Alexandra Clough, associate, Berwin Leighton Paisner LLP:
Although early neutral evaluation (ENE) in the TCC got off to a slow start, interest in it seems to be increasing. Recently, we have found that more clients are considering ENE as a dispute resolution method and as an alternative, or as an add on, to more traditional methods such as mediation.
What is ENE?
The TCC Guide (section 7.5) provides that in an appropriate case, and with the consent of all the parties, a TCC judge may:
“provide an early neutral evaluation either in respect of the full case or of particular issues arising within it. Unless the parties otherwise agree the ENE will be produced in writing and will set out conclusions and brief reasons.”
ENE can be used pre-action or once proceedings have been issued by applying to the court at any time. The procedure for ENE is fluid and will be set by the judge undertaking the ENE. The procedure may be entirely in writing, or the judge my direct an oral hearing (with or without evidence).
The default position is that ENE is non-binding unless all the parties decide that it will be binding on them. It is for the parties to agree whether the procedure and the documents, submissions and evidence is to be without prejudice.
What are the benefits of ENE?
ENE is a good idea if the parties are not at complete loggerheads. If they are still talking to each other and are amenable to settlement, but disagree on points of principle, then ENE could give them the push they need to reach a settlement. After all, both parties are likely to be respectful of the judge’s view. The evaluation could also provide the commercial justification that some organisations require. What better way to demonstrate to the board that settlement is the best option than a TCC judge’s opinion?
ENE has the potential to be inexpensive and could work out cheaper than mediation (it only costs £400, much less than a mediator may charge). However, there is likely to be a significant amount of preparation necessary and, if there is an oral hearing, you might consider engaging counsel.
If the decision is non-binding, there is really very little risk to your client, other than the cost and the impact on your opponent’s perception of your bargaining position if you lose.
Is ENE always suitable?
ENE is unlikely to be suitable for large cases involving a significant amount of factual evidence. In these cases, ENE may be used to decide discrete issues but, as with preliminary issues, the parties should be realistic about what can be achieved by only having an opinion in respect of part of the dispute.
The usefulness of the evaluation will inevitably depend on the quality of the parties’ submissions. If the parties are not willing to invest the time in participating in the ENE, then the evaluation may be no more than an indication of the judge’s view. In those circumstances, both parties could come away feeling they would get a more favourable decision in the “real thing”.
As with all forms of ADR, whether ENE will really offer clients a better option for resolving their dispute will depend on the case, the size and nature of the dispute, the parties involved and also the genuine commitment of those involved to resolving it. The point though is, that as an option for construction-related disputes, ENE finally seems to be on the agenda.