Expert determination is a procedure by which the parties to a dispute appoint an independent and neutral expert to determine the dispute in private. It is used as a confidential alternative to arbitration or civil proceedings and allows the disputing parties trade secrets and other sensitive information to be kept out of the public domain.
It addition to the confidential benefits of expert determination, it is an expedited process that circumvents the time frames applicable to civil litigation, limits adversarial interaction between the parties preserving business relationships, is cost effective compared to instituting action in a court of law and ensures that the referees decision is vindicated as it is based on expert knowledge and an intricate understanding of the subject matter.
The provision for expert determination may be provided for pre dispute (included in an agreement between the parties) or post dispute in order to mitigate costs or for any of the benefits listed above.
The agreement from which the dispute arises ought to either identify the expert directly, provide for such determined by agreement between the parties, or in the case where no agreement can be reached, for an appointing authority, such as a related professional institute, to recommend possible candidates to the parties for appointment or to make such an appointment on behalf of the parties.
As the role of the expert must be neutral, the prospective appointment should always be made on an arm’s length basis.
Expert determination is usually employed in the resolution of technical or valuation issues in industries such as commercial, construction, mining, engineering, medical or legal where expert knowledge and proper understanding of the relevant industry is needed in order to properly evaluate the subject matter and reach a justified and accurate decision.
The required qualifications of an expert candidate are of the parties’ choosing. If expert determination is provided for pre dispute, such qualifications are usually specified in the authoritative agreement.