EXPERT DETERMINATION ( Schiedsgutachten ) is a tool for solving disputes such as those arising in connection with mergers and acquisitions. While in recent years the number of expert determination proceedings has increased to a reasonable extent, the amount of German case law and legal literature available on this subject remains sparse. This is particularly true when it comes to the accurate wording of expert determination clauses. In corporate mergers and acquisitions (‘M & A’) under German law, expert determination is frequently resorted to for the purpose of examining the annual financial statements and in particular for the purpose of determining the equity capital on which the calculation or an adjustment of the purchase price is to be based.1 Expert determination proceedings are considered to be very suitable for settling such matters, particularly since any state or arbitral court would normally also call in an expert to clarify such economic issues. This is all the more true since international rules for the preparation of balance sheets, International Financial Reporting Standards (IFRS) or foreign rules of preparing balance sheets, e.g . US-GAAP, are increasingly used in takeover agreements under German law. Representation and warranty issues in corporate acquisition agreements constitute another, somewhat smaller, group of cases in which expert determinations may have to be obtained. Experts may, for example, have to be called in to determine the reduction of a price resulting from a defect in the enterprise sold. In particular, this occurs frequently, but not exclusively, whenever environmental warranties are at stake. ### (a) The Concept of Expert Determination Proceedings The parties to a contract may stipulate that any matters that may become controversial, require clarification or supplementary provisions, or the contents of which are in need of a legal assessment, may be brought before one or more third parties acting as experts ( Schiedsgutachter ). Such experts will then be …