Small Claims Mediation Is Becoming Compulsory

The Ministry of Justice has previously outlined plans to make mediation a requirement in small claims. They have confirmed this will start with most money claims valued under £10,000, currently excluding claims issued through the Online Civil Money Claims portal, which will be integrated later.

Compulsory mediation will now apply to new small claims issued from Wednesday 22nd May 2024.

Previously, parties could choose to use the Small Claims Mediation Service (SCMS) voluntarily, though this will now become an integral part of the small claims process and something the court expects users to take part in.

We don’t believe the process will look any different. Parties will fill in directions questionnaires to give dates of unavailability and the case will then automatically be referred to the SCMS which will provide a three-hour window for a one-hour appointment within 28 days of the referral. There is no obligation to settle.

If mediation is successful, a formal mediation agreement will be drawn up by the mediator and will remain binding. If the appointment is unsuccessful the claim will be referred to a judge for directions, which is what currently happens.

The service through SCMS is still free
It is an automatic referral
It is likely to increase the number of quicker settlements
It is a cheaper way of resolving disputes for you than proceeding to trial
It is likely to improve court capacity including turnaround times for providing hearing dates
It is likely to reduce court pressures generally which, in turn, should allow the court to provide a better service
Your opponent can expect to receive sanctions if they don’t attend the mediation appointment
If you fail to attend the mediation appointment you can also expect to receive a sanction, even if you are successful in the claim

Sanctions

The court can order costs sanctions against a party who fails to attend mediation. Failure by a party to attend mediation may also support arguments for “unreasonable behaviour” in costs submissions. Any sanction would be decided by the judge at the final hearing.

It remains to be seen whether the court will look to order any other sanction they consider appropriate beyond costs.

Changes to the service we provide

In short, there will be no change to the service we provide. Our dedicated and experienced case handlers already conduct mediations via SCMS where clients and opponents opt in for a voluntary referral; we do not expect the compulsory aspect to change the actual mediation experience either.

We do expect this rollout will improve turnaround times on your claims that become defended and expect to see improved settlement and recovery.

What about the other tracks?

There has been an increase in discussions and government consultation on increasing the use of mediation in the civil justice system.

This is in part to ensure dispute resolution is evolving in line with our “modern age”, and also to empower parties to be able to resolve disputes quickly and without the need for a hearing.

Despite this, the position remains that alternative dispute resolution is encouraged, as per existing Practice Directions and there are no known upcoming changes to the rules on the Fast, Intermediate or Multi-Tracks regarding a compulsory mediation.

If you would like to discuss the new changes and how they might affect your claim, get in touch with our expert recoveries dispute resolution team today.