- 10 October 2022
- Litigation and dispute resolution
At the end of July 2022, the Ministry of Justice began consulting a proposal to refer small claims in the County Court automatically to mediation. The aim is to increase the use of mediation in the civil justice system. According to the plan, parties involved in a civil dispute of up to £10,000 will be automatically referred to mediation and the service will be supplied by Her Majesty’s Courts and Tribunals Services (HMCTS), the Small Claims Mediation Service (SCMS).
What is mediation?
Parties involved in a dispute can choose mediation as a method of Alternative Dispute Resolution (ADR). Mediation is currently a voluntary process in which parties to a dispute are assisted by an independent third party to reach a negotiated settlement. The third-party acts as a neutral mediator and encourages the parties to reach a mutually beneficial resolution. Typically, the mediator begins the mediation by holding a joint session with all parties present, during which each party makes an opening statement. After that, the mediator takes each party into separate, confidential discussions before finally coming together for the negotiation stage. Mediation is confidential and non-binding until an agreement has been reached and signed in writing by all parties.
What is the government consultation?
Worsened by the pandemic, the backlog of cases for the court is extremely high, and the costs involved in bringing legal proceedings are expensive. Therefore, there is a pressing need to deliver procedures that decrease the time and money spent on civil disputes whilst also resolving them justly and proportionately (Rule 1.1(1), Civil Procedure Rules 1998 (‘CPR’)). In particular, Part 27 of the CPR, which deals with small claims, already includes rules aimed at providing a proportionate method of dealing with straightforward cases of limited financial value. The government consultation on increasing the use of mediation in the civil justice system is intended to support this objective.
Under the new proposals, unless exempted by the court, mediation will become mandatory for those parties with claims defended on the small claims track (which make up approximately 61% of County Court claims). This includes all claims under £10,000 that are in the small claims track as well as personal injury and housing disrepair claims. The mediation will take place over the course of an hour-long telephone call with a qualified mediator (supplied by HMCTS) before the matter is scheduled for a hearing. The parties will speak to the mediator separately to determine whether they have any points of agreement, much as in a typical mediation setting. If a settlement is reached, the parties may agree to include its provisions in a settlement agreement that is legally binding. Court proceedings would then be avoided.
Opinions on the proposals and customer feedback for the SCMS were sought through the consultation. It is also looking at whether these rules should be applied beyond just small claims. The consultation closed on the 4 October 2022, and we are currently awaiting the final briefing (which usually takes around 12 weeks after the closing date).
Pros and Cons
When compared to typical referral rates, only 21% of claims on the small claims track are voluntarily sent to the SCMS. If the new government proposals are successful, nearly 100% of small claims will be referred to mediation (bar those that are exempt by the court). This demonstrates that a free automatic mediation service might significantly help to resolve a greater amount of small claims disputes, doing so with less stress for parties, at less cost and at a noticeably faster rate. According to the consultation, 20,000 cases will be diverted from the court system each year freeing approximately 7,000 judicial sitting days for use in more complex matters.
Furthermore, the Law Society vice president, Lubna Shuja, stated “it is encouraging to see the government looking for ways to reduce the courts backlog, and ensure disputes are resolved quickly and at minimal cost.” Although on the other hand Lubna Shuja stated “however, if parties are not interested in entering into mediation in good faith, it could waste time, as well as money, and there is a further risk that mediation may entrench imbalances of power between parties.”
The regulation and monitoring of the mediation sector are other issues that are raised by mandatory mediation. If all small claims are referred to an automatic mediation service, then should the industry be more regulated? For example, this could include ratifying standards of conduct, accreditation of mediators as well as the creation of a mediation regulated body.
Despite the minimal demands that it may place on parties, the concept for mandatory mediation of small claims is significant because it is the first time that mandatory mediation has been established as a long-term fixture of a whole area of the English Courts.
If the government’s predictions are correct, making mediation mandatory for cases on the small claims track will free up court time so that judges can focus on more complex matters.
There has been significant debate around the concept of mandatory mediation over the years with the Law Society previously stating that it would ‘frustrate the principle’ of ADR. Going back to the decision in Halsey v Milton Keynes , Dyson LJ ruled that parties in a dispute could not be required to engage in mediation without consent. This case also raised questions on whether compelling people to mediate breaches their right to a fair and public trial by restricting their access to the courts (Article 6, European Convention of Human Rights). Nevertheless, the discussions of breaching Article 6 of the ECHR were obiter comments and so were not legally binding. Additionally, Lord Dyson has since concluded that his comments on Article 6 in Halsey were incorrect and stated, “it is clear that in and of itself compulsory mediation does not breach art. 6”.
Many organisations, including Civil Justice Council’s CJC, have been considering the idea of mandatory mediation. More specifically in its ground-breaking report in July 2021, the CJC Judicial ADR Liaison Committee expressed their opinion that mandatory mediation was in fact legal and that it should be encouraged. The Ministry of Justice and the senior judiciary have since supported this. In the same report, the CJC Committee also concluded that any dispute resolution procedure “which is not disproportionately onerous and does not foreclose the parties’ effective access to the court will be compatible with the parties’ Article 6 rights”. Likewise, that “if there is no obligation on the parties to settle and they remain free to choose between settlement and continuing the litigation then there is not, in the words of Moylan LJ in Lomax, “an unacceptable constraint” on the right of access to the court”. The Committee confirmed that adding a requirement to consider mediation is acceptable, if the parties are not compelled to resolve their dispute during the mediation, and they retain access to the courts.
Mandatory Mediation already in the UK
In the UK’s family sector, parties to a dispute are already obliged to attend an initial Mediation Information and Assessment Meeting (MIAM). The parties are informed about what mediation is and the potential utility of mediation in their case, they are then free to decide if it will be suitable for them. This is a compulsory technique of accomplishing a voluntary mediation and alleviates the worries of pressuring parties to participate in a practice that is intended to be optional. This method demonstrates a high success rate in the Family sector and suggests a mandatory consideration of mediation is likely be effective with claims on the small claims track.
Furthermore, the Employment sector has its own type of mandated ADR called ACAS. Parties involved in a dispute must go through the Early Conciliation (EC) process with ACAS before they have access to an Employment Tribunal. This process sits approximately halfway along the mandatory spectrum of mediation and has an increased element of compulsion compared to a MIAM. According to a 2019 ACAS EC survey, the important advantages of utilising EC were quickness and avoiding the tribunal. Participants commented that if they were in a similar situation again, they would use the same service.
The future trend supports the judges view in Lomax, that Halsey’s objection to mandatory mediation has been consigned to history and judges are now forming different views. If the government’s predictions are correct, making mediation mandatory for cases on the small claims track will free up court time so that judges can focus on more complex matters while also giving the public greater access to dispute resolution services. However, mandatory mediation in the small claims track is new, and like any new process, it is likely to bring hesitancy from its users. An important aspect to consider is the level of expertise required of a mediator and the regulation of the industry. Mediators must have the level of competence to successfully assist parties throughout the entire mediation process. Formalising standards of conduct and establishing a mediation regulator is likely to help to improve the regulation of the industry.
The Government Consultation aimed to take onboard the views of all those with an interest in the resolution of civil disputes such as court users, the judiciary, the advice sector, the legal profession, and the mediation profession. Now the consultation has closed, the government will consider these viewpoints and use them to improve the quality of their decision. A final briefing on this decision is expected within twelve weeks of the consultation closing date.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.
About this article
SubjectIncreasing the use of mediation in the civil justice system
ExpertiseLitigation and dispute resolution
Published10 October 2022
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