Expert determination clauses in commercial contracts are at risk of being too uncertain to be enforced if complex disputes arise and details of the expert determination process have been left to be agreed at a later time. The case of Raskin v Mediterranean Olives is an example of the impact of such uncertainty.
The Facts Rebecca Raskin (plaintiff) invested in the Mediterranean Olives Project (first defendant), of which Anthony May (second defendant) was a director. The project was governed by a 'project constitution' to which only the plaintiff and first defendant were parties. The plaintiff alleged that the execution of certain other investment agreements by the second defendant on her behalf was unauthorised, that project projections provided by the second defendant were misleading, and that the conduct of the first and second defendant amounted to a breach of contractual and legislative obligations. The defendants disputed the allegations. The project constitution contained an expert determination clause permitting either party to require the dispute to be submitted to, and determined by, an independent expert, if the dispute had not been resolved through a prior settlement conference. The plaintiff, after a failed settlement conference, commenced proceedings against the defendants in the Victorian Supreme Court. The first defendant then applied for a stay of those proceedings, invoking the expert determination clause, and arguing that the clause in question in fact amounted to a submission to arbitration. The plaintiff contended, among other things, that the expert determination clause was too uncertain to be enforced. Expert determination by name, submission to arbitration by nature? The Court found that the clause was an expert determination clause in name and in nature, and not a submission to arbitration. Hargrave J drew a distinction between clauses that evidence contracting parties' intention to submit a dispute to a judicial process - more akin to the nature of an arbitration - and clauses that evidence an intention to appoint an adjudicator to determine the dispute on the basis of his or her skills and experience alone; being an expert determination. Factors indicative of a judicial process (and therefore arbitration) include: