by Allison Kuntz
Parties frequently agree to have their disputes determined outside of the courts by way of either arbitration or expert determination. Arbitration is typically used to resolve claims based on disputed facts and law between the parties, while an expert determination is typically used to settle a term of a contract or decide a discreet technical issue. These two types of proceedings are intended to be quite different and have different consequences.
Expert determination is a purely contractual creature where the parties agree not only to its process, but to be bound by its result. To the extent the parties have not made the expert determination process sufficiently certain it is possible to challenge its enforceability in court, but the courts will not easily set the process aside given its origins in the terms of the parties’ contract and the principle that parties should be held to their bargains.
To the extent the parties have not agreed on a detailed process for their expert determination, the expert is entitled to establish their own process and rely only on their own skill, judgment and experience in making their decision. This is important to consider when agreeing to an expert determination because experts are not required to follow the rules of procedural fairness or natural justice, which means if a party is expecting or desires a process by which they are entitled to submit evidence and respond to opposing arguments, they may be disappointed.
That said, if the parties structure their process to essentially mirror an arbitral (or litigation) process and ultimately ask their expert to resolve a disagreement in light of conflicting evidence and competing contractual interpretations, for example, the court may determine that they have actually agreed to an arbitration. This is possible even where the parties have included express language in their agreement that the appointed third party will be acting as an expert and not as an arbitrator. One of the reasons a party may want to have their expert determination deemed an arbitration is to expand their rights to challenge the decision (which although limited in arbitration are even more limited in expert determination) or for ease of enforcement.
An expert determination will not be final and binding unless it is designated as such in the parties’ agreement. If an expert determination is final and binding then it can only be challenged on very narrow grounds such as fraud, collusion or a material departure from instructions. If the expert simply gets it wrong there is no remedy against the decision per se, although it is possible to bring an application against the expert for negligence because experts conducting expert determinations do not share the same immunity from prosecution as arbitrators.
Parties can extend the scope of judicial review by adding “save in the case of manifest error” after “final and binding”, but should note that manifest error does not allow the reviewing court to re-examine the merits of the case, or scratch below the surface of the decision. Rather, Canadian courts have accepted a definition of manifest error as an “error in law on the face of the award…that you can find in the award or a document actually incorporated therein…” Further, the manifest error must be “apparent on the award, not the record….”English courts have opined extensively on the meaning of manifest error in the context of expert determinations and in doing so have reiterated the high and limited threshold for review:
- “oversights and blunders so obvious and obviously capable of affecting the determination as to admit to no difference of opinion”;
- an error which is “obvious or easily demonstrable without extensive investigation”;
- an error that requires “swift and easy persuasion and rapid recognition of the suggested error”; and
- an error that is obvious on the face of the decision and does not require a lengthy enquiry to identify it.
In respect of enforcement, given the legislative back drop and support for arbitral proceedings and awards, they can be enforced with relative ease compared to a decision in an expert determination. In order to enforce a decision in an expert determination the successful party must commence a proceeding and argue that the parties should be bound by their contractual decision to have the expert make the determination.
Parties may choose the comparatively informal process of an expert determination over arbitration because they believe the expert will be sufficiently qualified to determine either a discrete technical issue or an anticipated disagreement such that the parties can benefit from the presumed convenience, expediency and lower cost of that process. These are all good reasons to choose expert determination, however, the parties’ expectations for the process and the consequences of it should be thoroughly considered prior to embarking on that path.
 See for example Hanzek v TRM (Canada) Corporation, 2007 BCSC 418 [Hanzek]; Pfeil v Simcoe & Erie General Insurance Co., (1986), 45 Sask R 241 (CA); Robert Hunt, “The Law relating to Expert Determination”, online: (2008) Expert Determination Electronic Law Journal <http://www.roberthuntbarrister.com/ExpertDetLawApril2008.pdf>.
 J. Brian Casey, Arbitration Law of Canada: Practice and Procedure, 3rd ed. (Huntington, NT: Juris, 2017) at p. 13.
 Zittrer v Sport Maska Inc.,  1 SCR 564 at 602-605 (SCC).
 Hanzek, supra note 1.
 Campbell v Edwards  1 All ER 785; Jones v Sherwood Computer Services,  2 All ER 170.
 Zittrer, supra note 3 at 616.
 Hanover Management Ltd. (111196 Holdings Ltd.) v. Petro-Canada Inc., 1988 CanLII 3460 (ABQB) at 7.
 MacDonald and McLean v Livingstone and another,  CSOH 31 at para 4.
 North Shore Ventures Ltd. v Anstead Holdings Inc.,  EWCA Civ 230 at para 51, citing with approval IIG Capital llc v Van der Merwe,  EWHC 2631 at para 52, affirmed  EWCA 542 at paras 33-35.
 Natoli v Walker, 1994 NSW LEXIS 12789, at 41 (New South Wales CA); cited in Walton Homes Ltd. v Staffordshire County Council,  EWHC 2554 (Ch), and Sir Kim Lewison, The Interpretation of Contracts, (London: Sweet & Maxwell, 2015) at 860 – 861.
 Dixons v Murray-Oboynski (1997), 86 BLR 23 at 32 (QB).
Allison Kuntz is a Partner in the dispute resolution and litigation department of Norton Rose Fulbright’s Calgary office.