Understanding Neutral Evaluation
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Understanding Neutral Evaluation
When disagreements and disputes between parties cannot be resolved through alternative forms of dispute resolution (‘ADR’) such as mediation, these disagreements and disputes can significantly affect parties’ relationships and become even harder to resolve. Neutral evaluation aims to deal with such disputes and give parties the option to decide if they subsequently wish to assert their rights through formal dispute resolution processes. What is neutral evaluation, and how is it different from ADR mechanisms like mediation? Here are some key facts to note about neutral evaluation.
What is neutral evaluation?
Neutral evaluation is a private process where parties agree to refer their disputes to a neutral third party, also known as a Neutral, whose role is to provide a quick and summary evaluation of the dispute. This includes providing an estimate of the disputing parties’ likelihood of success if they were to pursue the matter further through formal proceedings, e.g. in court.
Is neutral evaluation the same as mediation?
While neutral evaluation and mediation are both forms of dispute resolution mechanisms that involve a neutral third party, they differ in several ways:
- Role of neutral third party: In neutral evaluation, the Neutral assesses the dispute and provides a best estimate of the parties’ likelihood of success if the dispute were to go to trial. Mediation, on the other hand, involves a third party mediator who assists the parties in reaching a mutually acceptable resolution of the dispute.
- Parties’ rights: While the neutral evaluation process preserves the parties’ rights to subsequently pursue formal legal proceedings, mediation emphasises the disputing parties’ interests as opposed to their rights.
- Advisory/binding nature: A neutral evaluation is usually advisory in nature and not binding on the parties; in contrast, if parties can reach a settlement following mediation, the settlement agreement becomes binding on the parties.
The infographic below summarises the key differences between neutral evaluation and mediation.