On 26 July 2022, Ministers published a blueprint for reforms to the English and Welsh Civil Justice System which will make it mandatory for disputes in the Small Claims Court (i.e. disputes under the value of £10,000.00) to go to mediation.
Ministers hope that by making mediation mandatory in the Small Claims Court, parties to claims will be encouraged to settle which in turn will free the Courts to deal with larger, more complex claims.
The Small Claims Mediation Service is a free service provided by the Civil Courts of England and Wales for people who find themselves in a dispute which falls in the Small Claims Court.
It is not currently mandatory for either party to participate in the service. Rather, when filing a Directions Questionnaire at Court (i.e. the Court form used to collect and assess information that is relevant to the claim), the parties will be asked whether they would like to participate in a Small Claims Mediation. The parties are encouraged to do so by way of a reminder on the form which states that “under the Civil Procedure Rules parties should make every effort to settle their case” but it is by no means compulsory.
As it stands, a Small Claims mediation is usually carried out by telephone in one hour time limited appointments with a professional mediator and takes place before the case is listed for a hearing. However, as the service is optional, parties tend to opt out of the service, preferring to have their day in Court instead.
The Government hopes to divert thousands of low value claims from the Courts by automatically assigning them to a mediation. The service itself will be much the same, with the Mediator speaking to each of the parties separately, with a view to establishing whether there is any common ground between them. If there is, and the parties are able to reach a settlement, the terms that are agreed can then be drafted into a legally binding Settlement Agreement. At this point, Court proceedings would no longer be required.
It is estimated that approximately 20,000 extra cases could be settled away from Court every year. In turn, the Government estimates up to 7,000 judicial sitting days will be made available by making mediation mandatory in the Small Claims Court. It is further estimated that c.272,000 people should be able to access the free mediation service.
The introduction of a mandatory mediation service in the Small Claims Court is not surprising as other Common Law jurisdictions have implemented similar schemes. Three Canadian cities in Ontario, for instance, have used either automatic or mandatory mediation for over 20 years.
Although still only at the consultation stage, there are strong arguments that these amendments will be implemented contrary to the decision in Halsey v Milton Keynes General NHS Trust [2004], which held that compulsory mediation could lead to challenges under breaches of Article 6 ECHR which provides people with the right to a fair trial.
The consultation will soon be ending in early October, having been opened for 10 weeks.
For more information on this article, please contact our Commercial Disputes team.
