Expert Determination not Arbitration under Scots Law

MacDonald applied for the judicial review of a design made by Mr. Murray, an architect appointed as an independent expert to resolve the parties’ dispute. The parties contested whether the agreement under which Mr. Murray had been acting as expert was an "agreement to refer to arbitration" within the meaning of section 3 of the Administration of Justice (Scotland) Act 1972 so that Mr. Murray could be required to state a case for the court’s opinion. In addition, Macdonald Estates sought a declaration that Mr. Murray was required to reach his decision as an expert and not an arbiter. In his decision, Mr. Murray had stated that he had been acting as an arbiter, with the result that he might be required to state a case for the purposes of section 3(1) of the Act.

The parties’ contract concerned the development of a multi-storey car park near the Scottish Exhibition and Conference Centre in Glasgow. If the contract were to become unconditional, MacDonald would be obliged to carry out the development, and, once completed, the NCP would be obliged to take out a 35year lease.

The parties disputed whether the planning consent granted amounted to Satisfactory Planning Permission, and then failed to agree within the time limit in the contract as to who should be appointed as Independent Expert. Satisfactory Planning Permission was defined in condition 1.1.65 as meaning a Planning Permission which was free from Onerous Conditions. On 12 June 2009, MacDonald applied to the RIBA for the appointment of an architect in that role, and the President appointed Mr. Murray. Both parties made written submissions to him, but NCP also raised objections about his jurisdiction.

Mr. Murray took independent legal advice, and conducted an oral hearing. He rejected NCP’s preliminary objections and issued a proposed determination in draft, finding that the planning permission was a Satisfactory Planning Permission because the conditions were not Onerous Conditions.

NCP asked Mr. Murray to state a case for the opinion of the court under section 3 of the 1972 Act, identifying ten questions of law which it alleged arose, whilst MacDonald disputed Mr. Murray’s ability to state a case because he was not an arbiter.

The relevant section of the Act provides:

“3(1) Subject to express provision to the contrary in an agreement to refer to arbitration, the arbiter or oversman may, on the application of a party to the arbitration, and shall, if the Court of Session on such an application so directs, at any stage in the arbitration state a case for the opinion of that court on any question of law arising in the arbitration.

“(2) This section shall not apply to an arbitration under any enactment which confers a power to appeal to or state a case for the opinion of a court or tribunal in relation to that arbitration.”

Before the 1972 Act, there was no general right under Scots law to require an arbiter to state a case. This right existed only in respect of certain types of statutory arbitration, such as agricultural arbitration. Consequently, generally, it was not possible to make an application to the courts before an award was issued. Once an award has been made, a challenge is possible on certain grounds.

The court first turned to consider whether section 3(1) applied in the present case. The parties’ contract contained "an agreement to refer to arbitration" disputes. NCP argued that the meaning of “arbitration” was wide enough to encompass any agreement referred to a third party for determination. Since Scots law did not differentiate between arbitration and expert determination, it was to be treated as a form of arbitration. Based on the authorities referred to it, the court could not conclude that expert determination was, as a matter of law, a reference to arbitration. Scottish legal terminology had developed as had the law of arbitration, and new methods of dispute resolution- such as adjudication, mediation and expert determination- had come into being. What expert determination involved in any particular case depended upon the parties’ agreement and the context. Generally though, an arbiter sits in a quasi-judicial capacity, deciding matters on the evidence and submissions made to him. An expert, subject to his remit, may undertake his own investigations and come to his conclusions irrespective of any evidence and submissions. Because section 3 of the Act applied only to arbitrations, an expert determination could not be appealed by a stated case.

Looking at the provisions of the contract, the court found that the parties had not intended to refer any dispute to arbitration, but had expressly agreed on an expert determination procedure. Consequently, the Act did not apply to the present case, and Mr. Murray could not be required to state a case for the court’s opinion.

(MacDonald Estates plc v National Car Parks Ltd.; 4 November 2009)

Author: Ann Glacki

Date: February 2010

Ann Glacki

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