Court Of Appeal Finds Expert's Determination Was Not Manifestly In Error

The decision confirms that the general test for "manifest error" applies to questions of contractual interpretation whether or not they involve mathematical formulae.

The Court of Appeal has held that an expert's interpretation of a contractual clause that determined a party's share of gains arising from a qualifying transaction was not manifestly in error, overturning an earlier High Court decision:WH Holding Ltd v London Stadium LLP  [2026] EWCA Civ 153.

The decision confirms that the test for manifest error requires the court to consider whether the error was "so obvious and obviously capable of affecting the determination as to admit of no difference of opinion". The nature of the issue to be determined does not affect the test. It applies both to questions of contractual interpretation and to the interpretation and application of contractual mathematical formulae.

The decision reinforces the final and binding nature of expert determinations. The English courts will interfere only in exceptional cases, where the expert's decision is so obviously wrong as to be unarguable.

Background

The defendant ("E20") and the claimant ("WHH") entered into an agreement which entitled WHH, the owner of West Ham United Football Club Limited (the "Club"), to use the London Stadium to hold football matches. At the date of the agreement, most of the shares in WHH were held (directly or indirectly) by two individuals (the "Relevant Shareholders").

The agreement contained an anti-embarrassment clause intended to ensure that E20 could share in any future gains made by a Relevant Shareholder if they sold or transferred any interest in the Club. If the provisions of this clause were met, WHH was obliged to pay E20 a sum referred to as a "Stadium Premium Amount".

A dispute arose as to whether the anti-embarrassment clause had been triggered by a series of transactions entered into by the Relevant Shareholders which resulted in another entity becoming a 27% shareholder in WHH. These transactions included both share sales and the grant of a call option. WHH contended that the call option did not result in a Stadium Premium Amount being payable, whereas E20 argued that it did, meaning that WHH owed it an additional £3.6 million.

As provided for under the agreement, the dispute was referred to an expert for determination, whose decision was to be final and binding "in the absence of manifest error". The expert accepted E20's calculation of the Stadium Premium Amount and determined that the additional £3.6 million sought was payable.

WHH sought a declaration that the determination was invalid on the basis that it contained two manifest errors: (i) the expert had accepted E20's calculation of the Stadium Premium Amount, which calculation was contrary to the wording of the agreement; and (ii) the expert had determined that the three share transfers and the call option constituted a single "Qualifying Transaction" for the purposes of the anti-embarrassment clause.

The High Court agreed with WHH and held that the determination was not final and binding. See our earlier  blog post for further detail on the High Court's decision.

E20 appealed. It argued that the High Court was wrong to find that the expert's determination contained manifest errors and asserted that the expert's conclusions were, at a minimum, not so obviously wrong as to be unarguable.

Decision

The Court of Appeal allowed the appeal and upheld the expert's determination. Phillips LJ gave the lead judgment, with which Falk LJ and Zacaroli LJ agreed.

Having considered the relevant authorities, the Court of Appeal confirmed that, absent contractual terms which provide differently, an error will be manifest if, after investigation limited in time and extent, it is so obvious (and obviously capable of affecting the determination) as to admit of no difference of opinion. The court noted that neither party disagreed with this formulation of the test, but that each proposed one or more refinement or qualification.

Relying on The Nema  [1982] AC 724 HL (a decision granting leave to appeal an arbitration award on the ground that the arbitrator's decision was "obviously wrong"), E20 argued that "limited investigation" means "without the need for adversarial argument". The Court of Appeal distinguished between: (i) an application for leave to appeal an arbitration award on a point of law, which is normally considered by the judge on the papers; and (ii) a challenge to an expert determination on the grounds of manifest error, which is made by originating claim or by way of defence to enforcement proceedings and therefore will result in an oral hearing involving the usual process of adversarial argument. The Court of Appeal therefore saw no merit in E20's proposed refinement, which did not seem to be supported by the authorities.

E20 further argued that it was wrong for a judge to first consider whether the expert had made a mistake and then go on to consider whether that mistake was manifest. This was on the basis that deciding first that an expert's determination contained a mistake would make it more likely that the judge would find that the alleged mistake was obvious. Again, the Court of Appeal found no support in the authorities for restricting the judge's process of reasoning in this way. It considered that the manifest error test itself invites a two-stage approach, namely: (i) whether there was an "oversight or blunder"; and (ii) whether that error was so obvious as to admit of no difference of opinion. 

Supporting the judge's decision, WHH submitted that where the parties agree a mathematical formula as the basis to calculate their future payment obligations, they expect the formula to be correctly applied by the expert appointed for that purpose. Therefore, if the expert incorrectly understands or applies the formula and produces a wrong answer, the answer is not binding. Only in cases where the contractual formula is found to be genuinely ambiguous could the expert reach more than one answer which would be binding. 

The Court of Appeal held that WHH's reference to what is "expected" of an expert impermissibly attempted to import into the test of manifest error the separate question of whether the expert had complied with their instructions. But in that context, the determination will be invalid if the departure from instructions is material – it does not need to be "manifest". Moreover, there was no basis for applying a different test for manifest error where the relevant contractual term contains a "formula". In fact, many of the authorities relied on by the court related to contractual clauses which could be viewed as containing a formula. None of those authorities suggested that a different test applied in those circumstances. 

Applying the applicable legal principles to the case before it, while the Court of Appeal saw force in WHH's arguments, it provided a detailed analysis of why the expert's interpretation was arguable, ultimately holding that the definition of "Qualifying Transaction" was wide enough to encompass the whole transaction in question, being a sale of shares and the grant of a call option. This was the starting point for the expert's calculation of the Stadium Premium Amount. While it was a different starting point from that which WHH and the High Court preferred, the expert's decision was not so obviously wrong as to admit of no difference of opinion. As the rest of the expert's analysis followed from that conclusion, it could not be said that the expert had produced a determination that was manifestly in error. 

Importantly, the Court of Appeal expressly noted that if the question was the proper interpretation of the agreement, it might have found that WHH were correct. However, that was not sufficient to find that the expert's determination was "manifestly in error", demonstrating the high threshold of this question and the general reluctance of the English courts to interfere in such decisions. 

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