The future of Alternative Dispute Resolution...

Early Neutral Evaluation is a form of alternative dispute resolution which seeks to achieve justice without the cost, delay and uncertainty of court proceedings.

Traditional forms of alternative dispute resolution include 'Without Prejudice' negotiation MediationArbitrationExpert Determination

Each of these has its place in resolving disputes.

Early Neutral Evaluation is different. It involves referring a dispute to an expert for an early, non-binding, evaluation of the likely outcome should the dispute be referred to court with the aim that the parties will then see the legal and commercial sense in resolving their dispute in accordance with the evaluation.

Although it is always open to each party in a dispute to obtain independent legal advice on the prospects of success, the adviser will inevitably only see one side's case until a relatively late stage - when proceedings have already been commenced and have reached the stage of disclosure of documents, inspection and exchange of evidence. This is often too late. Costs have been incurred and the parties are entrenched.

Early Neutral Evaluation secures an early indication of the likely prospects of success and the correctness of the approach being taken by the other side. It also provides a useful "reality check" for clients and their lawyers. It is an approach which is employed in Financial Dispute Resolution hearings and is now encouraged by the Technology and Construction Courts, as well as being piloted in other Tribunals. Essentially the judge is asked to give an early, non-binding view on merits and consider the positions being adopted by each side.

The costs involved are relatively modest and like other forms of ADR, a refusal to engage in Early Neutral Evaluation can be referred to when the court comes to consider the liability for costs.

However, it differs substantially from other forms of ADR: It avoids the cost and rigours of Arbitration and Mediation and the binding effect of Arbitration and Expert Determination. It also minimises the adversarial approach which still underpins these types of ADR.

Above all, Early Neutral Evaluation doesn't force a compromise for the sake of compromising. It enables settlement to be achieved against a backdrop of fairness - getting the right answer.

1. The first and obvious consideration is whether there is an issue which is a stumbling block to the resolution of a dispute. In the context of mortgage-related
  cases, these can be many and varied. For example, there may be an issue about:

  - the meaning and effect of the mortgage terms and conditions or offer of loan
  - the extent of the land comprised in the security
  - the correct calculation of the account and whether certain items should be included or not
  - whether the lender has correctly complied with its obligations under legislation; the Mortgage: Conduct of Business Rules; the Mortgage Arrears pre-
  Action Protocol or the Civil Procedure Rules
  - whether on the particular facts, the borrower has any reasonable prospect of establishing a defence to a possession claim - for example on the grounds
  of forgery, undue influence or misrepresentation etc
  - whether and to what extent the lender is entitled to be subrogated to the rights of a previous lender
  - whether and on what terms the borrower is entitled to suspend an order for possession on terms, or seek to stay a warrant of possession
  - whether the lender has taken reasonable care to obtain the best price reasonably obtainable on a sale of the mortgaged property

2. Discuss and agree with the opposing party whether there is a willingness to obtain an early neutral evaluation of the issue from a suitably qualified expert
  and consequently whether there is a genuine desire to compromise the issue having regard to the evaluation.

3. Formulate the issue; prepare a concise statement of the relevant facts and produce a bundle of relevant documents to send to the expert. The parties will
  invariably be asked to sign a form of ENE Agreement which forms a contract between themselves and the expert, and pay their share of the expert's fee.

4. It is important to appreciate that the expert will produce a non-binding evaluation. While it is open to either party to disregard it, the whole object of the
  evaluation is to help resolve an issue and remove the stumbling block to resolving the dispute and thereby avoiding the cost, delay and uncertainty of
  court proceedings. Bear in mind also that as with other forms of alternative dispute resolution, a failure to engage in the ADR process can be referred to on
  the question of costs, should litigation ensue.