Legal Definitions - oversman

An oversman is an independent third party appointed to resolve a dispute when two arbitrators, who were initially chosen by opposing parties, cannot reach a unanimous decision. The oversman's role is to review the arguments and evidence presented by both sides and the arbitrators, and then issue a final, binding decision. This mechanism ensures that the arbitration process does not deadlock and a resolution is ultimately achieved.

• Example 1: Construction Dispute

  A construction company and a client are in a dispute over significant cost overruns on a building project. Their contract specifies that any disagreements will be resolved through arbitration. Each party appoints an arbitrator to represent their interests. After reviewing all project documents, financial records, and hearing arguments from both sides, the two arbitrators find themselves at an impasse, unable to agree on whether certain additional costs were legitimate change orders or unauthorized expenses. To break this deadlock, they jointly appoint an oversman. The oversman then reviews the differing opinions of the two arbitrators, examines all the evidence, and makes a final, binding determination on the disputed costs.

  Explanation: Here, the oversman steps in to provide a definitive resolution when the two original arbitrators, appointed by the disputing parties, cannot reach a consensus, thereby preventing the arbitration from failing.

• Example 2: Partnership Dissolution

  Two business partners decide to dissolve their company, but they cannot agree on the fair valuation of specific intellectual property assets. Their partnership agreement includes a clause for arbitration in such situations. Each partner selects an arbitrator. When these two arbitrators present conflicting valuations and are unable to reconcile their differences after extensive deliberation, they agree to bring in an oversman. The oversman meticulously examines the company's financial records, intellectual property valuation reports, and the arguments presented by both initial arbitrators, ultimately issuing a decision on the fair market value of the assets that is binding on both partners.

  Explanation: The oversman acts as the crucial tie-breaker, ensuring that the complex issue of asset valuation is definitively resolved when the initial arbitrators are at an impasse.

• Example 3: International Supply Contract

  A dispute arises between a textile manufacturer in one country and a clothing retailer in another regarding the quality of a large shipment of fabric and the associated warranty claims. Their international supply agreement mandates arbitration under specific trade rules. Each company appoints an arbitrator. Despite thorough investigation and numerous discussions, the two arbitrators cannot agree on the extent of the manufacturer's liability for the alleged defects. They jointly appoint an oversman. The oversman then reviews all technical reports, contractual terms, and the detailed positions presented by the initial arbitrators to render a final decision on the warranty claims and any compensation due.

  Explanation: In this cross-border commercial context, the oversman ensures that the arbitration process, designed to resolve international trade disputes efficiently, successfully concludes despite initial disagreement between the party-appointed arbitrators.