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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Introduction
At this year’s 12th ICC New York Conference on International Arbitration, I had the pleasure of participating on a panel dedicated to the ‘use of experts in international arbitration.’ The panel focused on whether experts are used for the purpose of analysis or advocacy. Our three-woman panel, which included Laura Hardin, a damages expert, and Juliet Blanch, an independent arbitrator, inspired me to write this piece to remind parties and practitioners that experts can play a third role—not as analysists or advocates, but as adjudicators.
Readers may be familiar with expert adjudication in the context of construction disputes (e.g. Dispute Adjudication Boards or ‘DABs’), but experts can be used as adjudicators in any context. Expert adjudication works particularly well for specific fact issues that, when determined, trigger a predetermined contractual result. By chance, at the annual Women in International Arbitration Cocktails and Conversation event the evening before the conference, one of the guest speakers, who is Vice President and Assistant General Counsel of Dispute Resolution at a large American company with offices spanning the globe, mentioned that along with international arbitration provisions in international contracts, she often includes expert proceedings when there are discrete issues to be determined that do not require adjudication through an award. Her comment confirmed the relevancy of expert adjudication to in-house counsel and the attorneys working with them.
This paper discusses whether expert proceedings may meet parties’ dispute resolution needs (I), the benefits of administered expert proceedings (II), and some examples of expert determinations (III). It then encourages in-house counsel and dispute resolution experts to consider the flexibility of the ICC Expert Rules when bespoke dispute resolution solutions are needed (IV).
I. Devising the dispute resolution procedure that meets counsel or parties’ needs
One morning, I received a rather routine email from a corporate partner at Gibson Dunn who was looking for an ‘arbitration clause.’ The international arbitration department had assisted him months before with an arbitration clause for a stock purchase agreement, but the deal had stalled. The partner was working on the stockholder’s agreement, and incorporated the same ICC arbitration provision that we had drafted for the stock purchase agreement. However, in addition to that provision, the client wanted a ‘fast-track arbitration’ on a ‘discrete point’—specifically whether a potential purchaser of shares in the joint venture was a ‘direct competitor’ of one of the parties, because the agreement prohibited such sales. Admittedly, my first inclination was to propose an Emergency Arbitrator proceeding or a pre-arbitral referee procedure (the new ICC expedited procedure, which was not in place at that time, would have also been an interesting option). But, as I considered how we could incorporate those options into the parties’ dispute resolutions procedure, none was a perfect fit.
Emergency Arbitrator proceedings are a great innovation, but were not intended to be separate from an arbitration and the client did not want a full arbitration on this discrete issue. Pre-Arbitral Referee Proceedings, which I had overseen when I was working at the Secretariat of the ICC International Court of Arbitration, were intended to address urgently required temporary measures. That was not the type of dispute resolution the party foresaw needing. The ICC’s new Expedited Procedures Provisions, had they been available, would not have been a perfect fit either, because what the client wanted was the determination of a discrete factual issue. An arbitration, even if expedited, ended up being more than what the party wanted.
I sent some additional questions to the partner about enforcement and what the client was envisioning. In response, he asked me if the ‘arbitrator’ would have to be someone who practiced law because, he explained, ‘it’s not really a legal issue.’ The parties wanted someone with industry experience to make this determination. As lawyers, we often assume parties want someone like us, with legal training, to resolve their dispute. But, this client, like many clients, felt more comfortable submitting this potential dispute to a person with non-legal expertise. I proposed the possibility of expert proceedings and contacted the Centre.1 After a short call to Centre to discuss the situation, I drafted a clause for a binding ICC administered expert proceedings and worked with the Centre to perfect it.
Except for the specific disputes described in Section … below, all disputes arising out of or in connection with this Agreement shall be finally settled by binding arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce by a single arbitrator appointed in accordance with such Rules. The arbitrator shall have practiced law or served as a judge for at least 15 years. The place of arbitration shall be New York, New York, U.S.A. and judgment upon the award rendered by the arbitrator may be entered in any New York State or federal court sitting in the Borough of Manhattan in the City of New York. The language of arbitration shall be English.
