Wilky Property Holdings Plc v London & Surrey Investments Ltd

The character of a contractual dispute-resolution clause depends on the agreement construed as a whole. A clause providing for binding resolution of an existing dispute is not necessarily an arbitration agreement. Express reference to an independent expert is a strong indication of expert determination, particularly where the disputes concern computation, valuation or assessment. The Fiona Trust presumption of wide construction applies only after the clause has been identified as an arbitration agreement. A clause may confer on an expert an independent jurisdiction to determine questions of contractual interpretation, while excluding disputes about performance, breach or termination unless its wording clearly includes them.

London & Surrey Investments Ltd applied for a stay of Wilky Property Holdings plc’s Part 8 claim. The parties’ 1996 consultancy agreement provided that disputes concerning the meaning or effect of its terms, or the calculation of profit share, could be referred to an independent expert appointed by agreement or by the President of the Royal Institution of Chartered Surveyors.

After the defendant invoked the clause and an expert was appointed, it contended that the clause was an arbitration agreement within the Arbitration Act 1996. Wilky argued that it provided only for expert determination and that several issues fell outside its scope. The immediate issue was whether clause 22 was an arbitration agreement.

1. The application for a stay under the Arbitration Act 1996 was refused. Clause 22 was an expert-determination clause, not an arbitration agreement.

2. The contractual description of the process as determination by an “independent expert” was important, although not conclusive. The agreement contained no reference to arbitration or to the 1996 Act. There was no sufficient counter-indication in the agreement or commercial background to displace the ordinary meaning of that language.

3. The fact that the clause concerned disputes which had already arisen did not determine its character. Re Carus-Wilson and Greene recognised an intermediate category of decision-making processes, and the observations in David Wilson Homes Ltd v Survey Services Ltd did not establish a general rule that binding determination of a pre-existing dispute necessarily constitutes arbitration.

4. Clause 22 covered disputes about the interpretation of the agreement independently of disputes concerning calculation of profit share or compensatory payment. Its reference to the meaning or effect of the agreement did not extend naturally to claims that the agreement had been performed, breached or terminated, or to damages claims. The provision for the expert to determine referral costs was consistent with expert determination, because an expert would otherwise lack such power.

5. The calculations and assessments required by the profit-share and compensatory-payment provisions were matters which the parties could reasonably have intended an expert to determine quickly and informally. The possibility that interpretation questions might also arise, and that a legally qualified expert might be appointed, did not convert the clause into an arbitration agreement.

6. The court did not finally determine the alternative stay application under its case-management or inherent jurisdiction. It indicated that the relevant inquiry was whether there was a real, rather than hypothetical, dispute and whether justice and convenience required the court to decide it before the expert. The parties were directed to reassess the issues and return for a further hearing.