The world of Alternate Dispute Resolution mechanisms exists beyond the usual arbitration and mediation processes. One of the fast-coming and more efficient process is that of Neutral Evaluation.

Neutral Evaluation, also known as Early Neutral Evaluation, refers to a preliminary assessment of facts, evidence or legal merit. The purpose of the Neutral Evaluation is to facilitate further negotiation or to give the parties an idea of what to expect upon litigation of the dispute.

In Neutral Evaluation, the parties or their counsel refer to a neutral third party who is usually an experienced lawyer with expertise in the substantive area of dispute. He may act as a mediator or facilitator and renders a non-binding reasoned evaluation based on the merit of the case. An informal and voluntary process, Neutral Evaluation follows no fixed evidentiary or procedural rules to govern the process. Rather the parties decide the rules that would be laid down in the Neutral Evaluation agreement. There is a complete focus on the parties presenting their case in front of the neutral evaluator who, after probing and taking into account differing views of the facts, gives out an objective and impartial assessment of the key strengths and weaknesses of evidences and arguments presented by the parties.

Neutral Evaluation in this way follows the principles of Natural Justice by providing a fair hearing to both the sides, where neither is interrupted by the other side. It also follows the principle of a reasoned decision with the neutral evaluator providing an explanation to the decision made in writing and leaving no doubt as to the basis upon which the opinion was so provided.

Combining features of both a decision-making and a non-decision-making process, Neutral Evaluation tries to streamline the process and improve the efficiency of the litigation process by avoiding the failure of lawyers and clients to assess their cases early. It also smoothens the process by removing unnecessary discovery of facts and evidence and by removing irregularities and misunderstandings that occur due to misrepresentation of the case by the parties.

Neutral evaluation, by reducing the pre-trial costs, makes the process less expensive and thus more accessible and affordable to the people. It was originally conceived as a case management tool and has a broader purpose to contribute to both the case development and the settlement process.

A mid-point between mediation and arbitration, Neutral Evaluation is a dispute resolution technique which can be either used as a standalone measure or integrated with arbitration clauses to get a case valued at a pre-trial stage. Neutral Evaluation provides a structured and systematic approach to the pre-trial stage that has to be conducted in an orderly manner.

More and more countries and organisations world-over are recognising the benefit of Neutral Evaluation. The first incorporation of this process in the normal court proceedings was in 1985, when the Federal Court for the Northern District of California introduced an experimental dispute resolution program similar to the court’s judicial arbitration program. But the major difference was that the Early Neutral Evaluation was done early on in the litigation process, making the litigation less expensive and burdensome for the people involved.

In July 2023, the Employment Tribunals of England and Wales added a new non-consensual ADR process akin to Early Neutral Evaluation, adding to the growing momentum towards encouraging settlement and relaxing the fundamental English law prohibition on compelling ADR.

In November 2023, the Rawalpindi Bench of the Lahore High Court urged the parties to resolve a dispute regarding the Securities and Exchange Commission of Pakistan (SECP) through Early Neutral Evaluation.

Many IPR disputes of India have been linked with Early Neutral Evaluation such as the Tech Mahindra Ltd v. Sigma Soft (2019) which involved issues related to software development agreements and intellectual property rights.

Early Neutral Evaluation works on the principle of intellectual discipline, common sense and more direct communication and with a pro-active approach. It fosters informed decision-making, ultimately contributing to more efficient and amicable resolution of disputes.