Eastern Motor Company Ltd v Grassick & Ors

ScotCS CSIH_67 

One of the issues here was the circumstances in which the Scottish Court of Session could interfere with the decision of an expert appointed under a contractual dispute resolution procedure, where parties had agreed to be bound by the expert’s determination. The starting point for the court was that the parties entered into a contract whereby they agreed that the price adjustment expert’s decision as to any matter referred to him would be final and binding unless they were guilty of fraud or manifest error. A clause in such terms leaves little scope for a court challenge to the expert’s ruling. This was simply because the parties agreed to accept the expert’s decision on any matter referred except where the decision was vitiated by fraud or was manifestly wrong. The law attached a strong degree of respect to the parties’ agreement as to the finality of their chosen dispute resolution procedure.  If it could be shown that the expert departed from their instructions in some material way, and the expert had not done what the parties agreed that they were appointed to do, then the decision was open to challenge. Hoffman LJ in Mercury Communications Ltd v Director General of Telecommunications [1996] 1 WLR 48 had said: 

“So in questions in which the parties have entrusted the power of decision to a valuer or other decision-maker, the courts will not interfere either before or after the decision. This is because the court’s views about the right answer to the question are irrelevant. On the other hand, the court will intervene if the decision-maker has gone outside the limits of his decision-making authority.”

Here, there was no question of the price adjustment expert having gone outside the limits of their authority in the sense that they misunderstood their remit, or addressed themselves to questions which were different from those that the parties asked him to address. On the contrary, it was clear that the expert understood perfectly well what they had been instructed to decide. The  questions referred were plainly ones of mixed fact and law, involving consideration of practice in the motor trade. In those circumstances, the court had no jurisdiction to interfere with the expert’s conclusions. A manifest error required there to be “a glaring mistake that jumps off the page.” A mere difference of opinion could not be described as a “blunder”.

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