Section …
In the event of any dispute arising out of or in connection with whether a potential purchaser falls within the definition of ‘Direct Competitor of … as it appears in Article … of this agreement, the parties agree to submit that dispute to administered expertise proceedings in accordance with Rules for the Administration of Expert Proceedings of the International Chamber of Commerce (‘ICC Expert Rules’). The ICC International Centre for ADR (‘Centre’) shall appoint the expert. The expert proceeding shall be conducted in English. The place of the proceeding shall be New York, New York, U.S.A. and the expert proceeding shall be governed by the law of the state of New York. The expert shall have experience in at least one of …’s lines of business, specifically … as described in …’s Form 10K for the fiscal year ended … and have at least 10 years of experience in the … industry. The parties require an urgent decision. The expert will conduct the proceedings and render a reasoned report pursuant to the requirements set out in the ICC Expert Rules, while taking into consideration the parties’ need for an urgent resolution of the dispute. The parties agree that the expert’s report shall allocate costs, including reasonable attorneys’ fees. The expert shall award the successful or prevailing party costs, including reasonable attorneys’ fees, while taking into account the parties’ conduct. The findings of the expert shall be binding upon the parties.
The client’s and corporate partner’s difficulty in articulating what dispute resolution method they wanted is not unusual. Courts in some jurisdictions have experienced the same confusion.2 In a June 2013 report, the New York City Bar’s Committee on International Commercial Disputes explored the legal issues and practical problems arising in expert determinations under purchase price adjustment clauses in the United States.3 The City Bar Report reported that a review of case law in the United States revealed that ‘many practitioners’ assume that the adjudication provisions in purchase price adjustment clauses ‘must be an arbitration agreement because, if it is not an arbitration agreement, then it is not clear what else it could be’.4 The City Bar Report observed that:
The failure of U.S. law to mark the evolution of the law of appraisal into the law of expert determination, as it has under English law, has deprived many practitioners of the knowledge of this alternative form of binding dispute resolution and also of the vocabulary to give it its proper name.5
The City Bar Report recommended differentiating between arbitration and expert determinations based on the type and scope of authority the parties grant to the adjudicator. In contrast to arbitration, for expert determinations, the authority the parties grant is specific and limited in scope and relates to a factual (rather than legal) dispute/determination tied to the expert’s area of expertise.
Because of the confusion surrounding expert determination, expert determination clauses should be drafted carefully to reflect the parties’ intent. The scope of the expert determination should be clear and, to the extent possible, uncontestable. The powers the parties grant to the expert should be clear. The expert determination clause should use the word ‘expert’ and should not use the words ‘arbitrators’, ‘arbitrate’ or ‘arbitration’ unless those words are preceded by a negative (e.g. ‘experts not as arbitrators’, ‘not an arbitration’, ‘not an agreement to arbitrate’). Selecting the ICC Expert Rules or designating the ICC International Centre for ADR to select or appoint experts also makes it clear that the parties’ intention is not to arbitrate. The drafter should also consider and, when necessary, establish the hierarchy in the dispute resolution framework (i.e. if expert proceedings can happen independently of arbitration, if arbitrators would later have the power to review the determination, if expert proceedings will impact the availability of Emergency Arbitration proceedings, etc.). The drafter should also specify the law applicable to the expert determination. Carve-outs should be made to the other dispute resolution procedures agreed by the parties to ensure that they do not overlap with or override the expert determination.
When considering the law applicable to the expert proceedings, drafters should be cognizant that the courts, and not the experts, will likely be the bodies to determine the scope of the experts’ jurisdiction.6 In New York, the Civil Practice Law and Rules cover expert proceedings. CPLR § 7601 provides:
A special proceeding may be commenced to specifically enforce an agreement that a question of valuation, appraisal or other issue or controversy be determined by a person named or to be selected. The court may enforce such an agreement as if it were an arbitration agreement, in which case the proceeding shall be conducted as if brought under article seventy-five of this chapter. Where there is a defense which would require dismissal of an action for breach of the agreement, the proceeding shall be dismissed. Provided, however, that this section shall not apply to any agreement contained in the standard fire insurance policy of the state with the exception of an action to enforce the appraisal clause pursuant to section three thousand four hundred eight of the insurance law which shall not be enforced as an arbitration agreement.
