Methods of Alternative Dispute Resolution: Early Neutral Evaluation

15 October 2019

One of the features of the Civil Procedure Rules (CPR), which govern court procedure in civil actions in England and Wales, is encouraging parties to seek to resolve their dispute by means of alternative dispute resolution (ADR), rather than litigating claims all the way to trial.

Obvious benefits to the parties in pursuing ADR include significant savings in cost and wasted management time, as well as better allowing for preservation of the commercial relationship, if that is desired.  Perhaps of less immediate interest to the parties but still an important consideration is that, as more parties engage in ADR at the “pre-action” stage, the lower case load ought to reduce the burden on the court, allowing their focus to remain on claims that are not capable of settlement.

Examples of ADR include arbitration, mediation and early neutral evaluation (ENE).  In ENE, the parties appoint an impartial evaluator, which may be the court or a third party scheme, to assess and provide them with the merits of the case and an objective view, which they can use as a basis for negotiation.  ENE can be helpful where the parties do not agree on the application of a point of law or other technical matter, or where it appears that one party has an unrealistic view of its prospects in the claim.

In a recent inheritance dispute, Lomax v Lomax[1], the Court of Appeal determined that its power to order an ENE hearing is not subject to the consent of the parties.  In Lomax, the claimant appealed a decision by the High Court that, despite the Judge noting the case “cries out for a robust, judge-led process”, the court did not have the power to order an ENE because the defendant had raised objections to it taking place.

The CPR provides that one of the court’s general powers of case management is to hear an ENE, with the aim of helping the parties to settle the case.  In its determination, the Court of Appeal noted that the relevant CPR provision does not require the parties to consent before an ENE hearing is ordered.  Further, the court considered that ordering an ENE hearing does not place any unacceptable constraint on the parties’ access to the court, rather an ENE hearing is a step that can assist with the fair and sensible resolution of cases.  The court also noted that it has been demonstrated in financial remedy cases that there is great value in a judge providing parties with an independent evaluation, which will often lead to a good deal being struck and costs savings.  In short, the Court of Appeal’s decision was that there is no requirement for the parties’ consent that would otherwise limit the court’s power to order an ENE hearing.

This is an interesting decision that is worth keeping in mind when ADR options are being considered.  Seeking an early independent evaluation of the claim may be beneficial for all parties and will often lead to early settlement.  If not, the parties are free to continue litigating the claim in the courts.

Any party to a claim may apply to the court for an ENE hearing.  Many independent organisations also provide ENE schemes, including the ADR Group and the Centre for Effective Dispute Resolution, and industry-specific schemes are available.

[1] [2019] EWCA Civ 1467.