Expert Determination (Ireland)

[2009] IEHC H419 (High Court, Ireland)

The Facts

The two parties had entered into a commercial contract (in three separate agreements, two long and one short). The Defendant was paid by the Plaintiff to support and maintain various software. In doing so, the Defendant was to place the source code for certain of its software systems with a third party on the basis that the Plaintiff would be able to access the code should any one of a number of triggering “release events” occur. The contract contained a provision that in the event of a dispute about whether a “release event” had occurred, such a release would occur upon the decision of an independent expert whose appointment was to be mutually agreed, or failing mutual agreement, was to be appointed by the President of the Law Society at the time.

The short form contract contained the following provision:

“The Independent Expert’s decision will be final and binding on all parties to this agreement and shall not be subject to appeal to a court in legal proceedings except in cases of manifest error”.

The long form agreement was similar in content.

Both parties applied for interlocutory relief.

The Plaintiff had applied for temporary release of the codes pending trial or expert’s determination and provision of the services pursuant to the agreement. The Defendant sought a mandatory injunction to require payment for services if the Court were minded to grant the Plaintiff’s injunction.

The Issues

Could the Court suspend the Expert’s Determination process and order a temporary release of the codes?

The Decision

The Court declined to order temporary release of the codes pending the Expert’s Determination.

The Learned Judge considered the principles set out in Re: Via Networks (Ireland) Limited [2002] 2 IR 47 where, essentially, it was held that, when parties agree to arbitration clauses, they expressly waive their rights to determination of an issue by the Court. Further, the Court enjoys an inherent jurisdiction to stay the proceedings pending such determination. Accordingly, in this case the Learned Judge decided that there was no good reason for the parties to depart from the dispute resolution mechanisms they had agreed in both the short and long form contracts. It had been argued that it would cause delay but the agreements themselves laid down a short timetable for the Expert Determination process which was considered likely to be more expeditious than awaiting the Court process.

The Court distinguished the case of Shelbourne Hotel Holdings Limited v Torriam Hotel Operating Company Limited [2008] IEHC 376 (where the Plaintiff sought permanent injunctive relief to compel the Defendant to grant access to the Plaintiff’s books and records in accordance with their agreement). The management agreement contained an arbitration clause. That clause encompassed the substantive dispute between the parties but did not encompass the interlocutory application. In particular, the agreement contained a clause stating, “either party may seek injunctive or equitable relief (including, without limitation, restraining orders and preliminary injunctions) in any court of competent jurisdiction” and that referral to arbitration would be without prejudice “to preliminary or interim injunctions or enjoining orders granted by such court”.

In the instant case, the Learned Judge considered that the very heart of what the Plaintiff sought was reserved exclusively to the determination of the independent expert, namely, release of the codes.

Accordingly, the Plaintiff’s application failed.

Comment

Expert’s determination clauses should be carefully read and construed to see precisely what they encompass. The (Irish) Court will not trespass upon issues that are within the remit. In any event, the Expert does not want to fall into error by stepping outside his or her remit or failing to address an issue that ought to be addressed lest the matter does end up in Court.