Arbitral expert’s opinion and arbitration: Meaning and practical implications
By Sofia Georgiadi, Attorney-at-Law, LL.M.
This article focuses on a decision of the Greek Supreme Court that shed light on the issue of the arbitral expert’s opinion and its differentiation from the general recourse to arbitration, two procedures often misidentified by the contracting parties.
Before analyzing the considerations of the Court, one must briefly refer to the essence of the arbitral expert’s opinion. This procedure is very often encountered in everyday transactions and while it is not explicitly regulated by the Greek Law, it is however referred in Article 678 par. 3 of the Greek Code of Civil Procedure. Initially, contractual freedom as established under Article 361 of the Greek Civil Code fully provides the parties with the option to assign to a third party the examination and verification of certain controversial facts that may affect the content and substance of their agreement, based on his own knowledge and expertise and using the rules of the scientific or art community. The third party’s opinion does not usually result in a binding decision on the case – unlike arbitration. The arbitral expert’s opinion substantially differentiates from an arbitration contractual clause on the basis that the latter is an agreement to solve finally any present or future private disputes between the parties and the former is merely a designation of a material fact. The crucial point for an arbitral expert’s opinion clause is its binding – or not – effect for the parties.
Taking into account the above-mentioned facts, the Greek Supreme Court’s Decision 631/2012 (available by reference to the decision number and year in the original Greek version and in Google translation at http://www.areiospagos.gr/en/INDEX.htm under court rulings) unequivocally sets the borderline regarding the abovementioned options.
The facts of the case were set as follows: The members of a family construed a private agreement to delegate the management of the deceased husband’s considerable estate to the deceased’ s brother. He was appointed as the estate administrator, responsible for the preservation and good management of the assets. Among other terms, the parties agreed that an audit company – a third party – would perform an audit control, including the detailed admeasurement of the assets and the evaluation of the administrator’s total performance. More important, it was agreed that the audit control would also include a «judicial» element, meaning that, if there was a misuse of the estate, the auditors would not only determine the financial extent of the misuse, but also they would deliver an opinion on the way the assets should be restored and that opinion would constitute the basis of a final settlement between the parties. Indeed, at the end of the administrative period, the auditors found a considerable maladministration of the assets and the case was brought before an ad hoc arbitral court, as provided by an express arbitration clause in the agreement. The latter ruled that the administrator should be held accountable for the exploitation of the estate.
The administrator filled an annulment application before the local Courts by arguing that the agreed audit control was in fact an arbitral expert’s opinion that substituted the administrator’s obligation for accountability and therefore the arbitral court lacked jurisdiction, because the auditors’ opinion was final and binding for the parties. In this context, the Court of Appeal and then the Supreme Court needed to clarify not only the exact nature of the aforementioned contract term, but also the interconnection between the arbitration clause and the arbitral expert’s opinion.
Delivering an extended ruling, both Courts agreed in two main points: Firstly, the assignment of the managerial evaluation to the audit company had NOT been an arbitral expert’s opinion, due to the fact that according to the interpretative approach of the Court regarding the private agreement, it became clear that the parties in no way wished to be unequivocally bound by the audit company result. In contrast, they would use the final opinion of the audit control as a basis to settle their future disputes before the arbitration court. Thus, the delivered opinion of the company could be contested before the competent judicial authorities. Secondly, if the parties accepted a priori the audit opinion as excluding the arbitral court jurisdiction, they would not have inserted an arbitration clause in the contract. Accordingly, the co-existence of an arbitration clause in the agreement set into question the binding nature of the third party’s opinion and therefore the latter could not be characterized as an arbitral expert’s opinion.
The aforementioned Supreme Court’s Decision clarified the content of an arbitral expert’s opinion procedure and set the boundaries between a general arbitration clause in a contract and an agreement to seek an expert’s arbitral opinion, a difference that indeed has multiple practical implications.