www.ciarb.ie/services/expert-determination.236.html

(x) http://www.legal500.com/c/nigeria/developments/5505

(xi) Section 31, Arbitation and Conciliation Act 1998 (LFN 2004, A18)

(xii) Article 13, Third Schedule, Arbitration and Conciliation Act 1998 (LFN 2004, A18)

(xiii) https://www.wipo.int/amc/en/expert-determination/what-is-exp.html/

(xiv) Part I, Rule 6 (5) of the Rules for Expert Determination

Overall credits to Nicholas Gould, Partner, Fenwick Elliott (A firm of construction and energy law experts) for his incisive work on Expert Determination: An Update. Accessible through the link below:
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.fenwickelliott.com/sites/default/files/nick_gould_-_expert_determination_-_an_update.pdf&ved=2ahUKEwj90rKCzPziAhVStHEKHYhCBaEQFjAHegQIBRAG&usg=AOvVaw3PWVEnKybZtfP5M1c8TxYB

Featured Picture Source: https://www.gregcarter.com.au/2015/09/18/expert-determination-contract/

AUTHOR: ELIJAH AGBOOLA

Associate, Disputes and Conflicts Resolution

Law Axis 360°

Agboola Elijah is a graduate of Obafemi Awolowo University, One – Ife. He was the Chairman of the Moot and Mock Committee, Obafemi Awolowo University for the 2017/2018 academic session.

During his tenure as the Chairman, he won many accolades at the national and international stage. One of those achievements is qualifying as the only Nigerian University at the Nelson Mandela Human Rights Competition, 2018. He also organized a national program tagged The Advocacy Summit (TAS) which involved students from other universities and facilitators from leading firms in Nigeria.

He has developed a special interest in dispute resolution, energy and maritime. He has interned at Ikeyi, Shittu & Co. He also has several internship options which he plans to venture into before proceeding to the Nigerian Law School. He presently interns at the Africa Law Practice (ALP) Company (an SGRB firm)

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