‘Manifest errors’ in dispute resolution

Flowgroup v Cooperative Energy (High Court) [2021]

An important part of a contract is the clause which determines how disputes are to be resolved. Typically, jurisdiction over disputes is given either to the courts, to an arbitrator or an independent expert. In the latter case, a typical clause will provide that the expert’s decision is ‘final and binding except in cases of ‘manifest error’’ but what exactly does that phrase mean?


The dispute arose out of the sale of the share capital of Flow Energy Ltd. The acquisition agreement (the "Agreement") stated that the purchase price was subject to a working capital adjustment. The parties were unable to agree on the amount of the adjustment, so the matter was referred to an independent expert for determination. The Agreement specified that:

"The Expert's decision will be final and binding in the absence of manifest error…"

The question for the court was whether the report contained any "manifest errors"? In order to decide that, the court first had to determine what a ‘manifest error’ is.


The judge agreed that a manifest error must be more than just a wrong answer. The judge quoted a previous case where a manifest error was defined as “oversights and blunders so obvious and obviously capable of affecting the determination as to admit of no difference of opinion.”

The judge also quoted another case in which it was said that “it is not enough for the purchasers to show that their interpretation of the Agreement is right; they have to show that the expert’s interpretation of the Agreement was obviously wrong.”

The judge concluded that, on the facts, there were no ‘manifest’ errors in the expert’s report and the seller’s claim was dismissed.

Points to Note:

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