The HM Courts & Tribunal Service (HMCTS) has reshaped the process of how certain disputes are progressed through the English and Welsh court system.
Recently HMCTS announced any specified money claims within the County Court system allocated to the Small Claims Track (SCT) would be automatically referred to the mediation process. The pilot scheme (introduced under Practice Direction 51ZE) comes into force on 22 May 2024.
What is Mediation?
Mediation is a well-established method of Alternative Dispute Resolution (ADR). Disputing parties instruct an impartial third-party negotiator, the mediator, with the hope that discussions will result in an agreement to settle the claim and thus conclude the dispute. The process is essentially seen as an effort to avoid matters ever reaching the Trial stage of litigation when it could have been settled earlier. All mediation discussions are undertaken on a “Without Prejudice” basis and thus no discussions are brought before the Court unless all parties consent to disclosure.
Disputing parties are therefore able to reach an amicable conclusion and avoid the expensive (and not to mention time-consuming) process that would occur with a Trial. As a cheaper and quicker solution, mediation can be considered an effective alternative however this is only if the mediation process results in a successful settlement. It is important to note that there is no obligation upon the parties to settle the claim during mediation.
What is the Small Claims Track?
Generally, and in most cases, claims are allocated to the Small Claims Track where they are valued to be under £10,000.00. The SCT is a simpler litigation process than other tracks and is designed to produce quicker, cheaper results for parties considered to be in “small claims” disputes. With the latest figures from HMCTS suggesting that 69% of claims were allocated to the SCT, the new scheme will affect many individuals involved in Court Proceedings.
HMCTS has confirmed that the new scheme will not initially include claims submitted through Online Civil Money Claims (OCMC) however they have ensured that this will be introduced “at a later date.”
What does this mean for parties?
From 22 May 2024, if you are involved in a dispute as highlighted above then you will be expected by the Court to attend a free, one-hour telephone mediation and at the very least attempt to try and reach a settlement that suits all the concerned parties. The changes will implement an automatic referral process for eligible parties in which they will be required to attend but not required to reach a settlement.
Further, the Court will assess the conduct of the disputing parties throughout the mandatory mediation process to determine whether a reasonable effort was made by everyone to try and reach a conclusion. Failure to act reasonably could result in cost penalties imposed by the Court and any party that fails to attend mediation must include an explanation within any further papers filed with the Court.
Was it all worth it? The reasons for mandatory mediation
It can be difficult to see any benefit to a mandatory mediation process when it is clear to all parties that mediation will not result in a settlement. Indeed one of the cornerstones of the mediation process has always been the voluntary nature of it. However, despite the parties’ stark differences, mediation does allow parties the opportunity to assess the strengths and weaknesses of the opposing party’s arguments before reaching Trial and it should further narrow down any smaller issues that could be agreed upon without the need for a Judge.
Perhaps more importantly, it encourages the use of ADR for claims which could have (and should have) avoided Court altogether, reducing the significant small claims backlog.
How can we help?
Whether already instructed at the start of your dispute, or if you require assistance at the point that mediation begins, the Swinburne Maddison Dispute Resolution Team has extensive experience in mediation and advising and representing clients in all litigation tracks.
If you would like to discuss any of the issues raised in this article, please contact Adam McWilliams at amw@swinburnemaddison.co.uk or call 0191 3842441 and speak to any member of our Dispute Resolution Team.
