The landscape of small claims litigation is changing. A new rule has been implemented in order to streamline the judicial process and reduce Court backlogs. Mediation is now compulsory for all County Court claims estimated at £10,000 or less.
This new rule requires parties to join in a free, hour-long mediation session before going to Court. The purpose of this is to encourage parties to reach a more amicable resolution without the need for claims to proceed all the way to trial.
After introducing the policy in the Small Claims track, the Government’s initial announcement indicated plans for further expansion.
“we also aim later to integrate mediation within the resolution of higher value claims in the County Court: within the fast-track (£10,000-25,000) and multi-track (over £25,000)”.
The Government has formerly expressed openness to possibly extending some form of mandatory mediation to higher Courts in the future.
What is mediation?
Mediation is a structured yet voluntary process where a neutral third party (the mediator) assists negotiations between disputing parties. It is important to note the difference between mediation and judges as mediators. Unlike judges or arbitrators, mediators do not make decisions. Instead, they help parties find common ground and resolve conflicts amicably.
While now mandatory for smaller claims, mediation is strongly encouraged for disputes of all values due to its effectiveness in reaching settlements.
The Court’s view on mediation
Courts have long preferred that litigation be a last resort. The recent case of Conway v. Conway & Anor (Rev1) [2024] EW Misc 19 (CC) underscores this preference. In this case, the judge reduced costs awarded to the winning party because they had for no specific reason rejected an offer to mediate.
Why consider mediation?
Beyond Court mandates, mediation offers numerous benefits:
- Cost-effective: Normally much cheaper than going to trial.
- Time-efficient: Can resolve disputes far quicker than traditional Court processes.
- Private: Unlike public Court proceedings, mediation sessions are private.
- Greater control: Parties collaboratively work towards mutually agreeable solutions.
- Relationship preservation: The cooperative nature of mediation can help maintain or even improve relationships between parties.
- Flexible outcomes: Allows for creative, tailored solutions that Courts might not provide.
- Less stress: Often less stressful than Court appearances due to its relaxed, collaborative nature.
Comment
As the justice system evolves, embracing mediation not only complies with new regulations but also offers a more efficient, cost-effective, and potentially satisfying way to resolve disputes.
The impact of the new Small Claims rules will likely be under close Government scrutiny. The Government will look at comparing mediation settlement rates to those of the previous voluntary scheme, as well as observing how the judiciary applies its powers to compel mediation.
How can we help?
Charlotte Dowdy is an Associate in our Dispute Resolution team, specialising in commercial litigation and professional negligence claims.
For advice on or further information in relation to the subjects discussed in this article, please contact Charlotte or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.
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