Early Neutral Evaluation – A Much-Needed Form Of Alternate Dispute Resolution In India

By - Nikhilesh Koundinya, Associate, Solomon & Co. and Mustafa Bohra, Senior Associate, Solomon & Co.

Abstract	2
List of Abbreviations	3
List of Statutes	4
List of Cases	5
Statement of Problem	6
Research Objectives	6
Research Questions	6
Scope and Limitation of the Research	6
Research Methodology	7
Literature Review	7-10
Scheme of Chapters	10-11
Chapter 1: Introduction	12-15
Chapter II: What is ENE?	16-19
Chapter III: Comparative Analysis between India, U.S. and U.K.	20-25
Chapter IV. Way Forward and Proposed Reforms	26-27
Chapter V: Conclusion	28
Bibliography	29-32

ABSTRACT

The National Judicial Data Grid has as on 27^th April 2024 revealed a staggering number of more than Four Crore pending civil and criminal cases in India, showcasing the immense strain on the country’s judicial system. Amidst this, Alternate Dispute Resolution has emerged as a prominent method that encourages and ensures early resolution of disputes. A key reason behind the widespread adoption of Alternate Dispute Resolution is its ability to offer parties a faster and more cost – effective way to resolve disputes compared to traditional litigation. Alternate Dispute Resolution also provides more flexibility and control to the parties involved in finding mutually agreeable solutions.

While the traditional ADR methods are arbitration, mediation and conciliation are well known and legislatively recognized there are other forms of ADR slowly permeating in the judicial systems around the world such as Dispute Resolution Boards, Mini-Trials, Ombudsman, Expert Determination etc.

This paper studies one of the emerging form of dispute resolution, i.e., Early Neutral Evaluation (“ENE”). ENE is a voluntary procedure used in the early stages of the dispute i.e., begins; before the litigation process begins; however, it can also be considered by the parties after the litigation process is initiated. During the ENE process a neutral party reviews the issues and facts as presented by the parties and provides a frank assessment of some or all aspects of the case. The paper studies the growth of ENE and its journey from inception to being one of the most relied upon forms of dispute resolution in U.S.A. and U.K.

The paper goes on to address the need for introducing ENE in India and further explains as to how the same is already incorporated implicitly under the Civil Procedure Code, 1908. The paper concludes with how ENE can help in tackling pendency of cases in India and how the said technique would assist in streamlining multiple matters.

LIST OF ABBREVIATIONS

	ADR	Alternative Dispute Resolution
	U.S.	United States of America
	U.K.	United Kingdom
	NJDG	National Judicial Data Grid
	DBs	Dispute Boards
	ODR	Online Dispute Resolution
	ENE	Early Neutral Evaluation
	v.	Versus
	Ors.	Others
	Anr.	Another

LIST OF STATUTES

The Arbitration and Conciliation Act, 1996
The Civil Procedure Code, 1908
Civil Procedure (Amendment No. 4) Rules 2015
Civil Procedure Rules, 1998
Commercial Courts Act, 2015

LIST OF CASES

Telecom Centre (UK) Limited v Thomas Sanderson Limited, (2020) EWHC 368 (QB)

Bawa Masala Co. v Bawa Masala Co. Pvt. Ltd. & Anr., AIR 2007 Del 284

Seals v Williams, (2015) EWHC 1829 (ch)

M/s Sabsons Agencies Pvt. Ltd. v M/s Hairhar Polymers & Anr., CS (Comm) 899 of 2023

Statement of Problem

While the U.S. and U.K. legal landscape has adopted ENE in its laws to resolve disputes and differences between the parties, India though having recognized ENE has not taken any action to include the said method within its legislative landscape.

The thesis makes a novel attempt at describing what ENE is, how is it different from other forms of dispute resolution, some of the characteristics of ENE which make it a much-needed method in the dispute resolution landscape of India and the ways in which the same may be included in the legislative landscape of India going forward.

Research Objectives

The main objectives of the present thesis are as under:

To examine the meaning and working of ENE in foreign jurisdictions; and

To propose reforms to the dispute resolution laws of India ensuring the inclusion of the ENE for resolving of disputes at a faster pace and economically.

Research Questions

What is ENE?

How has been ENE been adopted / accepted around the world?

How is ENE different to the other forms of dispute resolution?

How can ENE be adopted in India to ensure faster disposal of matters / prevent matters from coming to the courts?

Scope and Limitation of Research

The present thesis deals with the concept and working of ENE. The researcher has confined his study to the understanding of ENE and examining its applicability to the Indian judicial landscape. The researcher has further limited his research to three key jurisdictions, India, U.K. and U.S.A.

