In July 2022 the Ministry of Justice announced plans to introduce automatic referral to Mediation for all Small Claims, i.e., generally those claims valued under £10,000.
Under the new proposal, all parties to a defended Small Claim would be required to attend a compulsory Mediation appointment with Her Majesty’s Courts and Tribunal Services. The Mediation would be conducted by telephone. If the parties reach an agreement and/or the Mediation results in a compromise between the parties, it would be made legal through binding a Settlement Agreement.
The government proposal it is hoped would allow in excess of 200,000 more parties each year the opportunity to resolve their dispute so as to avoid time and costs of litigation. It is estimated that the proposal would divert up to 20,000 cases each year from the Court system freeing up around 7,000 judicial sitting days for more complex cases.
At the present time, the Small Claims Mediation Service, which is operated by HMCTS, currently offers parties a free one-hour Mediation appointment with a Mediator employed by HMCTS. However, participation is not compulsory and cases are only referred where both parties consent to Mediation when completing the Directions Questionnaire.
Statistics show that currently 55% of cases mediated via the Small Claims Mediation Service result in a settlement, but just 15% to 21% of all parties use the service.
It is hoped that compulsory Mediation in the Small Claims Track would result in claims being settled at an earlier stage provided the parties were attending Mediation with an open mind and in good faith.