A provision for expert determination is capable of applying to all disputes between the parties and of being separable from the contract in which it appears if that is what the parties intended.
The High Court considered this issue granting a stay of proceedings to enable the dispute to be decided by expert determination in Dandara South East Ltd v Medway Preservation Ltd and another [2024] EWHC 2318 (Ch); [2024] PLSCS 163.
The case concerned a contract for the sale of land at Commissioner’s Road, Strood, Kent, between the claimant as buyer and the defendants as seller and contractor. The sale and completion of the sale of the land were subject to two conditions precedent: the carrying out of earthworks to create a development platform for future development and the issue of a statement of practical completion of the earthworks following an agreed procedure.
Clause 28 provided for any dispute or difference between the parties as to any matter in connection with the contract to be submitted for expert determination, for appointment of the expert and management of the dispute. Clause 31 provided for the courts of England and Wales to have exclusive jurisdiction to settle any dispute arising from the contract.
The defendants’ agent issued a statement of practical completion in November 2023 which the claimant disputed, arguing that the notification and representation provisions in the contract had not been complied with. The claimant purported to exercise its right to terminate the contract by notice in December 2023 and claimed the return of its deposit. The defendants sought a stay, contending that the contract provided for mandatory expert determination.
The court considered clause 28 to be an all-embracing provision, mirroring the breadth of disputes generally subject to an arbitration clause. Its natural reading required all disputes concerning the contract to be subject to expert determination including disputes as to whether the contract had been validly terminated or whether one party was in breach. The parties, as business people operating in property development, were objectively taken to have intended this.
While the principle of separability is enshrined in statute for arbitration agreements (section 7 of the Arbitration Act 1996) there is no authority on the position regarding expert determination. Such clauses generally presuppose that parties intend certain types of disputes to be resolved by expert determination and others by the court. The fact that expert determination was not carved out of the court’s jurisdiction in clause 31 was a factor favouring a one-stop construction of clause 28 which the court concluded was separable from the contract.
Louise Clark is a property law consultant and mediator
