On the 25th of July 2023, the Ministry of Justice (MoJ) announced new justice reforms to free up vital court capacity. This would mean that individuals seeking to recover debts of up to £10,000 will need to attempt mediation before their cases can be heard in the small claims courts of England and Wales.
What is Mediation?
Mediation is a form of Alternative Dispute Resolution (ADR) along with arbitration. It was designed to be a confidential and interactive process between disputing parties where an impartial and independent third party seeks to provide neutral assistance to resolve areas of conflict. Mediation is still optional in the civil courts. However, parties are encouraged to engage with ADR processes throughout the course of their claim to reduce costs, minimise the risk of cost sanctions, and free up court time.
The Benefits of Mediation
Mediation during dispute resolution provides the following benefits:
The New Justice Reform
The new justice reform comes after the Compulsory ADR report published in June 2021 by the Civil Justice Council (CJC) regarding the lawfulness and desirability of compulsory ADR. The CJC concluded that introducing further compulsory elements of ADR, “would be both legal and potentially an extremely positive development.”
The CJC report considers the case of Halsey v Milton Keynes (2004) and disagrees with the finding that mandatory ADR would “impose an unacceptable obstruction on their right of access to court.” The report states that as long as the ADR settlement process does not lead the parties to be coerced into settlement against their will, and if they have the option to refer back to the judicial system should they reject the settlement, then it would be lawful.
Following last year’s consultation, the government has committed to fully integrating mediation as a key step in the court process for small civil claims valued up to £10,000, starting with specified money claims which make up 80% of small claims.
Parties will be automatically referred to a free hour-long telephone session with a professional mediator provided by HM Courts and Tribunals Service (HMCTS) before their case can be progressed to a hearing. Parties who fail to engage in the dispute resolution process would risk facing cost sanctions or have their claims struck out.
This welcomed change could positively impact up to 92,000 cases per year. This has the potential to create an additional 5,000 available court days annually, significantly enhancing the court's capacity and aiding the government in diminishing the waiting period for the most intricate cases. The policy will eventually apply to all claims issued under the standard part 8 procedure of the Civil Procedure Rules.
Such a change will also provide parties with the opportunity to resolve their disputes out of court. This allows the involved parties to reduce their costs and remove some of the unnecessary stress court cases can bring.
To support these changes, HMCTS will be expanding the Small Claims Mediation Service (SCMS). The SCMS has been providing voluntary mediation since 2007, settling over half of the claims referred to it each year within weeks of starting the case.
Can Mediation Really Help?
Compulsory mediation although extremely beneficial might not be suitable for some cases. This could be due to the nature of the case itself, which runs the risk of mandatory mediation becoming a “box-ticking” exercise for both parties. The Law Society President, Lubna Shuja, noted that the lack of exemptions to this new process might increase unnecessary bureaucracy and cost which would ultimately hinder the ability of some parties to access justice.
However, we believe that the new justice reform is a step in the right direction for smaller claims as it provides a more affordable and accessible dispute resolution system. The existing downsides are minimal and would not result in an unreasonable delay for difficult cases. Especially when one considers the fact that Civil court delays are the ‘worst on record’. But how this could be scaled up when dealing with higher value claims and more complex cases remains to be seen.
If you have any questions regarding the process and how we can help you, please reach out to our solicitors.
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