When parties consider alternative dispute resolution (ADR), the focus is often on mediation, arbitration, or straightforward negotiations. However, a number of alternative ADR mechanisms can offer equally effective, and in some cases more suitable, routes to resolving commercial disputes.

In this article, we explore two such mechanisms: expert determination and early neutral evaluation. Each has distinct advantages and is particularly well suited to specific types of disputes.

Expert determination: a specialist solution for technical disputes

Expert determination is a private dispute resolution process in which the parties appoint an independent expert to decide a particular issue. The expert is selected for their technical or industry expertise, and typically conducts their own investigation to reach a decision based on their specialist knowledge. This form of ADR particularly appropriate where disputes (in full, or in part) turn on technical issues such as:

• share or business valuations in shareholder disputes
• accounting issues in partnership disagreements
• whether technical obligations contained within a commercial contract were in fact performed by a party

One of the key advantages of expert determination is its efficiency. Because the expert will be determining a specific issue, the process usually requires limited procedural steps and often dispenses with extensive submissions. This can make it a faster and more cost-effective alternative to litigation or arbitration.

Another important feature is flexibility. The parties can agree whether the expert’s decision will be binding. They can do so at the outset of their relationship by including a clause to that effect in their contract, or can agree this at a later stage once a dispute has arisen and expert determination is required. Even if expert determination is decidedly non-binding, it can still be valuable in narrowing the issues and/or providing insight into the merits of a claim.

However, expert determination is not without limitations. Because the expert’s focus is technical rather than legal, legal arguments may not be fully addressed making it less suitable where disputes involve a significant overlap between legal and technical issues.

Early Neutral Evaluation: Testing the Strength of Your Case

Early neutral evaluation (ENE) involves instructing an independent third party, often a retired judge or senior lawyer, to provide a non-binding assessment of the legal merits of a dispute.

Despite its name, ENE does not always occur ‘early on’ at the very outset of proceedings. It is actually most effective once pleadings have been exchanged and the parties’ positions have been properly articulated.

The evaluator reviews the available material and provides an informed view on the likely outcome were the case (or a particular issue therein) to proceed to trial.

This can be particularly useful where it is suspected that one or both parties have an overly optimistic view of their case. An objective assessment from an experienced evaluator can help recalibrate expectations and encourage constructive settlement discussions, in light of a more informed understanding of litigation risk and the potential costs associated with that.

As an ENE decision is non-binding, parties remain free to continue with the litigation in the event that its outcome does not facilitate settlement terms being agreed. Given the ENE is conducted on a without prejudice basis (just like other forms of ADR) the judge who presides over the ENE cannot have any involvement in the litigation itself, nor can the judge presiding over the litigation have sight of the ENE decision. This is advantageous for the same reason other forms of without prejudice ADR are advantageous, namely that parties can engage openly and freely in the process without concerns about any concessions or statements being utilised in the litigation.

The caveat is that the ENE judge will have sight of more limited documentation than a judge would at final trial in litigation, particularly where the parties have not yet exchanged disclosure and/or witness statements at the time the ENE takes place. That is a factor to be considered in light of what information is anticipated to be revealed by disclosure and witness evidence.

In practice, ENE can be thought of as a form of “reality testing”: whilst it does not provide a binding determine of the dispute (or particular issues therein), it often still plays a valuable role in bringing parties closer to resolution. Or at the very least, having another reference point for further settlement negotiations.

Key Takeaways

While mediation and arbitration remain popular and effective forms of ADR, expert determinations and ENE are valuable alternatives which are often underutilised. When deployed strategically, they can significantly reduce the time, cost, and uncertainty associated with disputes.

Selecting the appropriate mechanism will depend on the nature of the dispute, the parties’ objectives, and the commercial context. At Collyer Bristow, we regularly advise clients on the full spectrum of ADR options and work closely with them to identify the most effective route to resolution in each case.

If you would like to discuss any of the issues raised in this article, please get in touch with a member of our Commercial Disputes team.