Many commercial contracts provide for an independent expert to resolve disputes of a financial nature. In drafting these dispute resolution clauses it is common to provide that if the parties cannot agree upon an independent expert, the parties will ask the President of the Institute of Chartered Accountants in Australia (ICAA) to nominate a suitable person.
In light of recent changes to ICAA policy, these clauses now need to be revisited. On 15 December 2010 the ICAA announced that it will no longer provide a nomination service. Instead, parties will be directed to the ICAA's online 'Find-a-Chartered-Accountant' service. This service allows users to search for Chartered Accountants by area of expertise, industry and location. The website explains that the database includes only Chartered Accountants who have elected to be part of the service and that it is the responsibility of the parties to make their own enquiries regarding members.
As a practical matter, this means that contractual provisions referring nominations to the ICAA will no longer operate as intended. As a legal matter, there is a risk that these provisions may be unenforceable and leave disputing parties without an agreed mechanism to appoint an independent expert.
If the dispute resolution clause in your contract relies upon the ICAA nominating an independent expert, we recommend that you amend these provisions to provide an alternative process for expert nomination.
The Institute of Arbitrators and Mediators Australia (IAMA) offers a service for identifying impartial experts in the fields of finance and accounting. The President or Chapter Chairman of the IAMA will nominate a suitable financial expert on request. The expert will then determine the dispute in accordance with the IAMA's expert determination rules.
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