Early Neutral Evaluation FAQs

What is ENE?

In an ENE, an independent and impartial evaluator is appointed by the parties to give an assessment or "evaluation" of the merits of their respective cases.  The evaluator can provide an authoritative (albeit provisional) view of the issues at the heart of the case and an experienced evaluation of the strength of the evidence available to deploy in addressing those legal issues. This valuation may then be used as the basis for settlement negotiations. ENE can be used to explore any combination of legal, evidential, factual or technical questions. ENE is usually non-binding and  he process without prejuracismning that what is said by one party in ENE proceedings cannot be used later by the other party in any proceedings (with very limited exceptions). 

When to use ENE?

ENE may be useful in cases where:

•  the parties have reached an impasse on a particular element of or issue in the case: an independent evaluator may be able to break such a deadlock by giving an unbiased opinion of what the outcome would be if the matter proceeded to a court or an arbitral tribunal;
• there is a great disparity between the parties' positions: ENE can focus the minds of both parties and narrow the gap between them;
• one party has an unrealistic view of the case: receiving an independent evaluation of the case may help a party to realise that their arguments are unlikely to succeed in court; and/or
• confidentiality is essential: ENE is not a public process and does not produce any publically available judgment or decision.

Advantages of ENE

ENE can be an effective means of dispute resolution in that it can:

•  highlight and clarify the issues in dispute;
•  be faster than more traditional forms of dispute resolution;
•  demonstrate the limits of a party's case, any gaps in the evidence and the risks involved in pursuing litigation; and
•  assist in settlement negotiations by encouraging parties to move to a more realistic negotiating position. 

Disadvantages of ENE

ENE can be problematic because:

•  the "winner" of the process is likely to become more entrenched in their position as a result of a positive evaluation, which may lead to them becoming more demanding   in negotiations, thus hindering the settlement process;
•  conversely, the "loser" is likely to find their negotiating position significantly undermined, thus decreasing their chances of achieving a satisfactory settlement; 
•  ENE can be disproportionately expensive and time-consuming, if it does not result in a settlement;
•  ENE may be too short and informal to deal with complex technical or factual questions, unless they can be broken down into single issues; and
•  if ENE is carried out by the court, the judge carrying out the evaluation will not be able to take part in subsequent proceedings, unless both parties agree. ENE may therefore be used tactically to exclude a particular judge from hearing the case. 

How to select an ENE process?

As ENE is a voluntary process to which all parties must agree, the parties are free to determine the process and the identity of the evaluator. 4 ENE can be pursued through the courts or through an  rganisation.  However, it is important for the efficacy of the ENE process that the parties respect the chosen evaluator. Where one or more of the parties to the dispute perceives the evaluator not to be sufficiently independent and impartial, they will be less likely to respect the evaluation that is handed down at the end of the process. For this reason, the parties may wish to consider conducting ENE through the courts in the first instance.

How to enter into an ENE agreement?

Once the identity of the evaluator has been agreed upon by the parties, or confirmed by an appointing organisation, the parties and the evaluator are required to enter into an ENE agreement. This agreement should set out the parties' agreement as to how the ENE will be conducted, what is expected of the evaluator and how his evaluation should be delivered. As it will also serve as the parties' instructions to the evaluator, it should set out clearly what is expected of the evaluator. 

In addition to the key provisions around whether the process will be without prejudice and whether the evaluation will be binding or non-binding, we would also recommend the ENE agreement includes the following information:

•  confirmation of the evaluator's duty to act impartially;
•  the procedure to be adopted for the ENE, or how the procedure is to be determined (see "Procedure for ENE" below);
•  a statement that the parties shall give full assistance to enable the ENE to proceed and be conducted within the stipulated time;
•  the timetable for the exchange of documents, conduct of the hearing and provision of the evaluation;
•  whether the evaluator is expected to give a reasoned or "bare bones" opinion;
•  whether the scope of the evaluation must be limited to information provided by the parties, or whether the evaluator may consider other matters, or request additional information from the parties, orally or in writing;
•  whether the evaluator may obtain independent advice, and if so whether he will provide a copy of the advice to the parties so that they may also have an opportunity to comment on it;
•  whether the parties are permitted to ask questions or seek clarification once the evaluation has been issued;
•  the extent to which the evaluator will have immunity from suit following the ENE;
•  a statement that the ENE is confidential, all information disclosed is disclosed on a privileged and without prejudice basis and no privilege or confidentiality is waived by disclosure; and
•  how the evaluator's fees and parties' costs are to be dealt with 

What procedure is followed for ENE?

As with the identity of the evaluator, the parties have discretion in determining the procedure for the ENE process. How much of the procedure the parties wish to set will depend on the facts of the dispute, but in general, the parties may agree either that the evaluator is to determine the procedure or that the parties are to determine some or all of the procedure themselves.

If the parties want to set some or all of the procedure themselves, they should agree this at an early stage of discussions, as the agreed procedure should be recited in full in the ENE agreement. Where the parties have agreed some or all of the procedure, they should ensure that the proposed evaluator is willing to conduct the process under their agreed procedure.

What procedural matters need to be considered?

The parties may specify any element of the ENE procedure, but as a minimum should consider the following:

• whether it is necessary for the parties to provide the evaluator with a case summary and, if so, whether this should be prepared jointly or by one party with the other party to comment or provide their own separate case summary (as in litigation);
•  how many submissions each party may make and whether they should be limited in any way;
•  whether there is to be an opportunity for a discussion of the conduct, procedure or other relevant matters prior to the ENE (which may be useful in a complex dispute), and if so whether this is to take place by teleconference meeting or in person;
•  whether the ENE will be conducted by way of a hearing, or proceed on the basis of written submissions and documentary evidence only;
•  where a hearing is to take place, whether the parties will have an opportunity to present their evidence and make submissions, and whether there is to be any oral examination of witnesses;
•  what documents the parties are expected to provide to the evaluator and/or whether there is to be a core bundle of agreed documents;
•  whether to limit the number or length of supporting documents;
•  whether the parties are to be represented or assisted at any hearing; and
•  the maximum duration of any hearing.

When discussing procedural matters, it should be borne in mind by the parties that the aim of ENE, as with ADR mechanisms generally, is to resolve disputes in a timely and cost-effective manner.

Accordingly, when determining the ENE procedure, the parties should consider the need to balance these ADR aims with the requirement to put the evaluator in a broadly equivalent position to that of a trial judge. While excessive preparation time and costs would de-value the ENE process, insufficient materials being placed before the evaluator may lead to a lack of confidence in the final valuation properly reflecting the position between the parties.