Mandatory mediation commences for Small Claims

Last week saw the commencement of new court rules introducing mandatory mediation as a standard procedural step in the majority of civil claims allocated to the County Court's Small Claims track (generally, claims valued below £10,000).  Although the new procedure in Practice Direction 51ZE is modest in terms of what it requires of parties, it is very significant as the first instance of compulsory mediation being applied across an entire part of the civil justice system.

It represents the first stage of plans announced by the Government last summer to integrate a mandatory mediation requirement in all defended Small Claims brought under the standard CPR Part 7 procedure, with no exemptions for particular types of claims or individual parties:

1. From 22 May 2024, the requirement applies to all new money claims for a quantified sum (except actions commenced through the Online Civil Money Claims platform, which will be included later this year). Such quantified  claims are estimated to constitute approximately 80% of Small Claims cases
    
2. A later stage will extend the requirement to the remaining types of Part 7 Small Claims cases, including unquantified money claims and personal injury cases.

Once a defence is filed, the parties will be required to attend a short (usually 1 hour) free telephone mediation session with a court-employed mediator.  The session will be limited to the mediator "shuttling" between the participants, with no direct party-party discussion.  While the parties are expected to engage with the process in good faith,  this will not be the subject of any attestation by the mediator.  The only requirement is to attend the scheduled mediation call, failing which the court may impose costs sanctions or even strike out the party's claim or defence.

A policy shift re higher value claims?

The Government's original policy announcement stated that, following implementation in the Small Claims track,

"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)".   

It has also previously indicated a preparedness to consider the extension of mandatory mediation in some form to the higher courts in the longer term.

However, that was prior to the Court of Appeal's landmark decision in late 2023 in Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416.  As discussed here and here, that decision overturned what had for nearly 20 years been widely accepted as a general prohibition on the English courts compelling parties to engage in mediation or other ADR processes. 

The Government strongly welcomed the Churchill decision, and the Ministry of Justice's Head of Dispute Resolution Policy was recently reported as commenting that the judiciary's newly-recognised power to compel mediation in individual cases "could prove a better mechanism to ensure the engagement of parties and to drive up the uptake of dispute resolution than a blanket mandated approach".  Interestingly, she reportedly referred to the extension of mandatory mediation to higher-value County Court claims as something which “(w)e haven’t ruled out" and "remains of interest" – a softening of language which might indicate a policy shift (or at least postponement) as a result of Churchill.  

No doubt the Government will be closely monitoring the impact of the new Small Claims procedure (including mediation settlement rates compared to the prior voluntary mediation scheme), as well as how the judiciary exercises its powers of compulsion.