Radical change as the Ministry of Justice considers proposals for mandatory mediation
Ministry of Justice (E&W) proposals to make mediation compulsory in small claims cases are currently being mulled over. The changes are radical, challenging to implement, but could yield significant results.
Under the proposals, before a trial is permitted the parties would have to sit down for a one-hour telephone session led by a court appointed mediator. Failing to properly engage would risk an adverse cost award at the end of proceedings (albeit I imagine within the limited scope of the small claims fixed cost rules). It’s envisaged that an additional 270,000 parties would access mediation each year, 20,000 cases would be diverted from the court system and around 7,000 judicial sittings would be freed up.
The current small claims mediation system has a narrow scope consistent with the idea of agreement to mediate being voluntary. Today, parties to small claims cases (broadly those of a value of £10,000 or less) are offered a free mediation service early in the procedure, after the claim has been issued and defended. The parties indicate in a questionnaire whether they would like to take part in an hour-long free mediation before the SCMS (small claims mediation service) and if both parties indicate they’d like to mediate, the case is stayed and referred to the SMCS which tries to accommodate the request.
The SMCS is predictably stretched and cannot accommodate all requests. At times notices are sent out giving a date for a mediation window, but in the end the service frequently does not have capacity and the window passes without the appointment taking place with the case moving on to trial thereafter. Any positive intentions of the parties can be lost. Anyone with experience of calling county courts will be keenly aware of the difficulties in even getting connected given the volume of cases – there are parallels with the SCMS. Also, it’s relevant to consider that the service is stretched even though only a relatively small proportion of parties agree to even try mediation – the courts have estimated that only in 21% of small claims do parties sign up.
So, the proposal of making mediation compulsory for all small claims cases is radical and will require significant resourcing. Plans are underway to recruit and train additional mediators and, given the labour and financial challenges faced by all sectors, the difficulty of meeting the anticipated volume is obvious. In addition, the Ministry of Justice’s proposals don’t just envisage mediation for small claims but cite a future ambition of having compulsory mediation for all county court matters.
However, with all those challenges in mind, the proposal is rational and laudable. Small claims are estimated at making up 61% of claims within the county court and the prospect of a significant chunk of these cases being resolved early is worth pursuing. Average time to trial is just under a year for small claims and experiences can be frustrating. Even if you are set a hearing date within a year, parties could be notified at a day’s notice that the hearing has to be adjourned for capacity reasons, only for it to be relisted 6 – 8 months later. And that sort of adjournment may happen, in the same case, again.
The prospect of settlement in mandatory mediation also appears to be high when figures from other jurisdictions are considered. In Alberta, Canada, the court assesses incoming small claims and mandates that certain claims mediate – the “success” rate (i.e. settlement rate) is 67%.
A consultation ran on the Ministry of Justice proposals over the summer months and recently closed. Final plans will be released in due course but if implemented successfully could have a significant impact on the handling and resolving of small claims, to the advantage of the courts and the parties. We await the results of the consultation with interest.
Neil Carslaw is a Senior Associate at Pinsent Mason specialising in commercial dispute resolution