New York Courts have interpreted CPLR § 7601 as applying to all agreements to expert determinations, not just appraisals. CPLR § 7601 can be used both to enforce agreements to submit issues to expert determination and when judicial enforcement of an expert determination becomes necessary. If judicial enforcement of an expert decision becomes necessary, the New York Court of Appeals has held that CPLR § 7601 empowers a court, in its discretion, to entertain an independent special proceeding for confirmation of the determination.7 Under New York law, an expert determination should be upheld in the absence of fraud, bias or bad faith.8 The law in other jurisdictions may not recognize expert determinations as a specific type of dispute resolution.
Not too long after drafting the expert determination clause above, I received an email from a different corporate partner who was ‘borrowing’ the ICC Expert Rules provision that I had drafted. The client, a bank in Latin America, was buying the local banking operations of a large international bank. The parties needed a way to determine whether the national regulator was imposing an ‘overly burdensome condition’ on our client in the course of seeking regulatory approval for the transaction. If a ‘burdensome condition’ was being imposed on our client, then our client would not be obligated to undertake that condition and had the right to terminate the agreement. If it arose, the issue the parties needed determined was a discrete ‘pre-closing’ condition. It was not a decision that would need to be enforced by a court, because the parties had already agreed in the contract about what rights would arise if a ‘burdensome condition’ existed.
As it turned out, it also was not a decision that needed to be determined by a lawyer, but one that the client thought would be handled more deftly by an investment banker with banking experience. Our client could have selected more than one expert to make the determination, but here, our client opted for the reduced cost and speed of a single expert. That single expert does not necessarily have to be an individual person; indeed, under the ICC Expert Rules an expert ‘may be a physical person or a legal person, such as a company or partnership’.9
The clause we ended up suggesting to meet the client’s needs was something along these lines:
In the event that Buyer and Seller are unable to agree after negotiating in good faith for 30 days as to whether any such condition, restraint or restriction would result in a Burdensome Condition, the parties agree: (A) to refer such dispute to Rules for the Administration of Expert Proceedings of the International Chamber of Commerce (‘ICC Expert Rules’), (B) the ICC International Centre for ADR (the ‘Centre’) shall appoint an expert who has banking expertise, specifically in investment banking, (C) the expert proceedings shall be conducted in English in New York, New York, (D) there shall be no substantive motions or discovery, (E) the expert will conduct the proceedings and render a reasoned report pursuant to the requirements set out in the ICC Expert Rules as soon as reasonably practicable and in any event shall submit the draft expert report to the Centre for scrutiny within twenty (20) Business Days from the Centre’s transmission of the file to the expert, (F) the non-prevailing party shall be responsible for all costs and expenses of the proceedings, including attorneys’ fees of the prevailing party, and (G) the findings of the expert shall be final and binding upon the parties.
However, the other side proposed proceeding with an ad hoc expert proceeding instead. In the section below, I describe the benefits of administered expertise proceedings, which we urged the counterparty to accept.
II. The benefits of administered expertise proceedings
Most international arbitration practitioners recommend institutional arbitration over ad hoc arbitration.10 However, in the deal described immediately above, the counterparty’s counsel – which was a leading firm in the practice of international arbitration that I suspect would not have suggested ad hoc arbitration to its client– suggested ad hoc expertise proceedings. With ad hoc expert proceedings, and by not referring to the ICC Rules for the Administration of Expert Proceedings, the parties would lose:
In the context of an ad hoc expert proceeding, to have any of the protections provided by the ICC Rules for the Administration of Expert Proceedings, the parties would have to specifically contract for them or agree to them at the time the dispute arises. The parties would also have to designate a third party to appoint the expert, resolve challenges, replace the expert or attempt to scrutinize the report. Moreover, it is not outside of the realm of possibility that issues could arise that the parties did not contemplate. A lack of cooperation at the time the dispute arises may thwart the parties’ ability to fill in any gaps in the procedure.
Experts may be the leading minds in their fields, but they may not be experienced in managing a dispute resolution procedure. The support of rules and an administrative body to oversee and assist the expert is invaluable. The Centre has over 40 years of experience assisting parties to obtain informed and independent opinions on technical issues. It currently administers three modern sets of rules, which were revised in 2015 and come under a single cover: (1) one for the proposal of experts and neutrals; (2) one for the appointment of experts and neutrals; and (3) one for the administration of expert proceedings. The ICC Rules for the Administration of Expert Proceedings will seem familiar to users of ICC Arbitration, as many of the Rules mirror the ICC Arbitration Rules regarding, among others, the independence of experts, good faith conduct of the proceedings in a cost effective manner, and scrutiny.
