Expert determination clauses have become a common means of providing for a swift resolution to disputes in a variety of commercial agreements. However, the High Court’s judgement in Dandara South East Ltd v Medway Preservation Ltd and another [2024] recently consolidated the effect of such a clause, holding it was separable from the agreement as a whole, and mirrored the operation of an arbitration clause. Consequently, parties should be wary that expert determination clauses may continue to apply, even where the remainder of the agreement has been called into question.
Background to the Dispute
Medway Preservation Limited agreed to sell an area of land in Strood, Kent to Dandara South East Limited. Dandara had previously contested the validity of Medway’s statement of practical completion, which had delivered in November 2023. One month thereafter, Dandara terminated the agreement, maintaining their contractual entitlement to do so.
The first, and most contentious legal point in question concerned which of two competing, jurisdictional clauses should determine how this dispute was to be decided. Clause 28, an expert determination clause, had been drafted to apply to all disputes between the parties. Meanwhile, Clause 31 gave exclusive jurisdiction over the agreement to the courts of England and Wales.
Medway successfully disputed the court’s jurisdiction to determine Dandara’s right to terminate the agreement. The defendants argued that proceedings should be stayed, and the dispute first submitted for expert determination. This argument reasoned that the operation of the mandatory expert determination clause followed the separability principles of an arbitration clause, and remained effective during the dispute.
Master Brightwell’s Judgement
Master Brightwell’s judgement stated that the natural reading of Clause 28 was indeed similar to that of an arbitration clause, enshrining the principle of separation.
In this instance, the claimants were unable to refute the idea that the parties had intended for all disputes to be subject to expert determination. The fact expert determination had not been carved out of the court’s jurisdiction favoured a ‘one-stop’ and all-embracing construction of clause 28, which remained effective during the dispute over Dandara’s right to terminate the agreement.
Accordingly, proceedings were stayed to allow an expert determination to take place.
Comments
Parties should readily define the scope of disputes which are subject to expert determination. This is particularly important where expert determination is mandatory, and demonstrates the parties’ intention for disputes to be referred to an independent expert. Master Brightwell’s comments advise that exclusive jurisdiction clauses may refer to an expert determination clause, to resolve ambiguity over jurisdiction.
If you have any questions or are seeking advice, please contact one of our Commercial Property Team.