Wednesday, September 12, 2007
Courts in the U.K. are increasingly willing to enforce dispute resolution clauses in contracts, according to a client report from Jeremy Glover at London’s Fenwick Elliott. LLP. Glover examines the recent High Court decision in Harper v Interchange Group Limited  EWHC 1834. (Free registration required.)
The case involved a dispute about commissions that Interchange was allegedly supposed to pay to Harper. The contract contained rather awkward clause, which provided that if the two parties were unable to reach agreement on the commission amounts:
then the dispute shall be referred, with the agreement of the Purchaser and Mr Harper, or in the absence of such agreement, by the President for the time being of the Institute of Chartered Accountants in England and Wales on the application of either of them, to an independent chartered accountant (being a partner of one of the "big 6" firms) who, once appointed, shall act as an expert (not as arbitrator) and whose decision shall, in the absence of manifest error, be final and binding on the parties.
One of Harper’s arguments was that the clause (presumably because it said that the accountant would not serve as an arbitrator) meant that the expert accountant was only supposed to calculate damages, but that issues of construction of the contract would have to go to the courts. Writing for the court, Mr. Justice Aikens disagreed.