When parties choose administered proceedings, the Centre – like the Secretariat of the ICC Court in the context of arbitrations – supervises the entire proceedings which it closely monitors, scrutinizes the expert report and notifies it to the parties. ICC offers four model clauses for administered expert proceedings, specifically—(1) for optional proceedings; (2) for required non-binding proceedings, (3) for required contractually binding proceedings; and (4) for non-binding proceedings followed by arbitration on the same issue, if it is still required. As in the examples above, parties can incorporate expert proceedings into the larger framework of their preferred dispute resolution method, as our clients did because they wanted an expert proceeding to resolve specific, discrete issues that may arise, and to submit any other disputes to ICC arbitration. ICC expert proceedings and ICC arbitration are compatible.
To commence an expert proceeding, a party submits a Request to the Centre. The ICC Rules for Administration of Expert Proceedings provide guidance about what should be included in the Request. Along with its contact details, a party should include the contact details for the other side and the details of any entities that may cause conflicts of interest (Article 1). The Request should also contain a description of the work to be carried out, the desired (and undesirable) attributes of the expert, a description of the dispute and an indication of the value of the dispute. The Centre will notify the Request to the other side. The parties may either select the expert or the Centre will find and appoint the expert. When the Centre is asked to propose or appoint an expert (Article 3), it conducts a bespoke search for that expert. Whether chosen by the parties or the Centre, the expert must complete a Statement of Acceptance, Availability, Impartiality and Independence and has an ongoing obligation to disclose any potential conflicts that may arise (Article 4). The parties may also have agreed to have more than one expert, in which case the same provisions will apply.
Once appointed, the expert will consult the parties and set out a written mission, including a list of issues she will make findings on and the procedure that will be followed. The mission is similar to Terms of Reference in ICC arbitration. The ICC Rules for the Administration of Expert Proceedings provide guidance about how any disagreements regarding the scope of the expert’s mission will be resolved (Article 6(4)). The expert also establishes a timetable and both the expert and parties are obliged to ‘make every effort to conduct the expert proceedings in an expeditious and cost effective manner, having regard to the complexity and value of the findings to be made in the expert report’ (Article 6(1)). The end result of the administered expert proceeding is a written reasoned decision, called a ‘Report.’ Unless the parties provide otherwise, the Report is admissible in judicial or arbitral proceedings where all parties to the expert proceeding are parties (Article 8(3)). The Report is not binding, unless the parties agree to make it binding (Article 8(2)).
The Centre supervises the entire proceeding and has the power to remove experts who do not fulfil their functions (Article 4(5)). The Centre also handles issues and objections regarding the experts’ independence, impartiality or competence. It ensures that experts fix and comply with efficient procedural timetables. The Centre administers the financial aspect of the proceedings, which is a benefit for both the parties and experts, particularly if any issues regarding payments arise. The Centre and its Standing Committee scrutinize the draft Report in much the same manner as the ICC Court of Arbitration and its Secretariat scrutinize arbitral awards. The Report undergoes scrutiny by the Centre and the Centre’s Standing Committee composed of experts and dispute resolution specialists – of which I have the privilege of being part of as a Vice President of the Standing Committee. The Centre enforces the requirement of a reasoned Report, can require modifications as to form, and make suggestions on points of substance. The Centre’s fees are composed of a $3,000 filing fee per expert appointed or proposed and administrative expenses, which are based on the amount in dispute. The Centre’s scale of administrative expenses makes it an economical choice, particularly considering the extent of the services rendered.
III. Successfully using expert proceedings
As expert determinations often are conducted without the benefit of an administering body, it is difficult to have statistics on how often they are used and what success rates they have. In January 2017, a case before the New York federal courts between Alstom and General Electric (‘GE’) over the scope of the expert determination provision revealed that Alstom and General Electric had included an expert determination regarding post-closing purchase price adjustments in the November 4, 2014 Master Purchase Agreement that governed GE’s sale of its rail signalling business to Alstom.11 Like the suggestion of the in-house counsel during the Women’s event, this was another example of large corporations employing an expert determination as part of a larger dispute resolution framework.
