EXPERT DETERMINATIONS IN M&A AND OTHER COMPLEX COMMERCIAL AGREEMENTS
Expert determinations are a common tool in modern mergers and acquisitions (M&A) and other complex commercial agreements. M&A agreements typically include a general submission to arbitration or litigation, but they often also include expert determination clauses for resolving certain clearly defined disputes that can be anticipated prior to signing, and can be resolved in a streamlined manner if submitted to a proper expert. While expert determination provisions allow parties to quickly resolve accounting and other technical disputes, their benefits can be elusive if not entered into with care. Clear drafting and thoughtful selection of the disputes appropriate for expert determination are essential for the proceedings to work as intended.
Expert determination provides for a technical expert, often an accountant, to decide an issue where a court or arbitrator may not have the same expertise, with a speedier process because the issues are narrowly limited and the experts require less assistance in making a determination. As a result, the procedures often can be streamlined to eliminate witnesses, legal briefs and hearings, focusing instead on the submission of technical information that the expert needs to make a decision. (One caution: In the international context, expert determinations are less likely to be immediately enforceable than arbitration awards, which usually are covered by the New York Convention or another treaty on enforcement, so it may be preferable to write expert proceedings as arbitration provisions with any attendant due process requirements.)