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Procurement Perspectives: An alternative process to dispute resolution

Stephen Bauld
Procurement Perspectives: An alternative process to dispute resolution

The term “expert determination” describes a dispute resolution procedure under which the parties jointly instruct an expert to decide an issue, with the understanding that determination shall be contractually binding.

Expert determination is made by a specialist in the subject matter of the dispute undertaken with the agreement that the parties will accept the result.

According to advocates, expert determination is ideally suited to disputes and matters of valuation or matters that are primarily dependent on technical issues, such as whether a particular design or product satisfies the buyer’s specification or whether there is a malfunction.

According to the Institute of Arbitrators and Mediators of Australia, the term expert determination describes a “flexible alternative procedure for the resolution of disputes based upon the decision of an independent party: The Expert.”

The disputants agree beforehand to be bound by the decision of an independent expert. It is often the quickest and most effective way of resolving disputes that are relatively simple in content or are essentially technical in nature.

According to the institute’s Expert Determination Rules, the role of the expert is summarized as follows:

  • The expert shall determine the dispute as an expert in accordance with the rules and according to law.
  • The parties agree that the expert is not an arbitrator of the matters in dispute and is deemed not to be acting in an arbitral capacity.
  • The process is not an arbitration within the meaning of any statute.
  • The expert shall adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay and expense, so as to provide an expeditious cost-effective and fair means of determining the dispute.
  • The expert shall be independent of and act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of any opposing party, and a reasonable opportunity to make submissions on the conduct of the process.

In Canada, it is relatively rare for procurement contracts to make any provision for the resolution of disputes by way of expert determination. Where it is employed, it tends to be used for relatively technical questions that would be beyond the range of experience of an ordinary arbitrator or superior court judge.

The general consensus in the secondary literature is that it is suitable for use only in a case-by-case basis.

It follows that expert determination is not advised as a general mechanism for the resolution of contractual disputes, for the following reasons: there is not yet a clear set of professional standards regarding the conduct of this form of ADR; most contract related disputes do not involve technical issues on which it is either necessary or advisable to obtain an expert opinion; the procedure proposed affords too much uncontrolled discretion to the expert; and the “expertise” of a single expert may well not be sufficiently broad to allow a proper resolution of a dispute, due to the existence of different technical issues that require separate resolution.

For a number of reasons, it is unusual for a contract to include a provision requiring expert determination.

Much as with adjudication, there is some uncertainty as to the manner in which expert determination is intended to function. It is now general practice for experts to use an inquisitorial method of fact determination.

The expert carries out his or her own tests and makes an independent determination as to where the truth lies. The parties have no right to present evidence and no right to challenge the evidence on which the expert relies.

The perceived merit of this approach tends to depend on how much confidence one is prepared to place in the expert who makes the determination.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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