Research Methodology

Research Techniques:

While conducting the research, the thesis is firmly doctrinal in its methodology as it entails an analysis of legal materials that support the research and analysis, the relevant legal texts to interpret what law exists regarding the particular context.

The thesis also incorporates a comparative approach to compare legal rules from different jurisdictions to find the best solutions. The comparative methods also allow for the identification of differences and similarities in legal concepts.

Collection of Data

The Doctrinal Method:

It includes the analysis of various statutes, judicial decisions and study through reasoning by referring to articles, books, journals, case laws, websites and magazines.

Primary Data:

The primary source of data collection used by the researcher is the judgments, legislations and reports.

Secondary Data:

The secondary source of data collection used by the researcher is articles from reliable sources like SSRN, Kluwer arbitration, books, journals, newspapers, literature information, articles, reports, web sources and authentic dictionaries.

Comparative Method:

It includes analysis of the statues and studies through reasoning by referring to articles, journals, case laws and websites.

Literature Review:

For this thesis, the literature review explores the meaning of ENE through various papers and looks at the use of ENE in foreign jurisdictions. For this thesis, the researcher has relied on the Bluebook (20^th edition) style of citation uniformly throughout.

Keith A. Ashmus in his article ‘Early Neutral Evaluation’ dwells into the meaning and functioning of the said alternate dispute resolution method. The paper further addresses as to how the said concept evolved in the United States and the procedure to be followed while adopting the said technique for resolving disputes.

Wayne D. Brazil, Micheal A. Kahn, Jeffrey P. Newman and Judith Z. Gold in their article ‘Early Neutral Evaluation: an experimental effort to expedite dispute resolution’ address the need for Early Neutral Evaluation. The paper further enunciates on why evaluators in Early Neutral Evaluation should be private attorneys and not judges or magistrates.

Victoria McCloud in her article ‘Judicial Early Neutral Evaluation’ differentiates between Early Neutral Evaluation and other forms of dispute resolution. She further expounds on the principles of Early Neutral Evaluation.

Jordan Leigh Santeramo in his article ‘Early Neutral Evaluation in Divorce Cases’ while explaining Early Neutral Evaluation, enunciates on the pros and cons of the said method. The article further analyzes the use of the said method in divorce cases and explains as to how the said method could be incorporated in matrimonial laws of various countries.

David I. Levine in his article ‘Early Neutral Evaluation: The Second Phase’ recounts as to how Early Neutral Evaluation was formally adopted as a method for alternative dispute resolution in the Northern District of California. It also points towards the rules and regulations formulated by the Courts for successful functioning of Early Neutral Evaluation.

I. Levine in his article ‘Early Neutral Evaluation: A follow-up report’ covers the initial pilot phase of Early Neutral Evaluation in the District Court of San Francisco. The paper covers the lacunae in applying Early Neutral Evaluation and addresses measures for improving the same to make it more amenable to a professional environment.

In ‘Telecom Centre (UK) Limited v Thomas Sanderson Limited, (2020) EWHC 368 (QB)’ the High Court of Justice Queen’s Bench Division where the working of Early Neutral Evaluation was expounded upon. The Judge provided a skeleton order identifying the points to be captured by any Court while referring a matter to Early Neutral Evaluation.

Roderick Thompson and Micheal Sacksteder, in their article ‘Judicial strategies for Resolving Intellectual Property Cases without Trial’ address the working of Early Neutral Evaluation in the Northern District of California with respect to intellectual property cases. Further, the paper explains the difference between Early Neutral Evaluation and settlement conferences.

Norman Zakiyy J.T. Chow and Kamal Halili Hassan, in their article ‘Integrating Early Neutral Evaluation into Mediation of Complex Civil Cases in Malaysia’ address the differences between Mediation and Early Neutral Evaluation while recommending methods for both these alternate dispute resolution methods to co-exist and operate in symphony with each other.

Douglas Houghton in his article ‘Is Early Neutral Evaluation the Start of a New Way of Resolving Probate Disputes?’ highlights the benefits of Early Neutral Evaluation and also enumerates the role of courts in the said method.

The outcome of the Literature Review: The review of literature has been extremely helpful to understand the method of ENE and its functioning. Further, the review has helped to understand the benefits of adopting the method of ENE in the legislative landscape of India which will be extremely useful in proposing methods and reforms on inclusion of ENE to India.

