In a case regarding a share purchase agreement with an adjustable base price of USD 2.258 billion and the adjustment to be determined by an independent accountancy firm acting as an expert, the court dealt with the supervision and control by the court of expert determinations.

The approach is:

  • The parties may agree that an independent expert has the power to decide a question in dispute.
  • The extent and limits (or scope) of an expert’s decision-making authority depends on the interpretation of the contract.
  • Where the expert acts within its decision-making authority, the court will not intervene before or after the expert’s decision even if the court considers that it would have reached a different decision itself.
  • The parties may agree on the principles on which an expert is to act. If the expert acts outside its authority, the court will set aside the decision because the expert has not performed the exercise the parties have agreed they should undertake.
  • The courts will not normally declare in advance what the limits of the expert’s authority are because this question is usually hypothetical and only becomes a live issue when one of the parties contends that the expert has reached the wrong decision.
  • If an advance declaration is sought the court must determine whether the dispute is real and not hypothetical and, if real, whether it is in the interests of justice to determine the disputed matter rather than allowing the expert to do so first.
  • If there is a question whether the expert determination agreement covers the dispute at all (ie the extent of the expert’s jurisdiction) the same principles apply.

In this matter the court found that the questions raised were hypothetical rather than real and stayed the proceedings between the parties pending the decision of the expert.

Similar principles would probably be applied in South Africa.

[General Electric Company v AI Alpine US Bidco Inc [2021] EWHC 45 (Ch)]