Early neutral evaluation is introduced in India

In Bawa Masala Company v Bawa Masala Pvt Ltd (OS 139/2002, August 6 2007), the Delhi High Court has referred the parties to early neutral evaluation.

Early neutral evaluation is a fairly new but increasingly popular form of alternative dispute resolution. At its most basic, early neutral evaluation is the process whereby a third party examines the evidence, listens to the parties' positions and gives his or her evaluation of the case. In the hands of a capable evaluator, it has the potential to go beyond simply hearing the facts of the case.

While early neutral evaluation has been increasingly used in the United States in a wide variety of cases, this is the first time that such a reference has been made by an Indian court.

After counsel for both parties conceded that they were unable to resolve a dispute relating to the rights in the name Bawa Masala (although it had already been referred to mediation), counsel for the plaintiff suggested that the case be referred to early neutral evaluation.

In its order, the court defined 'early neutral evaluation' in the words of US lawyer Robert A Goodin as:

"a technique used in US litigation to provide early focus to complex commercial litigation, and based on that focus, provide a basis for sensible case management or offer resolution of the entire case in the very early stages."

The court was of the opinion that early neutral evaluation might succeed where mediation had failed. Mediation tries to find a common ground between two distinct stands. The process usually requires that the parties accept a compromise and much depends on the parties' willingness to cooperate. Early neutral evaluation, on the other hand, focuses on more practical and procedural issues, thereby giving the parties an understanding of what their case is worth and how much it will cost them (both in terms of time and money) should they proceed with litigation.

Section 89 of the Civil Procedure Code provides for case management techniques, such as mediation, arbitration and mandatory settlement orders. The court based its order on Section 89(2)(b) of the code, which provides that the court may refer parties to mediation where it deems it necessary. While the section itself does not provide for early neutral evaluation, the court reasoned that it is a process that is similar to mediation and broadly follows the same procedure - the difference being that early neutral evaluation provides for a neutral assessment, while mediation seeks a negotiated settlement. The outcome of the early neutral evaluation is not binding and is not disclosed to the court. This ensures privacy and gives the parties another chance to make their case in court.

Arguably, early neutral evaluation is efficient in complicated or emotionally challenging issues. Although much depends on whether the parties are willing to be flexible and gain some perspective, early neutral evaluation, if heeded, could provide the answer to pointless litigation and over-zealous litigants.

Pravin Anand of Anand And Anand Advocates was counsel for Bawa Masala Company.

Binny Kalra and Avantika Mehta, Anand And Anand Advocates, New Dehli