Scheme of Chapters

The present thesis is divided into the following headings:

Chapter- I Introduction

The introduction chapter gives a brief introduction to the topic of the thesis. It also includes the objective, scope, limitations, significance, utility, research questions and hypothesis. It also deals with the methodology adopted to carry out the research.

Chapter- II What is ENE?

The said chapter introduces the concept of ENE and iterates on how the same was discovered. It also provides a brief description on where the concept was promulgated in the beginning and its results.

Chapter- III Comparative Analysis between India, U.S. and U.K.

The said chapter discusses the use of ENE in U.S. and U.K. and compares the same with India. It further looks at the laws of U.S. and U.K. as observes as to how the said countries apply ENE to reduce the dependency on courts for resolution of disputes. It further points out the differences between the various forms of dispute resolution, i.e., arbitration, mediation and ENE.

Chapter- IV Way forward and Proposed Reforms

The said chapter looks at affirmative steps India must take to adopt the said method of ENE and why the same would be beneficial for India in the long run.

Chapter- V Conclusion

The final chapter dwells into providing a summary of the entire thesis work and lays down the way forward. This chapter reviews the research questions and then comes up with concluding observations.

CHAPTER I. INTRODUCTION

The Concept

The National Judicial Data Grid (“NJDG”) as on 27^th April 2024 lists down the pending civil and criminal cases in India to the tune of 4,47,73,110 (Four Crores Forty-Seven Thousand Seventy-Three Thousand One Hundred Ten only). The data exemplifies the enormous pressure and strain on the judicial system in India. In the midst of this, Alternate Dispute Resolution (“ADR”) has gained prominence by being a method which encourages and has the ability to ensure early resolution of disputes. One of the reasons for the widespread of ADR methods was its ability to address two problems faced by parties in traditional litigation, i.e., time consumed for resolving disputes and money spent for resolving differences.

There are various methods in ADR which gained prominence amongst the masses including mediation, arbitration and negotiation. In fact, the Code of Civil Procedure, 1908 (“CPC”) in Section 89 iterates on the said methods of ADR stating that, if there appears to be an element of settlement, the Court is at liberty to refer the said disputes / parties to; (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat; and (d) mediation.

While these forms of ADR are well recognized around the world and in India, there are many emerging forms of ADR also, namely:

Dispute Boards (“DBs”): DBs are commonly used by parties involved in large scale constructions and infrastructure projects. A dispute board generally consists of independent experts who are appointed to provide proactive dispute resolution during the course of a project. The Dispute Board panel typically consists of 3 (Three) members who have extensive experience and expertise in relevant fields, such as engineering, construction and law. The persons are appointed at the inception of the project and remain involved throughout the duration of the project. The primary duty of a Dispute Board is to prevent disputes from escalating into full-blown disputes by identifying and addressing potential issues in a timely manner. The Dispute Board does this by providing non-binding advice and recommendations to the parties during the course of the project.

At the international level, the first set of accessible and well-known Dispute Board rules are those found in the contracts which were part of the Federation Internationale des Ingenieurs-Conseils (“FIDIC”), 1999 which was created for the global construction industry. These were followed by the ICC Dispute Resolution Rules. Dispute Boards are not yet commonly used in India but there are instances where the government had used such boards namely, the Ministry of Road Transport and Highways in Model Concession Agreement for the Hybrid Annuity Project.

Apart from governmental efforts, there are several private organizations providing Dispute Board Services such as Indian Council of Arbitration, Indian Roads Congress and Construction Industry Development Council.

Hence, the necessary function of DBs is to prevent disputes by resolving grievances of the parties involved at the earliest by discussions, negotiations and further resolve disputes if any, by providing decisions on the disputes arising between the parties which are considered to be final and binding.

Expert Determination: There are several disputes, which are highly technical in nature, requiring an expert in the particular field to be part of the tribunal or to provide an independent opinion resulting in the dispute being resolved between the parties. Expert determination in such situations has gained prominence being a method whereby a third-party expert is appointed to make a determination on specific issue in dispute between the parties. An example of this would be dispute between parties over the structural issues faced in a building. While the builder attributes the same to a design flaw, the contractor states that the same is a result of the failure to follow construction plans. An expert engineer is appointed to make a determination who arrives at a decision having reviewed the plans, visited the building in question and conducted a thorough investigation. It is pertinent to mention that, normally, in expert determination there are no pleadings advanced by parties and also expert determination may not be exercised by parties for resolving the entirety of disputes but is normally placed in contracts to address specific issues / queries.

