WH Holding Limited v E20 Stadium LLP

A contractual expert determination will generally bind the parties where the expert has acted within the scope of the reference, subject to any agreed exception for manifest error or fraud.

In a reasoned expert determination concerning contractual interpretation, the court may examine the agreement, the determination and materials expressly forming an essential part of the reasoning. The court is not conducting an appeal and does not invalidate the determination merely because it would adopt a different legal construction.

A manifest error is an error that is obvious, obviously capable of affecting the determination and such as to admit of no difference of opinion. An expert’s misreading of a disjunctive contractual term and adoption of a calculation having no basis in the contractual machinery may satisfy that test.

WH Holding Limited and E20 Stadium LLP were parties to a concession agreement governing the London Stadium. The agreement contained anti-embarrassment provisions requiring WH Holding to pay a Stadium Premium Amount when specified transactions involving interests in the football club occurred.

A dispute arose concerning three share sales and a put and call option entered into on 10 November 2021. The parties referred the dispute to an expert under a clause providing that the determination would be final and binding in the absence of manifest error or fraud.

The expert treated the share sales and option as one Qualifying Transaction and awarded E20 £3.6 million. WH Holding sought a declaration that the determination was not binding, alleging two manifest errors concerning the contractual calculation and the characterisation of the transactions.

1. Contractual effect of expert determination. The parties had agreed that the expert acted as an expert, not as an arbitrator, and that the determination was final and binding except for manifest error or fraud. The expert’s remit permitted him to decide issues of law and was not confined to the parties’ submissions.
2. Scope of review. The court’s task was not to hear an appeal or decide merely whether the expert had made an error of law. WH Holding had to prove that the expert’s interpretation was obviously wrong. In examining a reasoned determination, the court could consider the agreement, the parties’ written submissions, the agreed note of oral submissions, the determination and documents expressly referred to in those materials.
3. First error. The contractual definition of Consideration used the alternatives in sub-clauses (a), (b) and (c) disjunctively. It did not authorise blending two separate extrapolated valuations into a hybrid calculation. The expert had therefore erred in accepting E20’s calculation, which effectively treated “or” as “and”.
4. Second error. Whether linked dealings constitute one transaction depends on the nature of the dealings; different counterparties do not automatically prevent that conclusion. However, the expert erred in treating the share sales and option as one Qualifying Transaction in circumstances where the contractual machinery could not produce one Stadium Premium Amount from the two different calculations and ratios.
5. Manifest character. The errors were obvious and obviously capable of affecting the determination. They went to the heart of the result and could be identified by applying the contractual language and performing the required mathematics, without an extensive investigation or fine judgment on an arguable construction.
6. Disposition. WH Holding proved two manifest errors. The court granted a declaration that the expert determination was not final and binding on WH Holding. Consequential matters, including costs, were left for agreement or a further hearing.