It is widely acknowledged that it can be faster, cheaper and more beneficial to commercial parties if a business dispute can be resolved outside of court, or at least outside of a formal trial. There are many ways that this can be achieved, including through a variety of tried and tested alternative dispute resolution processes (referred to as ‘ADR’ for short).

At the moment, the decision to refer a dispute to ADR is predominantly a voluntary one, except where a contractual obligation to use alternative dispute resolution exists. However, as Richard Shears, dispute resolution lawyer and founder of Shears Law explains ‘there are signs that the courts are keen to acquire greater power to compel the use of ADR in appropriate cases, which now makes it incumbent on businesses to think more carefully when devising a dispute resolution strategy.’ 

One of the most recent cases of note on this issue is Lomax v Lomax, decided by the Court of Appeal in the summer of 2019, which focuses on the court’s ability to compel the use of an ADR process known as ‘early neutral evaluation’ in the face of party opposition.

Lomax v Lomax 

In Lomax v Lomax, the court confirmed that a judge hearing a civil dispute was within their rights to order the parties to attend an early neutral evaluation hearing, and that this was the case even where one party was opposed to such a hearing taking place. 

This came as a surprise to many, as use of any sort of alternative process within the context of a civil dispute (other than one arising in family proceedings) has always been seen as something that requires all-party consensus. Albeit that one or both parties may face an adverse costs order where they fail to consider whether ADR may be helpful, or where ADR is suggested and unreasonably refused.

What is early neutral evaluation?

Early neutral evaluation involves a judge hearing a short summation of each party’s case and their evidence, and then assessing the relative merits of this to provide a non-binding and without prejudice evaluation of each party’s position. It also provides a provisional view about how they believe the case (or a particular issue within it) is likely to be decided.

The judge who oversees the process will not usually be the same judge who handles any subsequent trial if the matter should end up needing formal determination by the court. 

The value of early neutral evaluation

Requiring the parties to a commercial dispute to submit to early neutral evaluation can be a very helpful step, not just in cases where both parties have an appetite to resolve their differences but also in cases where there is hostility towards the idea of settlement. 

This is because the process forces you to listen to someone else’s opinion on your dispute, and to hear what they think about the strength of the arguments you are seeking to advance. You may have to consider the possibility (maybe for the first time) that if you continue to press for a trial then there may be a chance, even if it is a small one, that you end up losing.

It is therefore an effective way of bringing home the inherent risks that exist in litigation, and provides an opportunity for you to reflect on this and to consider whether it might be preferable for you and your opponent to work together to negotiate your own terms of resolution, over which you have some degree of control. 

Could you be forced to use early neutral evaluation

While many people have criticised the decision in Lomax, arguing that to compel someone to engage in early neutral evaluation against their will constitutes a breach of their right to access justice through the courts, the Court of Appeal was of the view that this was not the case and said instead that ordering early neutral evaluation was, in fact, part and parcel of the court process.

The court’s power is clearly set out in the rules that govern civil disputes, and it is a power that the court can exercise without the need to seek the prior approval of the parties involved. This is in contrast to mediation, which the courts currently have no power to compel commercial parties to use against their will.

How we can help

In view of Lomax, businesses should expect to see the use of an early neutral evaluation order in an appropriate case and unmeritorious objections will be given short shrift. 

We are experienced conflict resolution lawyers, who understand that there is more than one way to resolve a commercial dispute and who recognise that traditional litigation may not always be the best or most appropriate course of action.

Our solicitors appreciate the benefits that ADR has to offer and are accustomed to supporting businesses to use a variety of non-court based processes, including mediation, arbitration, adjudication, expert determination and early neutral evaluation. 

To find out more, please contact Richard Shears in our dispute resolution team on 07973 845055 or rds@shearslaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.