Mini Trial: As the name would suggest, mini-trial is a procedure adopted by parties prior to proceeding to actual trial. The parties in the said procedure, present their cases before a panel comprising of high-level executives / other knowledgeable or industry relevant individuals who after listening to the parties, consider the evidence on record and provide feedback to both parties about the merits and demerits of their respective cases. It is pertinent to mention that the panel is appointed upon consent of both parties. The said procedure leads to parties never approaching courts and provides a medium for parties to settle the matter having understood their position, if the matter were to be referred to trial. The said process in totality ensures a fair and balanced outcome.

Ombudsman: While in India, Ombudsman is appointed by the government or by institutions to provide a forum for resolving complaints, world over, ombudsman is a method of dispute resolution whereby an independent intermediary or third party is appointed to resolve complaints between parties. Some of the most noteworthy institutions in India which function as Ombudsman are the Lokpal and Lokayukta which mainly aim at reduction of corruption and addressing any complaints thereof.

Lok Adalat: As iterated above, Lok Adalats’ are another method / forum used for dispute resolution whereby, as the name suggests, these are people’s courts which are appointed on given dates of a year, whereby parties come forward and settle any disputes / differences which may arise between them. Lok Adalats can resolve civil, quasi – criminal disputes and criminal disputes (compoundable offences), including ongoing or pre-litigation matters. The panel for Lok Adalats normally consists of a sitting / retired judicial officer, a lawyer and social worker who act as conciliators and mediators to resolve disputes between the parties. The said method also ensures that it reduces the excruciating backlog of cases pending in India. Approximately 1.13 Crores cases were resolved in the first Lok Adalat of 2024 which was held on 9^th March 2024.

Online Dispute Resolution (“ODR”): ODR is one of the newer methods of resolving disputes whereby parties resolve their disputes / differences on electronic platforms. Hence parties through ODR use the internet and other digital communication tools to facilitate communication and negotiation to reach a mutually acceptable solution. In fact, there are many organizations in India, including SAMA, ODRways, E-Setu etc. which currently provide an online platform for resolution of disputes. According to some, the market for ODR services is on the rise and expected to cross INR 10,000 crores (approximately) by 2025.

While all of these methods of dispute resolution are gaining prominence in India and permeating in the dispute resolution system of the Indian hemisphere, there is one method of dispute resolution which has been completely adopted by the United States of America (“U.S.”) and United Kingdom (“U.K.”) legal system which can be adopted in India as well to ensure that the pendency of cases in India reduces and the costly and time-consuming method of litigation is done away with. The paper examines, the method of ENE. ENE is a voluntary procedure used early in the litigation process in which a neutral party reviews the issues and facts as presented by the parties and provides a frank assessment of some or all aspects of the case. It is pertinent to mention that the evaluator is either appointed by parties, if the parties during the course of trial before the courts express willingness to settle the dispute or the court may recommend the name of an evaluator to conduct theENE.

CHAPTER II. WHAT IS ENE?

The Concept

ENE is a voluntary procedure used early in the litigation process in which a neutral third party reviews the issues and facts as presented by the parties and provides a frank assessment of some or all aspects of the case. The goals of ENE are to enable cases to be prepared for their final resolution in the best way possible and to make the parties better aware of the true picture of their case at an early stage. To exemplify the same with an example, suppose there are two parties having a dispute pertaining to a property, in ordinary course one of the parties would file a proceeding before the court where the court may either adjudicate the same or refer dispute to any one of the ADR processes.

But, the advantage of referring to the same ENE and the working of ENE would be that the parties would come to the evaluator who will hear the parties and observe their submissions. Furthering this, the evaluator would provide an independent assessment of the case and the way forward to parties, which will help them decide as to whether to proceed with the disputes / differences or settle the same.

The role of an evaluator under ENE is not merely to assist the parties to settle the matter. The evaluator may assist the parties to review the issue and facts as presented by the parties and provide a frank assessment of some or all aspects of the case as he / she may be directed to do by the Court or parties themselves, in some other cases, the evaluator would help parties stipulate the facts or issues to be referred to the court for adjudication. Sometimes, the evaluator under ENE may also adopt a position of a mediator and hence this proves that the method of ENE converges with other forms of alternate dispute resolution constantly.

Development of ENE

ENE as a concept has only recently started getting traction amongst parties who wish to settle their disputes / differences by using ADR processes but its roots are to be found in the Northern District of California. It is believed that Chief Judge Robert Peckham during in tenure, in 1992, wanted to devise a program to reduce costs of litigation and time taken in disposal of cases. He sought for ideas and measures for the same, and Magistrate Judge Wayne Brazil to assist in this vision of the Chief Judge, developed and sought to implement the ENE program. The Magistrate Judge in the committee formed by the Chief Judge recommended the said method and also sought for its inclusion in the methods of dispute resolution adopted by the said Court. In 1988, the judges of the Northern District of California voted to make ENE a permanent program.

