Expert determination clauses have become an increasingly popular feature of commercial contracts, providing an efficient and cost-effective method for parties to resolve specific technical or industry-related disputes. However, the recent judgment in WH Holding Limited v E20 Stadium LLP [2025] EWHC 140 (Comm) is an important reminder that parties should always consider the appropriateness of opting for expert determination, and if they choose to do so, the implications of any "manifest error" exception.
Expert determination clauses
Expert determination clauses allow parties to refer specific types of contractual disputes to an independent expert, rather than resolving them through arbitration or litigation. In practice, expert determination operates as a streamlined alternative dispute resolution method, which is often used for technical or valuation issues in the context of, for example, an SPA, rent review clause, or clause determining whether goods or services complied with a certain specification. The independent expert is tasked with evaluating the issues and rendering a decision that is usually final and binding on the parties, subject to limited grounds for challenge.
Expert determination can enable the parties to reach a resolution more quickly than arbitration or litigation, minimising disruption to ongoing projects and preserving business relationships. Given its relative speed and simplicity of procedure, it can also be cost-effective, making it an attractive option for smaller disputes or when budget constraints exist. Additionally, parties maintain a degree of control over the process, including the choice of expert and procedure.
Background facts
In 2013, E20, the owner of the Olympic Stadium, granted a 99-year concession to WHH, the holding company of West Ham Football Club, effectively entitling the club to use the stadium as a home ground. The agreement provided for E20 to share in gains made by the shareholders of WHH if they sold or transferred their interests in the club through the payment of a "Stadium Premium Amount". The agreement also contained an expert determination clause, providing that any dispute between the parties relating to payments be determined by an expert, and that "the expert's determination shall (in the absence of manifest error) be final and binding on the parties and not be subject to appeal".
In 2021, a dispute arose as to whether a Stadium Premium Amount of £3.6 million became due after various WHH shareholders entered into share sales and an option agreement. The parties agreed to put their dispute before an expert, who concluded that the premium was payable by WHH to E20. However, WHH challenged the determination, claiming the expert had made two "manifest" errors.
What is a manifest error?
The authorities indicate that, while the precise meaning of manifest error may depend on the particular contract and the context in which it is used, generally:
- A "manifest error" is one that is obvious or easily demonstrable without extensive investigation.
- "Obvious or easily demonstrable" errors include those oversights and blunders so obvious and obviously capable of affecting the determination, that there can be no difference of opinion.
- Demonstrable "without extensive investigation" may depend on context. Unless the contract specifies otherwise, extrinsic evidence will be admissible. It may not be necessary to be able to demonstrate the error immediately but in most cases, this will be done readily (by a narrow, time-limited investigation).
The judge distinguished the exercise of determining whether a manifest error has occurred from the court's task when determining an appeal. It is not the court's role to determine whether the expert erred in law, but rather to decide whether the claimant has proved the manifest errors it contends for. Thus, while a manifest error exception provides a means by which a party may seek to challenge the decision of an expert, the scope to do so is heavily constrained.
Decision
The judge went on to hold that the expert had erred in finding WHH liable to pay the £3.6 million Stadium Premium Amount, which rested on E20's contention that the share sales and the option agreement formed a single transaction. The expert had accepted E20's approach, which involved undertaking two separate calculations in relation to the share sales and the option agreement, each undertaken on a different basis, which were then blended into a hybrid calculation to arrive at the Stadium Premium Amount. However, the judge concluded that there was no basis to justify such an approach and even if the share sales and option were categorised as a single transaction, there was no mechanism in the agreement from which the Stadium Premium Amount could be calculated.
As to whether those errors were manifest, E20 submitted that even if the expert had erred in reaching his original conclusion, those errors were not manifest as they could not be said to be "a howler", something that "hit you between the eyes" or "so obvious a blunder that there really can be no dispute about it". However, the judge did not consider that terminology such as 'howler' could be a guide to the necessary qualities of an error in a reasoned determination, preferring to apply the guidance above. In his view, the expert's errors went to the heart of his determination and were manifest. Therefore, the expert's determination was not final and binding.
Concluding remarks
Caution should be exercised by contracting parties in deciding the appropriate forum for resolution of disputes under their contracts.
Expert determination will be suitable for certain types of disputes, particularly those relating to discrete or technical issues. However, where issues may be complex, and require the production of documentary and witness evidence, a more rigorous dispute resolution process might be appropriate.
Parties should also carefully consider foregoing the right to appeal a decision regarding the resolution of a dispute. Expert determinations often cannot be appealed. Whilst a carve-out for manifest error may result in an expert determination being rendered non-binding, as illustrated by this case, manifest error is more limited in scope than the bases on which parties might opt to appeal an arbitral decision or judgment, and therefore is of more limited protection to contracting parties.