On 2 October 2017 Global Arbitration Review (‘GAR’) reported that on 8 June 2017 Doug Jones issued an interim award in an arbitration administered by the London Court of International Arbitration (‘LCIA’) finding that an expert determination against Pakistan was final and binding, and ordered Pakistan to pay US$ 167 million to a group of nine local power companies pursuant to the expert’s determination.12 The dispute resolution clause in the agreements between Pakistan and the local power companies required the parties to submit disputes to a local independent expert. The expert’s determination would become final and binding after 75 days, unless Pakistan referred the matter to arbitration. The expert, Sair Ali, delivered his decision in 2015. Pakistan challenged the expert’s decision in a Lahore court and failed to pay the amount ordered by the expert. In reaction, the local power companies filed an LCIA arbitration. Pakistan requested a stay of the LCIA arbitration, arguing that the matter was already before the Lahore courts. Professor Jones rejected Pakistan’s argument, enforced the expert determination and ordered Pakistan to withdraw its court challenge to the expert’s decision and refrain from taking steps to disrupt the arbitration. GAR reported that Professor Jones was holding further hearings to determine what damages and interest Pakistan should pay, as the local power companies were seeking an additional US$ 243 million in damages and US$ 76 million in interest.
Another expert determination involving a state came to light in 2016, when Albania asked an ICC tribunal to reverse the decision of a panel of experts in a tax dispute relating to Europe’s largest onshore oil field.13 Albania had issued a US$ 57 million tax assessment against a Canadian oil company, Bankers Petroleum. In 2015, Bankers Petroleum filed an ICC arbitration against Albania. The parties agreed to stay the ICC arbitration and submit the audit dispute to an expert panel for an expedited determination. The parties further agreed that either side could submit the expert panel’s determination to the arbitral tribunal for review. The expert panel, which was composed of three auditors, ordered Albania to pay Bankers Petroleum US$ 257 million after rejecting Albania’s allegation that Bankers Petroleum has misstated its 2011 expenses to evade US$ 57 million in taxes. The status of the ICC arbitration and its outcome relating to the challenge to the expert panel’s decision are not public.
Expert determinations, particularly those involving states, can benefit from the structure and oversight provided under the ICC Rules for the Administration of Expert Proceedings. One administered ICC expert proceeding involved a build-transfer-operate contract between a state (‘State’) and a private corporation under which the private corporation would build and operate a dam and hydro-electric power plant (‘Plant’). When the sixteen-year operating period expired, an expert would estimate the cost, if any, of getting the Plant into good operating condition before transferring the Plant to the State. The private corporation and the State agreed to an expert proceeding to evaluate the Plant and suggest any remediation that may be necessary before the Plant’s hand-over. The original agreement between the parties only provided for the Centre to appoint an expert. But, after receiving information from the Centre about the possibility of administered expert proceedings, the parties agreed to ICC administered proceedings. The parties agreed on a procedure whereby an expert would render two interim reports—one 24 months prior to hand-over and one 12 months prior to hand-over—to give the private corporation an opportunity to remediate any issues identified by the expert prior to handing the Plant back to the State. The expert would then render a final report, 6 months prior to hand over, identifying and quantifying the impact of any unremediated issues.
The parties asked the Centre to appoint an expert—requesting that the expert have a multi-disciplinary (civil, mechanical and electric) engineering background, quantum expertise and be able to draft the reports in both English and the language of the State. The language of the State is a relatively rare language that is, for the most part, only spoken in the State. The Centre appointed two experts—an expert to handle the engineering issues and a quantum expert to handle the final report that, together, had all the attributes the parties requested. The expert for the first stages of the proceeding was a legal person that designated a team of its employees that had mechanical, civil and electrical engineering backgrounds and included a native speaker of the State’s language. The expert was not accustomed to managing proceedings or state entities. At one point early in the proceedings, the Centre righted the proceedings by reminding the expert of the importance of ensuring that it was not corresponding with one side only.
