Mandatory mediation plans for small claims disputes

On the 26 July 2022 the Government revealed its latest plans to reduce the court case backlog, which has been exacerbated by the pandemic.

Proposals

The Government hopes to divert thousands of low value civil legal disputes away from the courts by automatically assigning claims under £10,000 to a mandatory free mediation service. The mediation would take the form of an hour-long telephone session with a professional mediator (provided by HM Courts and Tribunals Service (HMCTS)) and would take place before the case is listed for a hearing. Currently, mediation is optional and is often too expensive an option for low value claims – so the proposal of a free service is encouraging

Similar to a usual mediation structure, the parties will speak separately to the mediator to see if there is a common ground between them. If a settlement is reached the parties can agree to incorporate its terms into a legally binding settlement agreement. At this point, court proceedings would no longer be required.

The Government estimates that 7,000 judicial ‘sitting days’ would be made available as a result, which in turn would help reduce waiting times for higher value and more complex cases that require a hearing. It is also estimated that around 272,000 people should be able to access the free mediation, where they previously could not

It is important to note that these plans do not include personal injury or housing disrepair claims.

Comment on small claims mediation

This is latest in a long line of policy and rule changes by the Government in an attempt to clear the lengthy court backlog (in both Civil and Criminal cases) which has exploded since the pandemic, but was already increasing prior.

It is essential that steps are taken to reduce the backlog, particularly in relation to money claims as these represent over 80% of civil claims issued in 2021.

According to the Courts data, a total of 53,675 civil claims went to trial in 2021 and in theory the introduction of mandatory mediation under the latest proposals should significantly reduce this number. The Centre for Effective Dispute Resolution (CEDR) state in their most recent audit that the overall settlement rate for mediation in 2020 was 93%, an improvement from 89% in 2018. In addition, there is clearly a growing appetite for parties to utilise mediation as the number of mediations carried out in England and Wales increased by 38% between 2018 and 2020.

We are only at the proposal stage however, and the Government’s consultation will last 10 weeks. We await the outcome with interest.