Compulsory mediation for small claims of up to £10,000

On 25th July 2023, the Ministry of Justice announced that mediation will become a compulsory step for specified money claims of up to £10,000 in value, which covers approximately 80% of all small claims, and plans to introduce the legislation for this in this Parliament.

This is higher than the Civil Justice Council’s report in January 2021, which recommended mandating mediation for cases up to £500.

The Government anticipates extending the scheme to personal injury and unspecified money claims in the future.

How it will work

HMCTS (His Majesty’s Courts and Tribunal Service) will expand its Small Claims Mediation Service (SCMS) by recruiting and training more mediators and updating technology where necessary. They expect that over 180,000 parties will be referred each year.

The mediation will be a one-hour phone call, with the mediator speaking to each party in turn. The parties do not speak to each other. The service will be free and the parties will be expected to engage in “good faith”, although the mediator will not be asked to say whether the parties engaged adequately.

SCMS has been providing voluntary mediation since 2007 and states that they settle over half of claims referred to them each year within weeks.

A case will not be permitted to proceed to a hearing unless mediation has been undertaken.

The rationale

The Government estimates that mediation could free up 5,000 sitting days of court time a year (based on 2022 case volumes), which would reduce waiting times for more complex cases.

For the parties to the claim, the aim is that it will resolve the matter more quickly, at less cost and with less stress.

No exemptions

The consultation report states that there will not be any exemptions to the requirement to undertake mediation. Doing this on a case by case basis would create extra time and costs, complicating the court process unnecessarily.

However, if either party does not attend the mediation, they will face sanctions applied by the court.

The impact on High Court enforcement

We support mediation – a reduction in the number of cases that go to court can only be a positive outcome for all stakeholders.

In terms of enforcement, we tend to find that many of the cases we enforce are where there is a refusal on the part of the debtor to pay, or a belief that the creditor will give up in time.

We think it unlikely that mediation will resolve all of these kinds of cases and that enforcement will still be an important tool for creditors who need that leverage.

Read the Ministry of Justice press release.