What Is an Expert Determination in a Commercial Dispute? A Practical Guide for Solicitors

Commercial disputes do not always require every financial or technical issue to be resolved through a full court process. In some circumstances, a contract may provide for a defined issue to be referred to an independent expert for determination.

This process is commonly known as expert determination. It can be used in commercial agreements where the parties anticipate that certain accounting, valuation or other specialist questions may need to be resolved by an appropriately qualified expert.

For solicitors advising on a commercial dispute, understanding how expert determination differs from litigation, arbitration and expert evidence may be useful when reviewing contractual dispute resolution provisions or considering how a particular issue should be addressed.

This article provides a general overview of expert determination and some practical considerations for legal teams.

What Is Expert Determination?

Expert determination is generally a contractual process in which the parties refer a specified issue to an independent expert for a decision.

The expert is usually selected because the issue requires specialist knowledge. Depending on the agreement and the dispute, this might include:

• Accounting calculations
• Business or share valuations
• Completion accounts
• Purchase price adjustments
• Financial measurements specified in a contract
• Other defined technical or specialist calculations

The precise role of the expert depends on the agreement between the parties and the terms of the appointment.

Expert determination should therefore not automatically be treated as equivalent to expert evidence prepared for court proceedings. The expert's function, the issues within the appointment and the effect of the determination depend on the applicable contractual and legal framework.

How Does Expert Determination Work?

There is no single procedure that applies to every expert determination. The process will generally depend on the relevant contract, appointment terms and any applicable rules.

Reviewing the Contract

The starting point is usually the contractual provision dealing with expert determination.

The clause may address:

• Which disputes or issues can be referred
• How the expert is appointed
• Any required qualifications or experience
• The procedure to be followed
• Information to be provided by the parties
• Responsibility for the expert's costs
• Whether the determination is intended to be final and binding

The wording of the particular agreement is important. A process that applies under one contract may not apply in the same way under another.

Defining the Issue

The parties will generally need to identify the question that the expert is being asked to determine.

This can be particularly important in financial disputes. A calculation may involve several separate assumptions, accounting issues or contractual provisions.

For example, a transaction agreement might contain a mechanism for calculating a post-completion adjustment. If the parties disagree about part of that calculation, the relevant clause may provide for the disputed issue to be referred to an expert.

The expert's role will depend on the scope of the contractual mechanism. A defined financial question should not automatically be treated as giving the expert authority to determine wider disputes between the parties.

Appointing the Expert

The contract may specify how the expert is to be appointed.

Depending on the agreement, the parties may nominate and agree upon an expert, use a specified appointing body or follow another appointment mechanism.

Where the issue is financial, the relevant expertise should be considered in light of the actual question being determined. For example, experience in business valuation may be relevant to one dispute, while experience with transaction accounting may be more appropriate for another.

Providing Information

The parties will generally provide information and submissions in accordance with the applicable procedure.

Depending on the dispute, relevant material could include:

• Contractual documents
• Accounting records
• Financial statements
• Calculations
• Transaction documents
• Relevant correspondence
• Other information falling within the scope of the appointment

The expert's ability to consider particular material will depend on the terms governing the determination.

Reaching the Determination

The expert will consider the material available within the scope of the appointment and reach a determination on the issue referred.

The form of the determination and the extent to which reasons must be provided can depend on the contract and appointment terms.

The legal effect of the determination should also be considered by reference to the relevant agreement and applicable law rather than assumed from the use of the term "expert determination" alone.

Expert Determination vs Arbitration

Expert determination and arbitration are separate dispute resolution processes.

An expert determiner will generally be appointed to decide a defined issue within the scope of a contractual mechanism, often because the question involves specialist knowledge.

An arbitrator is appointed to determine a dispute through an arbitral process. Arbitration is governed by its own legal and procedural framework, which can depend on the arbitration agreement, applicable law and any institutional or procedural rules involved.

The distinction can be important because the parties' rights, the procedure and the effect of the resulting decision may differ.

The relevant agreement should therefore be reviewed carefully before concluding which mechanism applies.

Expert Determination vs Expert Evidence in Litigation

Expert determination should also be distinguished from expert evidence in commercial litigation.

In court proceedings, an expert may be instructed to provide opinion evidence within their area of expertise, subject to the applicable procedural requirements.

An expert determiner has a different function. They are generally appointed under a contractual mechanism to determine a specified issue between the parties.

The two roles can involve similar professional expertise, particularly in accounting or valuation matters, but their purpose and source of authority are different.

When Might Expert Determination Be Relevant?

Expert determination may be relevant where a commercial contract provides a mechanism for resolving a defined accounting, valuation or technical issue.

The following are examples of areas where such provisions may arise.

Completion Accounts

A transaction agreement may provide for final consideration to be calculated using specified financial measures.

If the parties disagree about the calculation, the agreement may provide for the relevant accounting issue to be referred to an expert.