How does ENE function?

The courts in U.S. and U.K. identify the cases which are ripe for settlement and refer the same for ENE. The process of identifying these cases is individually undertaken by judges by looking at their docket. Once these cases have been identified, the judges by consent of the parties may refer the cases to ENE or some of the courts in U.S. like the courts situated at the Northern District of California also permit unilateral appointment of evaluators.

These evaluators once appointed, by an order of referral, schedule sessions with the parties. Prior to the commencement of the said session, the parties will be required to submit their pleadings to the evaluator followed by a brief statement of facts which enunciate on the position of the parties. The evaluator is required to consider these pleadings and statements carefully to understand the position of both parties.

Furthering this, when both parties interact with the evaluator, they are given a period of time, to present their side of the dispute / difference to the evaluator and to the other side. These sessions may be conducted with one party at a time or with both parties present, as may be decided by the court or neutral evaluator. The most pertinent point to consider in this method is that the same is completely confidential.

Once the parties present their case , the evaluator is required to evaluate the strengths and weaknesses of the case on both sides and iterate to the parties his views of how the factual matrix is likely to impact the decision. The evaluator may also make a fiscal assumption of the amounts to be spent by parties on carrying on with the proceedings and he / she is required to and present the same in a written record to both parties. If the parties agree to the said evaluation, the parties may consider settling the matter which will immediately be recorded by the evaluator by making a written record / consent terms. If on the other hand, the parties do not agree to the said recommendations or wish not to settle the matter, the evaluator will prepare a report to the court indicating that the resolution could not be achieved and the matter would be reverted to the court for hearing and adjudication. In a scenario, where the parties have appointed the evaluator as per the contract or for resolving disputes prior to the matter reaching court, the parties, upon not agreeing to settle the matter may adopt appropriate proceedings as they deem fit.

Principles of ENE

As is found in other methods of dispute resolution, there are certain principles which form the very basis of ENE without which the said method cannot function:

Party autonomy: To a large extent, the appointment of an evaluator to settle the disputes / differences between the parties is governed by whether the parties want to refer the same to a neutral evaluator. But, only in some cases, where it appears to the court that the matter is ripe for settlement and the parties are disagreeing is the mandate of court exercised to appoint an evaluator.

Confidentiality: The proceedings are bound by confidentiality and hence none of the stance taken by parties in the proceedings are shared with the court which may otherwise cause an unconscious bias in the court’s mind against one of the parties. Further, the findings by the evaluator, if any, on the merits of the case are not to be shared with the court and if the said method fails, the courts are required to independently adjudicate the disputes.

Impartiality – Evaluators under the ENE method are mandated to be impartial. If there is a conflict between the evaluator and the parties, it is the responsibility of the court / evaluator to identify the same and appoint someone else immediately to avoid any bias surrounding the process.

Benefits of ENE

To appreciate any method of ADR, a stakeholder analysis of who all the method is benefitting is necessary and warranted. ENE as a method covers two stakeholders, who if satisfied, would lead to the success of the said method:

Courts; and
Parties who refer their matter to ENE;

Courts

ENE shall reduce the work load and also assists the courts in focusing on those matters which actually require a trial. When matters which can be settled are referred to evaluators under ENE, cases which cannot be settled are moved up the docket for hearing and adjudication hence ensuring that the justice delivery mechanism functions at maximum effectiveness and efficiency.

Parties who refer their matter to ENE

Parties referring their matter may secure settlement or reliefs at a lower cost and in a timely manner. ENE also helps the parties understand the position of the other side clearly enabling them to settle the matter expeditiously. If the matter is not settled, ENE helps parties’ narrow down issues which are in dispute which may require adjudication by the courts.

Conclusion

The aforesaid enunciation on stakeholders represents as to why ENE is an important and necessary method of dispute resolution. Having iterated on the nature, importance and procedure to be followed while using the method of ENE, the thesis moves on to describe the process of ENE as adopted by foreign jurisdictions.

CHAPTER III. COMPARATIVE ANALYSIS BETWEEN INDIA, U.S. AND U.K.

