THE MINISTRY OF JUSTICE HAS CONFIRMED COMPULSORY MEDIATION FOR SMALL CLAIMS UP TO £10’000.
In a press release 25th July 2023 the MOJ stated it will proceed with reforms that would mandate compulsory mediation for small claims. It intends to role out these proposals starting with specified money claims which constitute 80% of their hearings.
In this article we provide a brief introduction to mediation and an outline of the reforms.
MEDIATION
Mediation is a recognised form of Alternative Dispute Resolution (ADR) whereby the parties negotiate through a neutral third party (i.e. the Mediator) whom attempts to identify the issues in dispute and bring about their resolution. Unlike most forms of ADR, mediation can be used both before and during litigation which means that the parties can have the benefit of legal representation together with:
Private & Non-Binding Discussion: Mediation is behind closed doors and statements made during mediation cannot be used in litigation. Should settlement be reached it is consensual rather than being forced upon the parties as with a civil court judgement.
Affordable & Quick Resolution: Costs are relatively cheap compared to other forms of ADR but it depends on the nature of the dispute. In nearly all cases, mediation can be arranged at short notice using various mediation groups.
Retain Control: The parties retain full control over their decision on whether or not to settle and on what terms. This allows for more flexibility and creativity compared to Adjudication or Arbitration.
Creative & Effective Settlements: The Mediator works towards unlocking any deadlock that might have occurred in negotiation and statistics show over >75% of disputes referred to mediation ending in a consensual settlement. Further, while mediation is usually used to settle a dispute it can also be used for fleshing out the terms of a settlement agreement when the parties have agreed to settle but are 'stuck' on certain terms.
A typical mediation session will begin with the Mediator holding a joint session outlining the process. The parties will then be allowed to make an opening statement giving their perspective on the dispute and highlighting points of particular concern. After the opening, the mediator will have private discussions with each party to assist in the negotiating process.
Settlement in mediation depends entirely upon the parties will to reach settlement but it enjoys a high success rate. As of February 2023, mediators whom responded to the tenth mediation audit carried out by the Centre for Effective Dispute Resolution (CEDR) reported that 72% of their cases settled on the day, with another 20% settling shortly thereafter. A settlement rate of 92% in 2 days.
FORMS OF MEDIATION
With Facilitative Mediation, the Mediator will not decide the case on its merits but will work to facilitate an agreement. By contrast, Evaluative Mediation will involve the Mediator being called to assess the case or issues on its strengths and weaknesses. Conciliation is a type of mediation whereby the Mediator will actively assist the parties by making suggestions regarding settlement options. Its advantages and disadvantages are near identical to mediation save that it is favored by parties seeking a more pro-active approach to settling the dispute.
‘Conciliation’ is the term widely used for mediations in employment law where facilitated settlement discussions are common. The term is also used to describe the settlement conferences held by judges on the continent.
All the advantages of mediation
Parties have the benefit of a more pro-active approach from the third party in seeking settlement.
Familiar to expats from the majority of EU states.
THE MOJ RFORMS
The MOJ will implement its reforms starting with specified money claims which it states constitute 80% of their hearings. These are cases where the claimant is claiming a specified sum of money e.g. an unpaid invoice or contract dispute, as opposed to asking the court the court determine the sums owed such as in a personal injury case.
The reforms will be implemented through the Small Claims Mediation Service where it is believed that over 180’000 parties will be referred automatically for a free 1 hour-long telephone session with a professional mediator before the matter is allowed to progress to a court hearing. It is estimated that this will impact 92’000 cases and free up 5000 sitting days which should assist the courts with processing a record backlog of cases and to facilitate this the HMCTs has already begun hiring and training more mediators.
COMMENT
Our office encourages ADR both before and throughout the litigation process and we are proud to provide resources to facilitate this via our website.
The MOJ proposals are welcome insofar as a free 1 hour session is unlikely to shift the backlog to the mediation services and with specified money claims, it should be fairly straightforward to identify the cause(s) of the disputes. This should be of great benefit to small businesses dealing with record unpaid debt.
That being said, our view is the civil court calamity caused by successive governments confounding obsession with centralisation and cuts, is not going to be cured with a 1 hour telephone call from an overworked recently recruited mediator.
Calls to the County Court Money Claims Centre (CCMCC) often took >1 hour to be answered. When they were, information on their systems was often >3 weeks out of date and the travesty of transferring responsibility of Charging Orders from the county courts to the CCMCC (now closed and shifted to the CNBC), often meant execution suffered administrative delays and errors by which when time the debtor had run off with the goods.
Our view is that the civil court backlog cannot be resolved without more limited centralisation combined with increased funding and draconian management in the county courts.
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