Compulsory Mediation for Small Claims – What do you need to know?

By Maggie Kerr

Associate

24 August 2023

Article Insights

Following a consultation, the Ministry of Justice has announced that mediation will become a compulsory and essential step in small civil claims up to the value of £10,000. Previously, mediation was always encouraged but it was not a requirement.

Approximately 80% of small claims in County Courts are specified money claims of under £3,000 such as businesses recovering debts from customers.  The current proposal will start with these specified money claims and will eventually be extended to all claims issued under Part 7 of the Civil Procedure Rules.  There will be limited exemptions to mediation as individual circumstances will not be considered. However, the policy will not apply to claims issued under non-standard procedures such as possession claims.

Why is compulsory mediation being introduced?

On average, small claims are taking in excess of one year from issue of the claim to reach a trial. This is due to much of the courts time being used for cases that could be settled without the necessity of a hearing.

By introducing mandatory mediation, the hope is that more disputes will be settled before reaching a trial which could free up to 5,000 sitting days a year. This allows more capacity within the Courts for the more complex cases.

‘The reforms are not about restricting people’s access to the courts, but about expanding their avenues to redress’ Lord Bellamy KC.

How does it work?

Once a defence is filed and the case has been allocated to the small claims track, the parties will complete a directions questionnaire. The case will then automatically be referred to an independent mediator provided by HM Courts and Tribunal Services.  The mediation will be a free of charge, hour long telephone session offered within 28 days after the Small Clams Mediation Service receives the case details.  The mediator will speak to each party in turn meaning that the parties will not directly liaise with each other.

If a settlement is reached, a formal settlement agreement is drawn up and will become legally binding. However, settlement at mediation will remain voluntary, and all parties who need a hearing before a judge to resolve their dispute will be able to have one.

Sanctions for non-compliance

As mediation will be a requirement, there will be significant repercussions if a party does not attend. A judge will be able to impose sanctions at their discretion which could result in the case being struck out.  HMCTS will ensure that all reasonable adjustments are made to ensure all parties can have access to mediation, including interpreters.

What are the benefits of mediation?

Court proceedings can be a very stressful time for all parties involved. Mediation, therefore, provides a possibility of settling a dispute that is faster and also cheaper. The process is also much simpler.

Mediation allows the matter to be resolved amicably with the parties able to come to an agreement that everyone is happy with.  The parties are in control and the final decision is not down to the Court.   The parties can take ownership themselves.

‘A vast number of cases that go through the civil courts each year could be settled far more swiftly and with less stress through mediation. By integrating mediation for small civil claims we will create valuable court capacity, freeing up time for judges and reducing pressures on the courts.’ Justice Minister Lord Bellamy KC

Read here the Ministry of Justice Consultation Paper

If you have a dispute, Taylor Walton has a Commercial Litigation Department with experienced solicitors that are able to help. We always aim to resolve cases quickly, cost-effectively, and without the involvement of courts unless necessary. To discuss further, please reach out to our Commercial Litigation team or send us your details via our online form.

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