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New Court of Appeal decision: – “Manifest error” remains a hard test to satisfy even where the alleged mistake is one of contractual construction

24.02.26

In WH Holding Ltd v London Stadium LLP [2026] EWCA Civ 153 (CA), the CA reinstated an expert determination and gave a useful summary of the correct approach to “manifest error” challenges.

The dispute related to the size of an anti-embarrassment payment upon a share sale, and in particular whether related share sale and share option agreements could amount to one transaction.  A substantial sum of money turned on the question.

The dispute was one of contractual construction and, in line with the contractual mechanism, had been put before an expert (a leading commercial KC) whose decision was agreed to be final and binding absent manifest error.

The claimant, who had lost before the expert, brought proceedings challenging the determination alleging manifest error.

At first instance, a Deputy HC Judge (another leading commercial KC) had held that the expert had made a manifest error; the expert determination was set aside.

The CA granted the defendant’s appeal.

The key takeaways are as follows:

• The same test applies for manifest errors whether or not the issue is one of contractual construction: an error will only be manifest if, after investigation limited in time and extent, it is so obvious (and obviously capable of affecting the determination) as to admit of no difference of opinion.
• The judge in determining manifest error is entitled to decide first whether there has been an error and secondly whether it is manifest.
• The judge is not, however, entitled simply to prefer their own view of contractual construction.
• In that regard it is not sufficient that the expert merely incorrectly understood or applied a contractual mathematical formula and so produced a wrong answer.
• The expert is engaged to determine the dispute, not guarantee the “right” construction. It is not enough for the challenging party to show that the expert got it wrong – it must be obviously wrong. The window of opportunity for challenge is very limited.

The CA’s decision will be of significant interest to share sale disputes practitioners. Expert determinations in this field – such as earn out and other deferred consideration disputes – often revolve around issues of contractual construction. The first instance decision had intimated a lower hurdle for challenging contractual construction expert determinations. The CA have confirmed the previous orthodoxy: – manifest error challenges are hard.