Expert Determination and Judicial Non-Interference: Sunward Holdings Ltd v Teqnion AB ([2025] IEHC 296)

Introduction

This case concerns a dispute between Sunward Holdings Limited (“Sunward”), the seller of a mobile food-truck manufacturing business, and Teqnion AB (“Teqnion”), the buyer, under a Share Purchase Agreement dated 31 August 2022 (the “SPA”). In that agreement the parties agreed that disagreements over the calculation of an earn-out payment (a contingent further payment based on future performance) would be resolved by an independent expert accountant rather than by litigation. Before the expert process began, Sunward sought a court declaration limiting the expert’s power to apply accounting standards and interpreting the SPA’s definition of “Gross Profit.” Teqnion resisted, arguing that such pre-emptive court interference would undermine the expert determination process the parties had contractually agreed. Mr. Justice Twomey of the High Court (Commercial Court) delivered judgment on 23 May 2025, refusing Sunward’s application.

Summary of the Judgment

The Court held, following the principles in Dunnes Stores v McCann [2020] 3 I.R. 1, that:

Parties who agree to expert determination as an alternative to litigation must be left to that process except in exceptional circumstances;
Any premature application to court to delimit the expert’s remit is “wasteful and premature” and contrary to public policy encouraging cost-effective dispute resolution;
There was no evidence the appointed expert would exceed her contractual mandate, and in any event post-determination challenges remain available;
Sunward’s application for a declaration was rejected, and preliminary indications are that Sunward will be ordered to pay Teqnion’s wasted legal costs.

Analysis

Precedents Cited

Dunnes Stores v McCann [2020] 3 I.R. 1: Established the general rule that courts should not interfere in expert determinations before the expert has decided, absent exceptional circumstances.
Lett & Co Ltd v Wexford Borough Council [2012] IESC 14: Characterised litigation as “the most protracted and expensive way” to resolve disputes, underscoring the rationale for ADR.
Bourbon v Ward [2012] IEHC 30: Highlighted the “prohibitive” nature of High Court costs.
Mercury Communications Ltd v Director General of Telecommunications [1994] C.L.C. 1125: Described premature court applications as “wasteful and premature.”
Thorne v Courtier [2011] EWCA Civ 104: English authority against court interference in expert determinations to avoid unnecessary litigation and cost.
Tweedswood Ltd v Power [2015] IESC 18: Illustrated how litigation can remain protracted despite early interlocutory hearings.

Legal Reasoning

The Court’s reasoning follows five principal considerations drawn from Dunnes and allied authorities:

Wasteful and Premature Intervention
Courts should not hear or determine issues reserved for an expert before the expert’s own decision is rendered. To do so wastes court time and party costs.
Respect for the Parties’ Agreement
By contracting for expert determination, the parties chose to avoid litigation. The Court must respect that choice and allow the expert process to run its course.
No Evidence of Expert Misconduct
There was no basis to suspect the expert would exceed her mandate, and any post-determination challenge remains available.
Policy Encouraging Cost-Effective ADR
Public policy favors cheaper, efficient resolution of commercial disputes. Premature litigation would impose “prohibitive” costs the parties sought to avoid.
Illogicality of Dual Process
It would defeat the purpose of ADR to allow pre-emptive court interpretations of contractual terms the expert must apply.

Impact

This decision reinforces the high-court’s respect for alternative dispute resolution provisions. Key impacts include:

Affirmation that courts will not grant advance declarations on matters reserved for an expert absent truly exceptional circumstances.
Encouragement to commercial parties to rely in good faith on their agreed expert-determination mechanisms.
Warning that wasted “backdoor” litigation will attract adverse costs orders.
Contribution to a consistent body of Irish law discouraging premature judicial intervention in ADR.

Complex Concepts Simplified

Earn-Out: A contingent payment from buyer to seller based on future business performance.
Expert Determination: A form of ADR where an independent expert (here, an accountant) decides specified disputes rather than a judge.
Gross Profit (SPA definition): “Revenue received by the Company less cost of sales,” calculated consistently with pre-sale practice.
Manifest Error or Fraud: The narrow grounds on which an expert’s determination can be challenged post-decision.
Prohibitive Costs: High Court litigation expenses described as so large they effectively deter access to justice.

Conclusion

Sunward Holdings Ltd v Teqnion AB confirms the non-interference principle governing expert determinations in Irish commercial law. Parties who elect expert determination to avoid expensive litigation must allow that process to proceed unimpeded. Premature court applications to delimit an expert’s jurisdiction are “wasteful and premature,” undermine public policy favoring cost-effective ADR and will generally attract adverse costs orders. This judgment thus cements the Dunnes-Stores v McCann framework and signals to practitioners that the courts will uphold ADR agreements and discourage tactical “backdoor” litigation.