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The introduction of compulsory mediation in Small Claims Track cases

The Ministry of Justice (MoJ) has issued its response to a consultation carried out in 2022 regarding the extension of the use of mediation within the civil justice system. The response sets out firm plans as to the way forwards, and indicates future developments that may be on the way for higher value cases.

In short, mediation is the use of an independent facilitator to assist the parties to resolve their dispute. The mediator does not impose a decision but assists through a confidential and ‘without prejudice’ process, enabling the parties to exchange settlement proposals without those proposals being able to be referred to (sometimes seen as a sign of weakness) if the case does not settle and ends up being decided by a judge.

Mediation is a form of Alternative Dispute Resolution (ADR) and has long been considered as beneficial for the resolution of disputes. The Court system has actively encouraged use of mediation by parties, as a concluded settlement can have benefits for parties (such as a quicker and less costly resolution) and also save court time and the cost of resources.

The recent MoJ proposals are the first steps following several recent consultations where the Government has sought views from interested parties as to the merits of extending mediation further within the Court system. This consultation has run parallel to the senior judiciary’s encouragement of mediation, and consideration that mediation should become a compulsory part of the court process for the first time.

The Government plans to introduce ‘integrated’ mediation to the Small Claims Track – currently comprising money claim disputes of up to £10,000 in value. Previously mediation has been available for such cases – but only where the parties both opted to follow that process. While the current system deals with around 16,000 cases each year, the new system envisages dealing with 92,000 cases. Ensuring that sufficient resources are available will be key. Otherwise there is a risk of delay and dissatisfaction with the court process.

The major significance of the change is that parties will be compelled to try and resolve their dispute in this way. If they do not take part and attend their mediation appointment a judge will be able to apply a suitable but discretionary sanction at a later hearing. This could include a strike out of the case. More commonly it can be anticipated that there will be a costs sanction, with the non-compliant party paying some or all of the other party’s legal or court costs (even if they win the case). If the changes are to have effect, and change culture, it is important that sanctions are imposed in suitable cases.

The mediation will be carried out by telephone by court appointed mediators. There will be a series of calls between the mediator and the parties in a fixed one-hour time slot. This type of mediation varies from the mediation available in cases of a higher value. While around 55% of cases are currently settle that proceed through this process, it remains to be seen whether the addition of non-voluntary participants reduces the success rate substantially.

The proposed procedure is therefore as follows:

  • County Court proceedings will be commenced in the normal way
  • If no defence is filed, the claim will progress straight to default judgment at the Claimant’s request
  • If a defence is filed and the case is allocated to the Small Claims Track the parties will be informed that mediation is the next step. The case will proceed to the Small Claims Mediation Service.
  • Mediation appointments will be offered within 28 days of the Service receiving notification. The appointment will be free of charge and carried out remotely.
  • Parties will receive guidance on what to expect and how to prepare.
  • At the mediation the mediator will ring each party in turn – there will be no direct contact. The focus will be on reaching a solution as to the way forward and not look at the detail of the case itself.
  • If agreement is reached a legally binding agreement will be registered with the Court.
  • If agreement is not reached the dispute will proceed to be heard by a judge in the normal way.

It is important to understand that while parties will be compelled to try to settle the case they do not have to do so. Settlement at mediation remains voluntary and so a party can still decide that it wants a judge to decide their case.

It is envisaged that these changes will come into effect in 2024. They likely herald the first steps to the inclusion of mediation within the Court process with further changes likely to encourage mediation in higher value cases. Such an extension does present further practical issues that require consideration.

For further information on mediation and ADR contact our Dispute Team. We provide representation in mediation in higher value disputes, and also provide mediator services in disputes in which we are not acting.

If you would like more information about any of the issues raised in this article , please contact us on 029 2034 5511 or at disputeresolution@berrysmith.com