Valuation Issues

A contract may provide for an independent determination of the value of shares, assets or another financial interest.

The appropriate valuation approach will depend on the contractual provisions and the nature of the issue being determined.

Purchase Price Adjustments

Commercial transactions may include mechanisms for adjusting the purchase price using financial information determined after completion.

Where the parties disagree about a calculation, an expert determination clause may provide a contractual route for resolving the specified disagreement.

Other Contractual Calculations

Some commercial agreements contain detailed financial formulas or mechanisms that require specialist calculation or analysis.

Whether an expert determination is appropriate will depend on the wording of the agreement and the particular issue in dispute.

What Should Solicitors Consider Before an Expert Determination?

Before proceeding, legal teams may wish to consider several practical questions.

What Does the Contract Permit?

The contractual provision should be examined first.

It may define the matters that can be referred to an expert and may place limits on the expert's remit.

A dispute outside those provisions may require a different approach.

What Exactly Is the Expert Being Asked to Determine?

The issue should be identified with sufficient precision to establish the scope of the determination.

This can be especially important where a financial calculation contains several components or where the parties disagree about the interpretation or application of a contractual formula.

Does the Proposed Expert Have Relevant Experience?

The appropriate expertise depends on the issue.

A dispute concerning transaction accounting may call for relevant accounting and transaction experience. A valuation dispute may require experience with the particular valuation methodology and type of business or asset involved.

The relevant expertise should therefore be assessed against the specific question rather than professional title alone.

What Procedure Applies?

The contract and appointment terms may establish procedural requirements.

Depending on the arrangement, these could address:

• Deadlines for submissions
• Supporting documents
• Responses to the other party's submissions
• Questions put to the expert
• Meetings or other forms of engagement
• Expert fees and costs
• The effect of the determination

These matters should be considered from the actual contractual and procedural documents rather than assumed to follow a standard process.

What Evidence Supports the Position?

A defined expert determination may still depend on reliable underlying financial or factual information.

It can therefore be useful to identify relevant records, calculations and contractual provisions at an early stage.

Where financial information is incomplete or disputed, the potential effect on the determination may need to be considered.

The Importance of the Expert's Remit

The scope of the expert's appointment is an important consideration.

If the expert is appointed to determine a specific financial calculation, this does not necessarily mean that they are authorised to decide every issue arising from the wider commercial relationship.

For example, an appointment concerning a purchase price adjustment may be limited to calculating the adjustment in accordance with the relevant contractual provisions.

The exact boundaries will depend on the agreement, the appointment and any applicable legal principles.

For solicitors, clearly identifying the issue and the scope of the appointment can therefore be an important part of preparing for an expert determination.

How a Financial Expert May Contribute

Where an expert determination concerns accounting, valuation or another financial issue, a suitably experienced financial expert may be asked to apply specialist knowledge to the defined question.

Depending on the appointment, this may involve:

• Reviewing financial records
• Examining calculations
• Applying a contractual methodology
• Analysing accounting information
• Comparing the parties' calculations
• Considering valuation assumptions within the scope of the appointment

The work should remain focused on the issue the expert has been appointed to determine.

For matters requiring specialist financial analysis, the wider role of a commercial dispute expert may also be relevant. This can include situations involving financial evidence, valuation or quantum. See our commercial dispute expert witness services for further information.

Questions to Consider When Reviewing an Expert Determination Clause

When reviewing a commercial agreement or an emerging dispute, solicitors may wish to consider:

1. Does the contract contain an expert determination mechanism?
2. What types of issues fall within that mechanism?
3. Is the disputed issue within the expert's remit?
4. How is the expert appointed?
5. What qualifications or experience are relevant?
6. What procedure applies?
7. What information can each party provide?
8. Is the determination intended to be final and binding?
9. Does the agreement address any potential challenge to the determination?
10. How are the expert's fees and other costs dealt with?

These questions are intended as practical points for initial consideration and do not replace review of the particular agreement or appropriate professional advice.

Conclusion

Expert determination can provide a contractual mechanism for resolving defined accounting, valuation, technical or other specialist issues arising from a commercial agreement.

It is distinct from arbitration and from expert evidence used in court proceedings. The expert's role, the applicable procedure and the effect of the determination depend substantially on the relevant agreement, appointment terms and applicable legal framework.

For solicitors, reviewing the contractual clause, identifying the precise issue, considering the expert's remit and assessing the available financial or factual information can help clarify how an expert determination process may operate in a particular matter.

Where the issue involves accounting, valuation or another specialist financial question, the appropriate expertise will depend on the nature of that specific issue.

Disclaimer: This article provides general information only and is not legal, accounting or other professional advice. The operation and effect of an expert determination may depend on the wording of the relevant contract, the terms of the expert's appointment, applicable law and the circumstances of the dispute. Specific matters should be considered with appropriately qualified professional advisers.

Last Reviewed: September 2026