In the technically complex world of construction, resolving disputes efficiently and cost-effectively is critical. One alternative dispute resolution (ADR) mechanism that has gained traction in Thailand is expert determination. Particularly suited to valuation and technical matters, expert determination offers a streamlined and practical approach to dispute resolution in the construction industry. However, parties must carefully balance the benefits with the potential limitations, ensuring that the expert determination process is appropriate and well-defined within their contracts.
Introduction to the Expert Determination Process
Expert determination is a contract-based ADR method in which an independent and neutral expert resolves disputes, often related to valuation or technical matters. This approach can be particularly effective in construction disputes, where many issues are factual, and documentation is readily available. The expert, usually a professional in the relevant technical field (such as an engineer or architect), reviews the submissions and evidence before making a determination.
In Thailand, the construction sector is slowly adopting expert determination in multi-tier dispute resolution processes, often as an initial step before arbitration or litigation. While the expert’s decision may be provisional and open to challenge in later proceedings, the parties can also agree to make the decision binding. This flexibility allows an expert determination to be tailored to the parties’ needs, offering an efficient mechanism for addressing technical issues at the start of the negotiations and before engaging in more formal dispute-resolution processes.
Benefits of Expert Determination
Several key benefits make expert determination an appealing option for construction disputes in Thailand:
- Speed and Efficiency: Expert determination can significantly reduce the time it takes to resolve disputes. In the construction industry, where delays can result in costly project disruptions, resolving disputes quickly is invaluable. The process is often completed within months rather than years, making it far quicker than arbitration or litigation.
- Flexibility: Unlike arbitration, which is governed by formal rules, expert determination is highly flexible. The parties can customize the process to meet their specific needs. This could include selecting an expert with industry-specific knowledge or agreeing on tailored procedures for more efficient dispute resolution.
- Preservation of Commercial Relationships: Since expert determination is less adversarial than traditional litigation or arbitration, it is less likely to damage long-term commercial relationships. In construction, where partnerships often last across multiple projects, maintaining positive relationships can be just as important as the outcome of a dispute.
- Choice of Expert: One of the most significant advantages is choosing an expert with specialized knowledge directly relevant to the dispute. For example, if the dispute revolves around engineering standards, the parties can appoint a mutually respected engineer to resolve the issue. This expertise can lead to more informed and accurate decisions than generalist judges or arbitrators.
- Confidentiality: Like other ADR processes, expert determination is typically confidential, helping parties avoid public scrutiny that could affect their reputations or future projects.
Considerations and Potential Limitations
Despite these advantages, there are some potential downsides that parties should consider before opting for expert determination:
- Limited Grounds for Appeal: Once the expert’s decision is made, there are typically few grounds to challenge it, especially if the parties agree that the decision is binding. This can be problematic if the parties believe the expert made an error in judgment or misinterpreted the evidence.
- Enforcement Issues: In Thailand, like in many jurisdictions, expert determinations are not enforceable in the same way as arbitral awards. If a party refuses to comply with the expert’s decision, the other party may need to seek enforcement through the courts or an arbitral tribunal, which could reopen the dispute and cause further delays.
- Lack of Formal Structure: While the flexibility of expert determination is beneficial, it also presents risks. Without a formal structure, there may be concerns about due process and fairness, mainly if the procedures are not well-defined in the contract. This could lead to disputes over the process itself.
- Ambiguity in Expert Determination Clauses: Poorly drafted expert determination clauses can lead to further disputes about the process’s scope and procedures. It is essential to ensure that the ADR clauses in the contract clearly define all relevant terms to avoid misunderstandings.
Information that Should Be Included in the Expert Determination Clause
The contract’s ADR clause must be carefully crafted for expert determination to be effective. The following elements are critical for inclusion in any expert determination clause in a construction contract:
- Scope of Issues: The clause should clearly define the types of disputes that will be referred to expert determination. For example, it might specify that only technical issues, such as disputes over engineering specifications or valuations, will be subject to expert determination.
- Selection of Expert: The contract should outline how the expert will be chosen, including any qualifications the expert must have. It should also provide a mechanism for appointing a replacement expert if necessary.
- Procedures: The clause should set out the procedures the expert must follow, including timelines, submission requirements, and whether oral hearings are required.
- Finality of Decision: The contract should specify whether the expert’s decision will be final, binding, or subject to challenge in arbitration or court.
- Costs: It is essential to clarify whether the expert has the authority to award costs, including whether the successful party can recover its expenses.
Conclusion
Expert determination offers a pragmatic and efficient way to resolve technical disputes in Thailand’s construction sector. However, parties must weigh the advantages against limitations and ensure that the expert determination process is appropriate for the dispute. By drafting a well-structured expert determination clause, parties can minimize the risk of further disputes over the process and maximize the benefits of this ADR method.
As construction disputes become increasingly complex, expert determination is essential for managing and resolving issues quickly and with expertise. By incorporating this method into dispute resolution clauses, either alone or as a cascading resolution process, parties can create a more efficient and collaborative approach to resolving disputes while preserving long-term commercial relationships.
Dr Paul Crosio is a Member of the Chartered Institute of Arbitrators. Silk Legal provides services in several practice areas, including construction law and arbitration. This article is for information only. While we have tried to keep our updates as accurate as possible, changes to legislation or other factors may affect your decisions. Please feel free to contact us for a free consultation at [email protected].
