ADR Methods: Early Neutral Evaluation & Expert Determination
The Alternative Dispute Resolution method you choose will depend on the kind of business dispute you are having. As a startup, being aware of the advantages and disadvantages of different ADR methods and the ways they usually carry out in practice can help you make the right choice when settling a business dispute.
In this article, we take a deeper look at the early neutral evaluation and expert determination commercial ADR methods, how they work, and things to keep in mind during these processes. This article is Part 3 of a series focused on ADR. For a quick introduction into ADR and an overview into a wider range of ADR methods, see Part 1.
Below, we provide an overview of the early neutral evaluation and expert determination processes. However, there are a range of other forms of ADR, and it is advisable to contact an ADR solicitor to help you with your specific dispute resolution needs.
Types of Commercial ADR: EARLY NEUTRAL EVALUATION AND EXPERT DETERMINATION
Early Neutral Evaluation (ENE)
A process in which parties ask an independent evaluator to gauge the strengths and weaknesses of each of their cases and form a neutral and non-binding evaluation, intended to serve as a basis for settlement negotiations to start, helping parties prevent unnecessary ligitation and providing incentive for a resolution to be achieved.
The evaluation is confidential, non-binding and without prejudice, meaning that anything said during any ENE process by either party cannot be used as evidence later on in any other proceedings.
Appointing an Evaluator
ENE can be pursued by either a private appointment, through an organisation, or through the courts.
By private appointment: A number of organisations can be approached when in need of an evaluator, including the Chartered Institute of Arbitrators and the Academy of Experts, who back a body of expert arbitrators. Individual barristers and solicitors can also be directly approached when seeking an evaluator.
By court appointment: Some UK courts, including the TCC, Commercial Court and Chancery Division, issue ENE solutions. If you would like to proceed with ENE through the court, you can apply with the Civil Procedure Rules which apply to your case and situation.
What is the ENE process?
Since ENE is a flexible, voluntary and consentual process in which all parties to the dispute must agree to go through, the parties are free to decide the way in which the dispute is solved and who the evaluator will be. ENE can be used to answer any questions to do with the evidence, facts, technicalities and legalities of a dispute.
The parties and the evaluator should draw up a detailed Early Neutral Evaluation Agreement, outlining in writing their responsibilities throughout the ENE process, as well as the extent of documents each side has to submit, the extent to which the evaluator must explain their reasoning, a timeline, procedure and fee structure, to name a few.
The process of ENE begins and runs pursuant to how the parties want to address the dispute. It is the responsibility of you and your opponent to decide whether the evaluator should organise a hearing, or if the evaluation should be done wholly by citation to supporting documents submitted by each party.
You and your opposing party will generally have to provide a case summary, by way of putting your best case forward, and suggestions for a resolution, for the evaluator to use.
The evaluator’s final decision is non-binding and can be thought of as an assessment of the case and a review of each party’s side. The evaluator’s conclusion will be a likely indicator of a trial outcome of the dispute, and will usually prompt more discussion between the parties.
Expert Determination
When business disputes concern technical issues rather than legal issues, non-legal experts in relevant fields are engaged to help resolve the dispute through the process of Expert Determination. Expert Determination is a process in which an independent technical expert is appointed to give a (usually) final binding decision on a dispute based on technical issues and expertise.
The expert determination procedure and resulting decision are confidential and binding. Since there are no governing rules setting out a formal procedure for expert determination, the process can take place more informally and flexibly than other more exact dispute resolution processes, such as arbitration, and may be used in conjunction with other ADR methods, such as mediation, for instance.
Expert Determination is usually used when disputes arise concerning valuations (share valuations, price changes etc), and in the case of a range of technical issues across various fields, including accounting, oil and gas, IT, medicine etc.
Appointing an Expert
The expert determination contract clause will usually detail how an expert will be chosen and if an expert cannot initially be agreed on. A professional body will often be chosen in the contract as an organisation which can help parties reach a point of agreement and nominate a relevant expert. Then, the parties must agree to the terms of engagement for an expert to be appointed.
Appointing Authorities:
Centre for Effective Dispute Resolution
The Law Society of England and Wales
What should you include in an Expert Determination clause?
The expert determination process relies solely on the expert determination contractual terms drafted in your expert determination clause, rather than on some statutory governing rules. As a result, an expert determination clause is vitally important. An expert determination clause should usually include details such as:
Details of the dispute and the particular subject to be determined.
An unambiguous definition of an expert to refer to a technical expert, not to be confused with an adjudicator or some other legal expert.
Who the chosen expert is, or how you will agree on an expert, including details of their qualifications and their independent duties and responsibilities. If an expert is not decided, an external body can be chosen to help appoint an expert.
Whether the expert’s final and binding decision will be issued in writing and whether the determination will include reasons for the result.
Whether the expert’s decision is able to be challenged, and the grounds for justifying such an appeal, usually, in the case of an obvious or plain error i.e. a “manifest error”, or where there have been allegations of fraud, or of not complying with the terms of reference.
How payment for the expert be conducted, how costs will be proportioned, whether payment will be shared across parties, and whether parties will be liable for someone’s failure to pay.
When payment is due, how costs incurred during the process are paid and whether interest is awarded.
What is the Expert Determination process?
The process for expert determination is usually outlined in the terms of reference document, to be followed with the expert determination contract clause. When deciding on the right process, you might keep the following in mind:
Outlining a clear schedule with time stamps for when certain issues should be determined.
The expert’s rights and responsibilities and any restrictions on the expert’s powers.
How each side will make submissions to the expert, will these be written submissions, how detailed these submissions can be, and whether each side can reply to submissions from their opponent.
Whether the parties are to conduct an oral hearing.
Useful resources:
Specimen expert determination clause and list of appointing authorities
Author: Gaia Freydefont -
Author: Gaia Freydefont -
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DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.
Sources
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