Scope of an expert's mandate

The question raised in Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826 is one that is familiar in arbitration but has not previously arisen in the context of expert determination: if there is a dispute as to whether the issue falls within the scope of the expert’s mandate, should the court resolve the point or should it stay its proceedings and leave it to the expert? Unsurprisingly, given the English approach to arbitration, the Court of Appeal has decided that it will often be appropriate for the court to deal with the jurisdictional question in advance of the carrying out of the expert determination.

Nylon Capital: the facts

In 2004 Nylon Capital (Cayman) Ltd was appointed to manage two hedge funds set up by B and incorporated in the Cayman Islands. Nylon Capital LLP (NCLLP) was appointed as the investment manager, and was to receive a fee of 2% per annum of the net asset value of the funds and a performance fee of 20% of any increase in the funds’ value in any quarter. The fees were passed to NCLLP. The arrangements relating to NCLLP were contained in an agreement (the LLP agreement), the parties to which included investors, of which the bank was one. The LLP agreement provided that ‘the rights of the Members shall be governed by and construed in accordance with English law and the Members hereby submit to the exclusive jurisdiction of the English court’. The agreement also contained an expert determination clause, the salient features of which were: