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05 January 2023

Is mediation going to become compulsory for small claims?

3 mins

The latest set of government statistics released in December 2022 shows that on average, it is now taking nearly a full year for a small claim track to reach trial after it has been issued.

Clearly, timeframes will differ from County Court to County Court, but it is small claims (of under £3,000) that take up around 80% of all newly issued claims in the County Court, leading to further delays for these claims to reach trial if the parties cannot settle their dispute.

This upward trend in the time taken to reach trial in small claims cases has led the government to consider the introduction of compulsory mediation in small claims cases.

At present, once a claim is defended and allocated to the small claims track, the parties are invited (on the Directions Questionnaire) to state whether they are prepared to mediate the dispute via the small claims mediation service (SCMS). Obviously, for a mediation to take place, it requires the consent of both parties and at present, there are no consequences for a party refusing to mediate the dispute, via the SCMS. Indeed, as the majority of parties in small claims cases are not legally represented, many claimants and defendants may not know what mediation entails, and are often so entrenched in their respective positions that mediation may simply be a waste of time as neither are prepared to concede any part of their case.

With this in mind, in 2022, the government put forward proposals under which mediation would be compulsory for all small claims track cases, whether or not the parties agree to it. All defended claims would be stayed for a 28-day period and referred to the SCMS with a court-appointed mediator. The consultation ended in early October 2022 and the government is currently reviewing the responses received.

Whilst mediation has proved an effective tool in resolving disputes over the years (and indeed government statistics show that around 55% of mediations result in a resolution), making mediation compulsory is not without risks and could lead to parties being treated unfairly.

At present, the small claims mediation service is not seen as being very flexible and may set a date for a mediation that one party cannot attend. Further, the government is looking into whether there should be penalties for parties who do not properly engage in the mediation process, either by way of costs penalties, or by having their claim or defence struck out. Again, this seems unfair to parties who would simply prefer not to mediate. There also remains a possibility that the process could lead to even lengthier delays. Parties who do not really want to mediate will follow the process to keep the courts happy (and avoid any sanctions), and then when settlement is not reached at the mediation (due to their entrenched positions), the parties will then be faced with a longer wait for their case to reach trial.

The government has not provided any timeframe as to when they expect to provide a further update on the consultation process, so it is a case of ‘watch this space’. Certainly, compulsory mediations could result in a large number of cases being settled at an early stage, freeing up valuable court time, but could mean access to justice is denied for those parties who have no desire to mediate.

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