It makes a difference whether the determination is an arbitration or an expert decision. We see these clauses frequently. Something similar to “The franchise buyout price shall be determined by submission by each side’s appraiser, whose reports shall be submitted to a third, whose decision shall be binding.” Or perhaps “the fair market rent for the future term shall be determined by the an independent licensed real estate appraiser selected by the parties.” Will the determination by these experts be nonappealable arbitration awards or expert decisions that can be challenged in court and subject to appeal?

The difference can be huge when challenging or enforcing the determination. Both determinations are creatures of contract. Where the contract does not state whether it is an arbitration or litigation, proper enforcement or challenge to the determination can take years. A decision by the U.S. Court of Appeals for the Third Circuit provides guidance on procedure and drafting.

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