General Electric Company v AI Alpine UA Bidco Inc & Ors

Where parties refer a dispute to an independent expert, the court determines the scope and limits of the expert’s authority by construing the contract. It will ordinarily allow the expert to act first and will not intervene merely because it might reach a different conclusion.

An application for an advance declaration about the expert’s authority requires the court to ask whether the issue is real rather than hypothetical and, if so, whether justice favours determination by the court before the expert. A stay is appropriate where the expert process is advanced, a concrete determination would assist the court, proceedings may cause delay or wasted resources, and delay may cause uncompensated financial loss.

The claimant sought declarations concerning the proper scope of a contractual closing statement process under a share purchase agreement. The defendants had referred disputed accounting items to an independent accountancy firm acting as an expert. The claimant argued that the expert process could not revisit historical accounting treatments and that those matters belonged exclusively in warranty proceedings.

The expert determination was substantially advanced but had been paused pending the Part 8 claim. The defendants applied for a stay until the expert had issued its determination. The central issues were whether the dispute concerned the expert’s jurisdiction or decision-making authority, whether the declarations raised a real issue, and whether the expert should determine the matters first.

1. Nature of the dispute. The disagreement concerned the scope and limits of the expert’s decision-making authority, rather than the existence of jurisdiction. The expert was required to determine the disputed adjustments identified in the parties’ contractual process. The court’s classification would not alter the applicable advance-declaration test.
2. Applicable principles. The scope of an expert’s authority depends on contractual construction. Where the expert acts within that authority, the court will not intervene merely because it would have reached a different result. If the expert acts outside the agreed authority, its determination may be set aside.
3. Following Mercury Communications Ltd v Director General of Telecommunications [1994] CLC 1125 and Mercury Communications Ltd v Director General of Telecommunications [1996] 1 WLR 48, the court will not normally declare the limits of the expert’s authority in advance where the issue is hypothetical. Under Barclay’s Bank v Nylon Capital LLP [2011] EWCA Civ 826, the court must first ask whether the dispute is real and then whether it is in the interests of justice to determine it before the expert.
4. The issues were hypothetical. The independent accountancy firm had not disclosed its view on the threshold legal questions, and even a view favouring the defendants might make no practical difference if the expert accepted the claimant’s accounting treatments.
5. Five considerations favoured a stay: a concrete expert determination would assist the court; the expert process was well advanced; allowing the claim to proceed would cause delay; resources might be wasted if the claimant accepted the determination; and delay could deprive the defendants of contractual interest. The defendants’ change of position and overlap with warranty proceedings did not outweigh those factors.
6. The Part 8 claim was stayed pending the independent accountancy firm’s determination of the Final Closing Statement.