During the proceeding, the Centre worked extensively with the expert to ensure that its report was clear and reflected the due process it had afforded to each side. The expert drafted its first report, the Centre scrutinized it and approved it. The Report was originally written in two languages, English and the State’s language, and was issued to the parties. Following the issuance of the first report, the member of the expert team that spoke the State’s language resigned. Locating an expert with an independent electrical engineer who spoke and could draft a report in both the State’s language and English had been a challenge and replacing him would be time consuming. Furthermore, the time agreed by the parties for issuance of the second report was imminent. Staying in communication with the parties, the Centre alerted the parties to the issue and helped facilitate a solution—the parties agreed to have the second report rendered in English and translated into the State’s language. The expert drafted its second report, the Centre again scrutinized it and worked with the expert to ensure it was clear.
In the end, the process agreed between the parties was effective. P.C. successfully remediated all of the issues identified by the expert in its reports to the expert’s satisfaction, eliminating the need for the final stage of quantifying the outstanding issues and the quantum expert. There were no issues left to quantify. The parties benefited from the administration provided by the Centre, taking advantage of it to appoint the experts, oversee the proceedings and scrutinize the expert reports. By using administered proceedings, P.C. and the State were able to forestall contentious proceedings.
IV. Creatively using the flexibility of expert proceedings to meet specific needs
There is a notable trend towards parties seeking bespoke dispute resolution solutions. The Centre can and has helped fashion such solutions. In 2012, ICC became one of the four dispute resolution providers the Internet Corporation for Assigned Names and Numbers (‘ICANN’) called upon to administer part of the dispute resolution process relating to applications made for new Internet generic Top-Level Domain Names (‘gTLD’). In other words, applications to administer new domains like ‘.edu,’ ‘.book,’ ‘.basketball,’ ‘.black,’ ‘.charity,’ ‘.health,’ ‘.hiphop,’ ‘.food,’ ‘.kosher,’ ‘.halal,’ ‘.gay,’ ‘.luxury,’ etc. rather than the previously limited ‘.com,’ ‘.gov.’ or ‘.edu.’
Cooperating with ICANN, ICC developed a practice note to supplement its then ICC Expertise Rules that would allow the Centre to administer (1) limited public interest objections, which are disputes over proposed names that are considered to be contrary to generally accepted legal norms relating to morality and public order recognized under principles of international law, and (2) community objections, which are objections based on substantial opposition to the gTLD application from a significant portion of the community to which the string may be explicitly or implicitly targeted. The Centre has administered over a hundred disputes under this special procedure that fits into the larger process ICANN created to handle these disputes. There is no limit on what bespoke solutions can be conceived of and proposed to be handled by the Centre. Here, it came in the context of assisting in highly technical, cutting edge disputes that were part of a larger process instituted by ICANN.
Conclusion
Parties are demanding more efficient and faster methods of dispute resolution. To achieve their goals, crafting the right dispute resolution procedures is essential. Getting an understanding of what the dispute could be, how lawyers or parties want it to be decided and the intended impact of the outcome of the dispute are indispensable elements in finding the right fit between dispute resolution options and counsel or parties’ needs. To meet parties’ needs effectively, mastering the differences between dispute resolution options — arbitration, expedited arbitration, emergency arbitrators, referee proceedings, mediation, expert proceedings, dispute boards, etc. — is key. Arbitration was not the right choice for our clients for all of the disputes they envisioned may arise. For some issues, they were not looking for awards that they could later enforce, they just needed a quick determination by an expert in the field that would allow them to continue with the performance of their agreements. The ICC Expert Rules were the right solution for our clients and are well worth considering to meet any party’s diverse and demanding needs, from proposal of experts or neutrals, appointment of experts or neutrals, to fully administered expert proceedings, or for bespoke solutions to dispute resolution needs.
1 At the time, the new 2015 ICC Expert Rules had not yet come into force. The clause below is slightly modified to reflect the new Rules. However, the new Rules, which align with the current ICC Rules of Arbitration, now require less modification than the previous ICC Rules for Expertise did.
2 See e.g., Viacom International, Inc. v. Winshall, 2012 WL 3249620 at *3 (Del. Ch. Aug. 9, 2012), ignoring the parties’ contractually agreed method of dispute resolution and noting its confusion with the expert determination provision: ‘But not content with having deemed the Resolution Accountants as experts and not arbitrator and thus causing one eye-brow knitting moment, the drafters forged on to state in a later section that … no party shall have the right to bring any claim disputing such final determination, in the absence of fraud or manifest error’.
