Such a dispute resolution mechanism normally requires an accounting expert to act as an independent facilitator in the process of determining the outcome of a dispute. The parties to the dispute select this route to resolution even before the matter is referred to other forums, such as arbitration.
Expert determination not only aims to provide parties the opportunity to reach an agreement or acceptable compromise that would resolve the dispute in a more cost-effective and speedy manner than court proceedings, but also allows the parties to derive multiple benefits:
- The parties could continue their working relationship following the resolution of the dispute
- The nature of the dispute and the scope of the determination is agreed and documented by the parties to avoid any misunderstanding. The accounting expert may also provide clarity on what is in dispute
- The independence of the accounting expert allows him/her to manage the process, timeline and risks to ensure the focus remains on understanding the facts and providing a suitable business solution
- Where a formal dispute resolution process may centre on the interpretation of legal terms or the agreement, the accounting expert would consider the intention of the parties in executing their agreement. He/she would consider a practical business solution, without having to make legal interpretations.
While the expert determination process is flexible enough to allow for some adjustment, experience has taught us that the parties place their trust in the independent advisor to manage the process effectively. The respective parties have an opportunity to make submissions to provide a clear understanding of each party’s position. The accounting expert considers the submissions and obtains industry expertise and legal advice, if required. He/she then follows a professional and conscientious approach through careful consideration of the contractual basis and submissions to arrive at a well thought-out and robust outcome. The parties also agree that the determination reached would be final and binding and that it is documented in a written report.
The fundamental principle during the expert determination process is to maintain objectivity and credibility.