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ENE: Another ADR path to consider

Early neutral evaluation can make litigation less expensive and help parties get a better sense of the merits of their case. We should use it more in Canada.

man between two paths

There are many forms of alternative dispute resolution, each with their own characteristics. One that tends to get overlooked in Canada is early neutral evaluation – known as ENE – where an independent and impartial evaluator assesses the merits of the case, soon after it’s been filed.

What's intriguing is that litigants in several jurisdictions – England, the US, and Australia in particular – have turned to ENE and, not surprisingly, have encountered a high measure of success. It's time for it to be tested more widely in Canada.

What makes ENE attractive is that it can be used by the parties to engage in settlement discussions and arrive at a resolution sooner. It is non-binding and the process is conducted on a without prejudice basis. It can also be combined with mediation. If parties can't come to a mutually acceptable agreement, they can empower the mediator to provide an evaluation of the case. That evaluation can then help soften positions and move the parties towards a resolution.

Admittedly, there are disadvantages to the process as well. For instance, a litigant who emerges as a "winner" from ENE might become far more entrenched in its position, making resolution impossible and a trial more likely. It's a risk that counsel will have to assess.

The courts in Canada have the requisite legal authority to order ENE, even in the absence of any express provisions under rules of civil procedure – unlike in England where it is codified and can even be mandated by the courts for certain types of disputes. Parties to litigation can also enter into an ENE agreement voluntarily.

When ordered by a court, the presiding judge performs the evaluation, and then is subsequently precluded from any further involvement. The parties generally have less control over the process and are afforded little time to advance positions or evidence.

Where the parties agree voluntarily to ENE, they should address the following items in an agreement: (a) confirmation of the evaluator's duty to act impartially; (b) a timetable for the delivery of the evaluation; (c) a timetable for the exchange of documents, conduct of the hearing, if any; (d) whether the evaluator is expected to give a reasoned opinion; (e) whether the evaluator can get independent advice or expertise; (f) whether the parties can ask questions or seek clarification once the evaluation has been issued; (g) the immunity of the evaluator; (h) confidentiality provisions; and (i) how the evaluator's fees are to be paid.

What's more, the parties have the discretion to decide on the procedure. Either the evaluator determines the procedure, or they may decide on the code to follow. The parties may also agree on part of the procedural and allow the evaluator to issue procedural orders. Therefore, the ENE agreement should also address these procedural questions: (a) whether case summaries are to be provided; (b) the number of submissions to be made by the parties; (c) whether the ENE will be conducted by way of an oral hearing, or on the basis of written submissions and documentary evidence only; and (f) documents that are to be produced.

In the end, the evaluator should produce a preliminary opinion on the issues in dispute and the likely outcome if the dispute is to proceed to trial.  Where both parties are satisfied with the evaluation, they may move forward with settlement discussions or make an offer. If they remain dissatisfied, they can ignore the evaluation and proceed to trial.

ENE is still rarely used in Canada, which is unfortunate because it affords litigants with a wonderful opportunity to reach an early settlement based on substantive discussions. We should be encouraging litigants to consider as many off-ramps as possible to traditional trials. Neutral Evaluation is a dispute resolution technique that should be seized.