3 ‘Purchase Price Adjustment Clauses and Expert Determinations: Legal Issues, Practical Problems and Suggested Improvements’, Report by the Committee on International Commercial Disputes of the Association of the Bar of the City of New York (‘City Bar Report’), available at http://www2.nycbar.org/pdf/report/uploads/20072551-PurchasePriceAdjustmentClausesExpertDeterminations--LegalIssuesPracticalProblemsSuggestedImprovements.pdf.
4 Ibid. at 2.
5 Ibid. at 52.
6 See e.g., Barclays Bank PLC v. Nylon Capital LLP (2011) EWCA Civ 826, Court of Appeal, Lord Neuberger MR, Lord Justice Thomas and Lord Justice Etherton, 18 July 2011: The English Court of Appeal decided, even though the parties requested that the Court give no judgment, that it was the Court’s role to decide on the scope of the expert’s jurisdiction at the outset and finding that the dispute at issue did not fall within the scope of the expert proceeding, which was triggered once profits were allocated among stakeholders in the hedge fund. The Court differentiated expert proceedings from arbitration, finding that the ‘Fiona Trust presumption’ that parties intended their disputes to be resolved in one forum cannot normally apply to expert proceedings, which are by their nature limited to discrete issues. See also Philip Landolt, ‘Switzerland: Expert determination or arbitration?’, Global Arbitration Review 1 February 2009, http://globalarbitrationreview.com/article/1027666/switzerland-expert-determination-or-arbitration , noting the ‘fine line’ in Swiss law between expert determination and arbitral awards and that ‘Swiss law treats expert determinations as being characteristically binding on the parties’ and that they can only be challenged on limited grounds, including that they were ‘manifestly unjust, arbitrary, defective or seriously contrary to equity, or based on erroneous determination of the factual situation or vitiated by lack of counsel’.
7 Penn Central Corp. v. Consolidated Rail Corp., 56 N.Y.2d 120 (N.Y. 1982).
8 Liberty Fabrics, Inc. v Corp. Properties Assoc., 5, 223 A.D.2d 457 (1st Dep’t 1996), confirming the lower court’s confirmation of an expert determination on five commercial properties and rejecting claims for fraudulent misrepresentation. New York Courts have also subject expert determinations to the provisions for vacating arbitration awards. See the City Bar Report, footnote 3.
9 See Article 4 of the ICC Rules for the Proposal of Experts and Neutrals, Article 5 of the ICC Rules for the Appointment of Experts and Neutrals, and Article 14(1)) of the ICC Rules for Administration of Expert Proceedings.
10 See e.g. Gary Born, International Commercial Arbitration: Commentary and Materials (2d ed. Kluwer 2014), p. 71, noting that ‘most experienced international practitioners fairly decisively prefer the more structured, predictable character of institutional arbitration, and the benefits of institutional rules and appointment mechanisms, at least in the absence of unusual circumstances arguing for an ad hoc approach’.
11 Alstom, et al. v. General Electric Company, 16-SV-3568 (JMF) (S.D.N.Y. Jan. 10, 2017), determining that dispute should be submitted to expert determination in the first instances, rather than ICC arbitration and that where a single agreement contains an arbitration clause and an expert determination provision, questions of arbitrability must be decided in the first instances by a court, not by an arbitrator.
12 Lacey Young, ‘LCIA arbitrator rules against Pakistan in power plant dispute’, Global Arbitration Review 2 October 2017), available at http://globalarbitrationreview.com/article/1147847/lcia-arbitrator-rules-against-pakistan-in-power-plant-dispute?utm_source=Law Business Research&utm_medium=email&utm_campaign=8739009_GAR Headlines 02%2F10%2F2017&dm_i=1KSF,57B29,9GPI7T,K0GG1,1
13 Lacey Young, ‘Albania turns to ICC tribunal in petrol tax dispute’, Global Arbitration Review, 27 October 2016), available at http://globalarbitrationreview.com/article/1069948/albania-turns-to-icc-tribunal-in-petrol-tax-dispute. See also ‘Expert Panel Determination Pursuant to the Agreement for Determination by Expert of Certain Disputes Related to Cost Recovery (Patos Marinza Oilfield)’ dated February 24, 2016 https://www.reporter.al/wp-content/uploads/Navigant-watermark.pdf.