High Court ruling results in an off-pitch victory for West Ham
In its judgment in WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm) the High Court recently granted a claim for declaratory relief that parties were not bound by an expert determination, resulting in the expert determination being set aside.
The Court considered whether an expert’s determination was non-binding on the parties as a result of ‘manifest error.’ The judgment also provides useful guidance on considerations that should be taken into account when drafting the provisions of a contract referring disputes to expert determination.
Background
Expert determination is an effective mechanism for dispute resolution in sectors where valuation or technical issues arise, as opposed to multi-issue complex disputes. The main benefits of expert determination as an alternative dispute resolution (“ADR”) mechanism include time efficiency, limited costs exposure, confidentiality and the potential to limit negative impacts on an ongoing commercial relationship.
While expert determination is a well-used form of ADR, the limited recourse to challenge an expert determination in Court can be a disadvantage. In the absence of the parties agreeing otherwise an expert’s decision can only be challenged in the English courts in very limited circumstances and usually cannot be appealed. Many expert determination provisions therefore allow the parties to overturn a decision for ‘manifest error’, to provide some scope to challenge decisions which are clearly wrong.
In this case, the Claimant, WH Holding Limited (“WHH”), commenced a claim for declaratory relief, contending that it was not bound by a reasoned expert determination because that determination allegedly contained ‘manifest errors’.
WHH and the Defendant, E20 Stadium LLP (“E20”), had entered into a Concession Agreement (the “Agreement”) which permitted WHH to run events at the Queen Elizabeth Park Stadium in London and for the stadium to be the home ground of West Ham United Football Club. WHH is the holding company of West Ham United and a majority of the shares in WHH were held by two individuals (the “Relevant Shareholders”)
The Agreement contained an ‘anti-embarrassment’ provision, to allow E20 to share in any future gains made by the Relevant Shareholders if they sold or transferred an interest in the West Ham United. If the conditions of the anti-embarrassment provision were met, WHH was obliged to pay E20 a ‘Stadium Premium Amount’.
A dispute arose as to whether the anti-embarrassment provision was triggered, because of a put and call option agreement entered into by one of the Relevant Shareholders in November 2021 (the “Option”). If the provision had been triggered, WWH would be liable to pay E20 a Stadium Premium Amount totalling £3.6 million.
The parties had agreed that any dispute regarding the Stadium Premium Amount was to be determined by an expert. In compliance with the Agreement, in December 2022 the parties jointly appointed an expert, whose decision was to “be final and binding “in the absence of manifest error”’. The expert determined the issue in favour of E20 and provided a written opinion. WHH challenged this decision in the High Court.
The judgment
As a starting point, the Court set out the key provisions of the Agreement. The expert determination was binding on the parties as long as the expert had not departed from his instructions or there had been no ‘manifest error’ or fraud on the part of the expert.
The Court proceeded to examine previous case law relating to what constitutes a ‘manifest error’, noting that it is possible for the expert to be in error, particularly regarding the law, without the expert being negligent. The judge highlighted that the real challenge was not identifying an error, but identifying whether the error was indeed ‘manifest’.
The parties relied on the recent case Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2, citing the definition of “manifest error” from IIG Capital LLC v Van Der Merwe [2008] 1 All ER (Comm) 435 at para 52 as one that is ‘obvious or easily demonstrable without extensive investigation’, and from Veba Oil Supply & Trading GmbH v Petrotrade Inc [2002] 1 All ER 703 which described ‘manifest errors’ as “oversights and blunders so obvious and obviously capable of affecting the determination as to admit no difference of opinion”.
The Court reviewed the expert’s reasoning, and determined that there had in fact been errors in it. The expert had erred in his interpretation of the defined terms by misreading ‘or’ as ‘and’. As a result, the expert treated multiple transactions as a single transaction, in line with E20’s calculation of the Stadium Premium Amount. The Court held that the errors made were obvious. If ‘or’ had been given its meaning, and the calculations were carried out in accordance with the Agreement, the error would have been entirely avoided, and the outcome of the expert’s determination would have been entirely different.
Comment
This judgment provides insight into how the court will approach challenges to expert determinations, particularly when the contract between the parties permits challenges to the determination in the event of ‘manifest error’. Whilst the court set aside the expert determination here, the issue of whether there has been a ‘manifest error’ is highly context-dependent and the courts will not readily overturn expert determinations. Even if the court identifies one or more errors in an expert’s reasoning, this does not automatically mean that an error was ‘manifest’.
The decision also serves as an important reminder to ensure the provisions of a contract referring matters to expert determination are drafted with a view to when a determination can be challenged. While expert determination can be a valuable mechanism for resolving appropriate disputes, it is important for parties to understand at the outset the lack of appeal routes and generally prudent to provide for a right of challenge for manifest error.