U.S. Perspective

The Northern District of California being the court that introduced the concept of ENE was the first court in the world to adopt ENE. While the experimental program was in operation since 1985, as mentioned above, the court permanently adopted ENE in 1988. While the initial pilot study was successful, the second pilot phase of ENE saw around 150 cases being referred to ENE. Out of the said 150 cases, 67 cases were actually referred to ENE which were basis selection by the judicial law clerks. Overall, the results of the pilot phase were exceedingly successful as all the stakeholders identified above were in favor of referring matters to ENE.

The pilot phase was successful in identifying that when the matters were referred to ENE and the object was to effect settlement, the parties were considering their cases systematically; provided parties a vehicle for communication that is more informal enabling the parties to truly understand each other’s position regarding the dispute and resolving the said differences at the earliest. Hence, the District Court for the Northern District of California having recognized the merit of ENE permanently adopted the same as per General Order No. 26 in its Appendix.

As per the said order, the court identified cases whereby ENE could be permissible, i.e., (a) only civil matters were considered to be eligible for ENE and in that the following sectors could be referred to ENE:

Insurance
Negotiable Instrument
Stockholder Suits
Other Contracts
Contract Product Liability
Torts cases
Personal injury – product liability
Property rights
Civil rights

The court also introduced something unusual, which was appointing a magistrate to handle ENE matters. The court also noted that any party which is aggrieved by the case being assigned to ENE may raise the said challenge before a judge, senior to the ENE magistrate. Further, such challenge would need to be raised within ten calendar days from receipt of service of the notice indicating that the said case has been designated for the ENE program.

Once the notice is given by the court, both parties will provide all documents pertaining to the ENE method to the judicial clerk who will seek for appointment of the evaluator. Once the evaluator stands appointed and no conflict of interest is noted, the clerk will reveal the name of the evaluator to the judge and the counsels for both parties.

Having accepted the name of the evaluator, the evaluator will be required to schedule a session for the ENE to take place and the parties are mandated to attend the process. During the process, the evaluator will be required to:

Permit each party to make oral representation;
Help parties identify areas of agreement and where feasible, enter stipulations;
Assess the relative strengths and weaknesses of the parties’ contentions and evidence and explain as carefully as possible the reasoning by the evaluator to support his / her contentions;
Help the parties, if so desired by them, to settle the matter;
Estimate the likelihood of liability and the monetary compensation required to be paid by parties on either sides;
Help the parties devise a plan for sharing important information and conducting discovery that will equip the parties to enter into meaningful settlement discussions; and
Determine whether some form of follow-up to the session would contribute to the case development process or settlement.

Being an evaluator, comes with its own limitations as per the U.S. law which is, the evaluator cannot force the parties to settle the matter or the issues decided by the evaluator are not binding on the parties and/or any court of law. Coming to the perspective of funding, while the ordinary practice is to provide an evaluation pro-bono, the court may require deposit of some costs to the evaluators when the parties are in a sound financial position and the differences / disputes to be settled are complex in nature. If the matter is settled, as mentioned above, report will be made by the evaluator and shared with the ENE magistrate, otherwise if not settled, the matter would be referred back to the court indicating that the process has failed without assigning any reasons for the same to maintain uniformity in court’s perception of the parties.

U.K. Perspective

While the proliferation of ENE in the U.S. is merely through the judiciary, the Civil Procedural Rules (“CPR Rules”) of the U.K. in Part 3 titled “The Court’s Case Management Powers” under rule 3.1 (2) (m) permits the court to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including an Early Neutral Evaluation with the aim of helping the parties settle the case.” Hence, while the legislature does not mandate for use of ENE, it allows the court to use the same as a method to assist parties in settling the matter.

ENE and its working in the U.K. were explained by the Queen’s Bench Division in Telecom Centre (UK) Limited v Thomas Sanderson Limited, (2020) EWHC 368 (QB). The Queen’s Bench furthered the concept of ENE by holding that judicial ENE could also be done by certain courts. But it was equally careful to state that if the judicial ENE fails, the matter should immediately stand transferred to another bench since confidentiality is one of the foremost principles of ENE.

Further, the court held that the opinion of the judge conducting ENE would be provided informally to the parties but the degree of informality will be adjudged by the judges themselves. The papers considered during the session will be returned to the parties and not retained in the court file. While stating the same, the court annexed a draft order whereby matters would be referred to ENE or retained by the court for conducting judicial ENE. The said position was also solidified by the courts in U.K. in the judgment of Seals v Williams, (2015) EWHC 1829 (ch).

Further, the Civil Procedure (Amendment No. 4) Rules 2015, codifies the above judgments by holding that power to refer the matters to ENE is not constrained if parties do not consent.

