Looking back on decisions in 2024, the case of Dandara South East Limited v Medway Preservation Limited & Anor [2024] EWHC 2318 (Ch) is significant as the first decided authority on the question of whether an expert determination clause can be separable from an underlying agreement.

Background

The case concerned a contract regarding the sale of land (the Contract) which was contingent upon the completion of certain conditions – one being that the second defendant, the contractor, would carry out certain earthworks on the land.

A dispute arose following the service by the claimant, Dandara, of a disputed termination notice in which it asserted the pre-conditions of the sale had not been met and sought the repayment of its deposit. Medway disputed the validity of that termination, arguing the pre-conditions had been satisfied.

Dandara commenced proceedings in the High Court claiming repayment of the deposit. Medway contested the jurisdiction of the court and applied for a stay of the claim on the basis that the Contract included an expert determination clause (EDC).

The EDC at Clause 28.1 stated:

“Any dispute or difference between the parties as to any matter under or in connection with this contract shall be submitted for the determination of an expert seeking a stay of proceedings as the contract provided for mandatory expert determination”

Dandara contested Medway’s application for a stay arguing the EDC did not apply for the following reasons:

• The EDC did not extend to the present dispute;
• The doctrine of separability did not apply to the EDC; the underlying Contract had come to an end, therefore the provision was no longer live;
• Regardless of the separability of the EDC, the provision was unsuitable for the resolution of the dispute between the parties and the court should refuse to grant a stay as a matter of discretion.

The court had to decide whether as a matter of construction the scope of the dispute was within the jurisdiction of the expert (as conferred by the EDC in the Contract) and whether that clause was a self-contained agreement.

The court decision

Master Brightwell, who presided over the case, observed that: “expert determination clauses generally anticipate some disputes being resolved by an expert and some disputes by the court.” However, in the present case the drafting of the EDC was very broad and the court held it to be an “all-embracing provision”. Master Brightwell observed that the fact that the expert determination procedure was not carved out of the court's jurisdiction was a factor favouring a “one-stop” construction of the EDC.

The court also went on to consider whether an EDC could be separable from the Contract as a matter of construction. The court determined that where parties have created a “one-stop shop” for the resolution of all disputes in the form of an EDC, there is a presumption of separability. The judgment drew an analogy to the approach with arbitration clauses where the question is dependent on the parties' intentions, citing the established principles from the Fiona Trust case.[1]

Master Brightwell concluded that where parties have made an agreement for a particular form of dispute resolution, they should be held to that agreement. The judgment decided:

• The EDC was the contractually agreed method for the resolution of all disputes in relation to the Contract;
• The EDC was separable from the Contract and continued to be valid, even if the Contract had been validly terminated, as alleged.

As a result, the court stayed the proceedings to give effect to the EDC, requiring all disputes to be resolved by expert determination.

Comment

The case is interesting as an authority on the point whether an expert determination clause can be separable from an underlying agreement. However, it also serves as a reminder to parties to take care when drafting dispute resolution clauses and bear in mind the following:

• Be mindful of the practical considerations and avoid creating procedures that become overly onerous and potentially difficult to comply with should they need to be invoked.
• Be as clear as possible, ensuring the scope of the clause expressly reflects the parties’ intentions. This is especially important if an expert determination clause is not intended as a “one-stop shop” and is only intended to be in relation to a particular issue or subject matter.
• Consider the most cost-effective and practical forum for the resolution of disputes.

The EDC in this case was unusual in its broad drafting. EDCs typically provide for certain types of dispute to be resolved by expert determination and other types by the court; they are not generally interpreted as “one-stop shops”. It remains to be seen whether the presumption of separability applies to EDCs that are not “one-stop shops” and we await more direction from the courts in relation to this.