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Background part 1 Grant Jones LLM, Cooper Parry LLP & London Society of Chartered Accountants President. Chartered Accountant, Solicitor, New York Attorney,

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Presentation on theme: "Background part 1 Grant Jones LLM, Cooper Parry LLP & London Society of Chartered Accountants President. Chartered Accountant, Solicitor, New York Attorney,"— Presentation transcript:

1 background part 1 Grant Jones LLM, Cooper Parry LLP & London Society of Chartered Accountants President. Chartered Accountant, Solicitor, New York Attorney, Licensed Insolvency Practitioner, Special Professor of Laws Nottingham University & London CIArb branch committee member. Email – LinkedIn - (slides available on this page) CIArb London website – (slides available on this page) 1

2 background part 2 2 There is no need to read the detail of these slides. I will skip you through these slides; death will be avoided. The purpose of the detail is to allow readers of the London branch website to follow, when the slides are uploaded to our website. I have less than 15 minutes, so I will be quick. If a point was not followed during the seminar, please visit our website. I am grateful to CIArb members who have provided me with their standard ELs & to John Kendall, a fellow speaker, as I have quoted liberally from his leading book, Expert Determination.

3 introduction part 1 What is expert determination? Expert determination is a historically accepted form of dispute resolution invoked when there isn't a formulated dispute in which the parties have defined positions that need to be subjected to arbitration, but rather both parties are in agreement that there is a need for an evaluation: Wikepedia. It is not arbitration. Limited statutory input. All about contract therefore. So your EL is important. Should you provide an EL? Of course; save for if one is provided by an institution & even then, a supplemental EL? The purpose of this presentation is to consider what should be in your EL. 3

4 introduction part 2 Drafting the clause; the relationship with the EL. As in arbitration, expert determination has two contracts: (a) between the parties & (b) the parties and the expert (the EL). But in expert determination, given the lack of a statutory backdrop, the EL becomes more important –...consider whether to include a requirement that the parties must not unreasonably withhold their consent to the terms of engagement of an agreed or nominated expert, with a costs penalty or the ability to revert to a sole appointment if this is breached - Olswang web advice on drafting expert determination clauses - practical guidance following the epic legal battle of Cream Holdings Limited v Stuart Davenport – involving an accountants share valuation. 4

5 introduction part 2 Drafting the clause; the relationship with the EL. Notwithstanding what the expert determination clause says, "An expert should consider the terms on which to accept an appointment before losing a good bargaining position & should make an agreement on important issues like immunity from suit & fee rates a condition of acceptance" If the parties agree to your EL, then presumably they have accepted any consequential changes your EL imposes on the original expert determination clause? But perhaps, your EL should state that if there is any clash between the clause and the EL, the EL wins and varies the clause. 5

6 introduction part 3 Is your EL defined by regulation? If so what follows? Arbitration is not the practice of law or accountancy, but expert determination is, you are practising as an expert solicitor or accountant. As a means of promoting client care, Law Society regulations require a solicitor to give the client a letter at the start of every transaction which will * confirm what the client has asked the solicitor to do * say which individuals at the firm will handle the work * set out terms on which the client will be charged * how he will be notified of the cost as the transaction proceeds & how he will pay * state the name of the partner to contact if the client is unhappy with the firm's service – Newcastle LS advice. 'Substantially common interest, for the purposes of Chapter 3 of the SRA Code of Conduct, means a situation where there is a clear common purpose in relation to any matter or a particular aspect of it between the clients & a strong consensus on how it is to be achieved & the client conflict is peripheral to this common purpose. Detail the conflict. Etc. All that you are obliged to have in your standard EL, applies to a expert determination EL? But because expert determination, unlike contract, is entirely bound by contract, you should have more. 6

7 introduction part 4 Arbitration v Expert Determination: clarify at the point of the EL & look to the dispute. There are many badly written ADR clauses, mixing arbitration & expert determination. The arbitrator shall act as an expert in determining the valuation. Use the EL to clarify your position. I have come across many such difficult appointments & I prefer to be appointed an arbitrator, not an expert, but this is a personal decision. 7

8 Is it better off being an arbitrator? Negligence v Immunity: limiting liability v indemnity. A party who wishes to sue an expert has to prove negligence or some other breach of contract. An arbitrator is immune from suit except for acts or omissions in bad faith. Some expert clauses say that the expert is to immune from suit & that there is to be no involvement of the expert in proceedings or correspondence after the decision. Were these are not contained in the expert clause, an expert would be well advised to consider making...[it] a condition of his accepting an appointment. Unfair Contracts Terms Act 1977. Beware indemnities: most are badly written, they are not worth the paper they are written on. Should they be joint & /or several? 8

9 Is it better off being an arbitrator? Who is the expert? You, your partnership, a limited company? Unlike an arbitrator, an expert need not be a natural person. A company or a partnership can be (and in the case of auditors, often are) appointed as the expert determination practitioner. How does this affect the EL? Can liability be effectively capped via the use of separate appointment taking companies? 9

10 filling in the blanks: looking to arbitration. Interest? Unless otherwise provided for, the expert does not have the power to award interest. An interest clause can be placed in the EL. Costs? Unlike in arbitration, the expert does not have the power to award costs between parties unless the clause [or EL] says so. Many experts are not familiar with assessing costs. Arbitration has court taxation procedures. The expert, not being an expert in this area, should be able to appoint an independent cost draughtsman. Resignation? There is no authority on the circumstances in which an expert may resign, or the consequences of the resignation on the right to fees, so specify in the EL. Replacement is best addressed in the expert determination clause. 10

11 Challenging the determination. Calling the expert as a witness. "Some...[ELs] contain words to the effect that the expert is not to be required to give evidence in any subsequent connected proceedings. There is no rule of law which prevents a term of this sort being enforceable Reasons. Unlike arbitration, there is no statutory requirement on an expert to produce reasons. If he wishes to rebut any presumption that may exist that he should give reasons, he should state in the EL, that he will not give reasons. 11

12 Grammatical correctness. Are you the – expert determinator? 1.Capt Brown is also an Expert Determinator for technical issues - 2....the jurisdiction of the expert determinator is unclear - Disputes & International Projects, by DG Carmichael, published by Balkema 3.Mark Raeside QC has substantial experience as an expert determinator - expert determiner ? 1.As expert determiner, parties by agreement refer a specific issue or question to me to determine – Troy Peisly, an Australian lawyer & accountant - 2.International Arbitrator, Mediator and Expert Determiner - expert determinor? 1.Responsible for providing client services as required as an Arbitrator, Mediator, Expert Witness, Single Joint Expert, or Expert Determinor. – ORC Experts on their accountant experts - 12

13 concluding comments Expert determination is contractually based: including the relationship between the expert determiner & the parties. Many appointing institutions have minimal rules governing expert determination. Further in ad hoc appointments, there will be no rules. Take advantage of any initial party goodwill to get in as much as you can into the EL. An expert determiner whilst not an arbitrator, should contractually take many arbitrators powers. A draft expert determiner EL, based on this seminar, will be posted on – 13

14 thank you, as... 14

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