India’s Perspective

Section 89 of the CPC enunciates on settlement of disputes outside the Court. While the section only speaks about arbitration, conciliation, judicial settlement and mediation in its current form, it does not exclude any other form of ADR which may be agreed to between the parties. Further Section 151 of the CPC states that “Nothing in this Code shall be deemed to limit or otherwise effect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.”

Hence reading the said sections in conjunction with each other, there is no doubt that if the courts in India were to refer the matter to ENE as per the wishes of the party, the same was recommended and permissible. But, as on today, there is no express principle / rule / section that exists in the legislature permitting ENE to be mandated by the court on parties.

The first case in India where the parties came forward seeking to appoint an evaluator under ENE was Bawa Masala Co. v Bawa Masala Co. Pvt. Ltd. & Anr., AIR 2007 Del 284 where the parties had previously been referred to mediation. While all other issues had been settled by the mediators, the issue sought for to be resolved in the present case remained unresolved. Hence the counsel for the parties suggested that for resolving disputes amicably, an endeavor could be made through the process of ENE. Having said this, the parties sought for appointment of a senior counsel or panel with expertise in the subject matter of litigation to conduct ENE. The parties undertook to provide written arguments and submissions to the evaluator and submitted that the process would be similar as compared to making submissions before the court.

The parties stated that once the evaluator has gone through the submissions, a decision maker of each party accompanied by his attorneys would make a short concise presentation basis the documents and legal propositions involved in the matter. It is always open for the evaluator to raise queries on the attorneys of the parties and once the said submissions have been made, the evaluator will prepare the central dispute involved in the case according to him / her and also iterate on the likely outcome on each of the issues / aspects in the case while estimating the costs which would need to borne by the parties.

The evaluator will then share these conclusions with the parties either in joint sessions or at private sessions, termed as caucuses. While private caucuses permit for free and frank discussion, a caucus with both parties ensures smooth communication and points towards the pain point of each party.

Once these caucuses have been held, the parties may choose to accept the recommendation and settle the matter, but if the recommendations of the evaluator are not accepted, the matter will be referred back to the Court without disclosing reasons for the failure of ENE. Having said this, the Court differentiated between Mediation, Arbitration and ENE:

Difference	Arbitration	Mediation	Early Neutral Evaluation
Functioning	It is a more formal process where an arbitrator is appointed and just as in a trial, documents are submitted and marked, witnesses are examined and an award is passed which is subject to challenge before the courts of law depending on whether the said award is a domestic award or a foreign award.	It is an informal process where a neutral individual is appointed, but the solutions in a mediation normally emerge from the parties and the mediator is required to find the most acceptable solution by bridging the gap between the parties.	Difference with Arbitration The process of ENE is distinct from arbitration in that there is no testimony or oath or examination and such neutral evaluation is not allowed in arbitration. There is no award or result filed. ENE is really a judgment by the neutral evaluator on the basis on record without the judgment being binding and if not successful, matter is referred to court without disclosure of reasons as to why the process was unsuccessful. Difference with Mediation While solutions in a mediation emerge from parties, roadmap and solutions in ENE are given by the evaluator. While the mediator cannot adjudicate or assist the parties in formulating solutions, the evaluator under ENE is required to assist parties in settling the matter and helping them decipher the pros and cons of their respective case.

Conclusion

Hence, India as on today permits for ENE when parties consent to the same but does not legislatively recognize ENE and its working. The proposed reforms chapter ahead deals with the inclusion of ENE as a method of ADR within the CPC and having a law which deals exclusively with ENE and appointment of evaluators to resolve disputes / differences between the parties.

CHAPTER IV. WAY FORWARD AND PROPOSED REFORMS

After analyzing the meaning of ENE and its working all over the world, the question be answered by the researcher is whether the said concept must be adopted in India and if yes, how should the said concept be adopted? In light of the above analysis, the researcher submits that there is no doubt that ENE as a method of ADR must find mention in the laws of India and keeping this in mind, the proposed reforms are as follows:

Including ENE in Section 89 of the CPC

Due to the definition as mentioned above contained in Section 89 of CPC, the same appears to be a limited definition which gives power to the court to refer the disputes for settlement to arbitration, mediation, conciliation and judicial settlement. An adequate amendment by way of a normal bill / private member bill is required to be made in the parliament whereby the words “ENE” are required to inserted in Section 89, thus giving legislative sanctity to the method of ENE.

