Court will not interfere with expert determination process

The High Court has reaffirmed that, where parties agree to expert determination, the courts will be slow to intervene before the expert has reached a decision. Our Dispute Resolution team discusses the judgment which underscores the importance of allowing the agreed process to run its course.

There is limited Irish case law regarding the interplay between court process and expert determinations. However, a decision[1] by Mr Justice Twomey has given greater clarity to the principle that, where parties have chosen expert determination, the courts will be slow to interfere. This is especially the case where the dispute has not, at the time of the court application, been determined by the expert. The court in this case was critical of the applicant for seeking court intervention. It is clear from the judgment that, where parties have chosen expert determination, they should not apply to the court in advance of the expert process taking its course. Instead, the proper course is to allow the expert determination to proceed. The court should only be invoked afterwards, if there is a basis to do so.

Background

The case arose out of transaction involving a mobile catering food truck manufacturing business. This business expanded rapidly during COVID-19 and became a market leader in Europe. It was then sold to the defendant, a Swedish conglomerate.[2] The consideration included an initial payment. It also included an earn-out arrangement, which could potentially involve three additional payments. However, a dispute arose about how certain sales orders should be treated for timing purposes under the earn-out. Ultimately, the purchaser claimed that the second earn-out payment should be approximately €220,000. The vendor claimed it should be closer to €2.2 million. The Share Purchase Agreement (SPA) provided for expert determination in the event of a dispute. A partner in a leading accountancy practice was agreed as the expert. However, before the process could begin, the catering food truck manufacturing business applied to court seeking a declaration regarding the correct approach to any adjustments to the earn-out payment. As put by the court, the catering food truck manufacturing business effectively sought to limit the discretion of the expert in how she makes her determination. This necessarily raised the “question of the extent to which the courts can interfere, in advance of an expert determination process, in relation to a dispute which the parties have agreed should be resolved by that expert determination process and so, it seems, without court interference.”

Decision

Mr Justice Twomey began by looking at the Supreme Court decision in Dunnes Stores v McCann.[3] He described this as “the leading case on the law applicable to court intervention in the expert determination process”. He noted that the Supreme Court had expressly[4] accepted that appeal to “remove any doubt as to the appropriate principles to be applied” where the court is asked to interfere in an expert determination process previously agreed to by the parties. Drawing on that decision, he observed that “any doubt was removed” as the Supreme Court made it “very clear that it was inappropriate, save in exceptional circumstances, for a court to interfere in advance in the conduct of an expert determination.”

He went to note that a party doing so was engaged in a “wasteful pursuit”, both of their own and the other party’s money, as well as court time.

The food truck manufacturer here, as put by the judge, was a party to a dispute which had been referred to expert determination, not litigation. However, it was still trying to litigate the matter, seeking court determination of an issue which was “prima facie a matter for the expert under the terms of the SPA providing for expert determination.” That scenario had been considered by the Supreme Court in Dunnes Stores, where Ms Justice Dunne had identified the following:

“… the general rule is that the courts should not intervene in the matter in which the parties agree to submit a dispute to an expert for determination in advance of the dispute resolution process provided for in the parties’ contract and should only do so in the case of exceptional circumstances…”

Mr Justice Twomey then made the following observations:

It was “wasteful and premature to litigate before [the] expert makes [their] decision”; the Supreme Court had recognised it was “unsatisfactory” to apply to court without waiting for the determination of the expert.

The parties’ agreement should be respected: there was “no reason why the parties should not be left to resolve their disputes in accordance with the manner in which they have agreed to do so”. He further stated that this was especially true where the parties chose an expert in the field in which the dispute has arisen – in this case, an accounting issue to be determined by an accountant. Not only was that an area in which a judge would have no expertise, it would also avoid the need for expert witnesses on each side.

There was no reason to believe that the expert would not make a lawful decision. In addition, the application at this stage involved a hypothetical situation. Even if the expert did go beyond their scope, the legality of the decision could be challenged afterwards, if necessary.

Public policy reasons encouraged more cost-effective resolution of disputes, rather than litigation. The courts strongly encourage the use of alternative dispute resolution (ADR), as it is typically cheaper and more efficient than litigation, and reduces the burden on the courts system. By the courts accepting the application, the “prohibitive” costs would increase and enable the dispute to be litigated through the ‘backdoor’. These policy reasons were “particularly compelling” in this case.

It would be illogical if the expert was not entitled to determine the dispute without recourse to the courts. In determining the clauses in the agreement relevant to the dispute, the expert was entitled to decide what those clauses meant. The expert could not carry out their function without doing so. There would be no point in having an ADR process as an alternative to litigation if the courts were effectively asked to do the expert’s job.

The court rejected the arguments relied on by the food truck manufacturer as to why it should interfere. It noted that litigation rarely, if ever, provides a speedy resolution to disputes. Given the clear position set out in Dunnes Stores, Mr Justice Twomey was particularly critical of the food truck manufacturer in this case. It should have known it would not succeed and bringing the application was “most unsatisfactory”. In dismissing the application, the judge concluded that the Swedish conglomerate should not have been brought to court. Mr Justice Twomey also indicated a preliminary view that it should be awarded its costs.

Conclusion

The decision is an important and useful confirmation of the position. Where expert determination has been chosen as the dispute resolution method, an application to the court prior to the expert’s decision has been issued will not be viewed favourably by the courts. The parties can expect to be held to their agreement. They also will generally be expected to proceed with the expert determination process. The appropriate point to invoke the assistance of the court, if necessary, is after the determination of the expert has issued. Even then, the grounds for challenge are limited. Parties should not assume that the court will provide clarification before the expert determination process has concluded. Legal practitioners should advise their clients accordingly.

For more information and expert advice on commercial disputes, contact a member of our Dispute Resolution team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Sunward Holdings Limited v Teqnion AB [2025] IEHC 296

[2] It should be noted that the transaction has proved to be contentious and this is not the only litigation between parties related to it.

[3] [2020] 3 IR 1

[4] [2018] IESCDET 197