Court of Appeal rules that expert has no jurisdiction

The Court of Appeal has considered whether there should be a stay of court proceedings pending expert determination under an agreement between the parties. It ruled that the expert in the case did not have jurisdiction to decide the dispute, and so there should be no stay of the proceedings: Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826.

The case emphasises the difference between expert determination and arbitration. Unlike arbitration, there is no procedural code for expert determination. This means that the activities of an expert are subject to little control by the court. Further, the rationale in the Fiona Trust case (Premium Nafta Products Ltd (20th Defendant) and others v Fili Shipping Company Ltd and others [2007] UKHL 40), that parties should normally be taken, as sensible businessmen, to have chosen one forum for the resolution of their disputes, did not apply to expert determination. This was because arbitration is usually an alternative to a court for all dispute resolution, whereas expert determination clauses generally presuppose that there may be more than one type of dispute resolution procedure.

The court held that it is the ultimate decision maker on whether an expert has jurisdiction to hear a particular dispute. This is the case even if a contract purports to confer jurisdiction on the expert in a manner that is final and binding. However, in some circumstances the expert can determine the issue of jurisdiction. The interests of justice and convenience will decide whether the expert or court should decide the question first.

The fact that the court concluded that the expert had no jurisdiction (because a pre-condition necessary for referral of a dispute to the expert had not taken place) was the reason why in this case it was just and convenient for the court to determine the issue of jurisdiction. As an expert's decision on jurisdiction is not final, it would have been wasteful for him to have decided the issue first and then for this possibly to be challenged at court.

It is also worth noting that the parties notified the court before judgment was given that they had settled the case. However, the court still gave judgment, holding that when a case has been fully heard before it is settled or withdrawn, the court has the right to decide whether to give judgment or not. Lord Neuberger MR set out a list of factors that the court will consider when making the decision whether to hand down the judgment notwithstanding settlement. In this case, it was significant that the draft judgment had already been prepared when the case settled, and the issues were of general importance.