Including ENE in Section 12-A of the Commercial Courts Act, 2015

When the Commercial Courts Act, 2015 was promulgated, Section 12-A of Act was interesting as it mandated for suits which do not contemplate any urgent interim relief to be referred to mandatory mediation, failing which, the suit would be considered by a court of law. The same has been held to be mandatory in nature by several courts in India. ENE through an amendment as iterated above can also be held to be a mandatory process and be incorporated within Section 12-A.

ENE introduced must follow the U.K. model

While the U.S. model incorporates ENE basis judicial decisions, U.K. has incorporated ENE statutorily. India must also statutorily incorporate ENE. Further, the U.S. model requires individuals to give their time pro-bono for conducting ENE sessions, while the U.K. model permits for costs to be levied on parties which would be payable to the evaluator. In India, if individuals are not compensated adequately for the time spent, the efforts put in may not be fruitful enough. Further, it would be ideal for lawyers / retired judges to be appointed as evaluators rather than judicial members being appointed as evaluators for ENE.

The terms of appointment and functioning of the evaluators can be on similar lines as indicated in the Arbitration and Conciliation Act, 1996.

ENE will be on similar lines of functioning as Mediation

With the Mediation Act, 2023 being introduced by the legislature, ENE can also be framed on similar lines barring certain exceptions and disputes as is to be intrinsically found between the two methods of alternate dispute resolution.

Educating lawyers and masses about the said method

The said process having been used in India only once as promulgated by the Hon’ble Delhi High Court, many lawyers and practitioners are unaware of the same. Hence, there must be seminal conferences and paper submissions on the said topic which will help lawyers understand the working of ENE and its necessity.

ENE to be incorporated in contracts

ENE could be made part of contracts entered into between parties. ENE could be a pre-condition prior to the invocation of arbitration. As has been settled in multiple cases, fulfilment of pre-condition prior to invocation of arbitration is mandatory. Hence, the parties would be required to mandatorily attempt ENE first whereby the evaluator may be successful in settling the matter or at least make the parties aware of their strengths and weaknesses. If the parties do not settle the matter, the matter may be referred to arbitration for settling of disputes.

Appointment of Evaluators for ENE

One of the suggestions as incorporated above is to appoint evaluators by mutual consent. If the parties are unable to consent for the name(s) of evaluator(s), then court shall appoint an evaluator to adjudge the disputes / differences between the parties.

CHAPTER V. CONCLUSION

The thesis began with the exposition on various ADR methods which have not been legislatively introduced in the country but have found acceptance and prominence in other parts of the world. The thesis was a novel attempt to adjudge the viability of introducing ENE in the Indian system. To concretize its findings, the researcher was required to answer the following research questions:

What is ENE?

How has been ENE been adopted / accepted around the world?

How is ENE different to the other forms of dispute resolution?

How can ENE be adopted in India to ensure faster disposal of matters / prevent matters from coming to the courts?

The thesis in its exposition on ENE and its use around the world has been able to demonstrate its benefits over other forms of dispute resolution. The thesis differentiates between ENE, Arbitration and Mediation, it makes an argument as to why ENE is beneficial for the Indian legislative and judicial landscape.

Having compared the models of ENE in U.S. and U.K., the thesis advocates for India to adopt the model of U.K. while advocating for certain changes such as not adopting judicial ENE while focusing on ENE to be referred to lawyers / retired judges. The thesis, while proposing various reforms advocates for ENE to be incorporated advocates for it to be considered as a mandatory step under the Commercial Courts Act, 2015 and as a mandatory pre-condition in contracts prior to referring the disputes / differences to arbitration.

Lastly, the thesis encourages a legislation / act to be introduced and passed for ENE as has been done for mediation prior. The appointment of Evaluators can be done as is done for arbitrators under the Arbitration and Conciliation Act, 1996.

While the thesis answers all research questions as mentioned above, it also makes a case for ENE to be introduced expeditiously since it is the better alternative in ADR as concluded above.

***

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INTERNET RESOURCES:

Prime Legal (2022), Alternative dispute resolution: Mechanism in India, Prime Legal, Alternative Dispute Resolution: Mechanism in India – Prime Legal (last visited on April 27, 2024)
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Section 89 CPC.pdf (ecourts.gov.in)
A1908-05.pdf (indiacode.nic.in)
SCC Online® | The Surest Way To Legal Research
Manupatra – An Online Database for Legal Research
https://www.bing.com/search?q=kluwer+arbitration+blog&cvid=e87f0a88894748c5b26160304b2fac13&gs_lcrp=EgZjaHJvbWUqBggAEAAYQDIGCAAQABhAMgYIARAAGEAyBggCEAAYQDIGCAMQABhAMgYIBBAAGEAyBggFEAAYQDIGCA

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