The Courts are presently trialling a new system in a pilot scheme which, if successful, will see a notable change in how Small Claims (in general, those cases with a monetary value of under £10,000) are handled in England and Wales. The pilot scheme automatically refers certain claims under £10,000 to mediation.
Running from 22 May 2024 to 21 May 2026, the pilot scheme targets claims under £10,000, whether filed online via platforms such as Money Claims Online or through traditional paper submissions. These claims will be automatically referred to the Small Claims Mediation Service (SCMS) operated by HM Courts and Tribunals Service (HMCTS) upon completion of the directions questionnaire – a procedural step that comes after the Claimant has filed their Claim Form / Particulars of Claim, and the Defendant has filed their Defence.
So what does this mean in practical terms?
For eligible claims, parties will find themselves attending a free one-hour telephone mediation appointment with a mediator employed by HMCTS. Reaching a settlement will remain voluntary and all parties will retain access to the courts. However, should parties engage in unreasonable behaviour they will face potential costs sanctions at a final hearing. Parties should therefore be careful in frustrating the process or dragging their feet for no good reason.
The rationale behind this initiative is clear; mediation is recognised as a powerful tool for resolving disputes. By fostering open dialogue and encouraging parties to find common ground, mediation not only speeds up the resolution process but also eases the burden on court resources.
This is beneficial to the parties – but arguably crucial to the functioning of the Court system. It is estimated that greater use of mediation could positively improve the court’s capacity and reduce waiting times for more complex cases by freeing up to 5,000 Court days a year. Currently, the target wait for a court date is 30 weeks, and often the waiting time exceeds this target due to significant delays with the judicial system. Anything which improves the speed of the judicial process, without inhibiting access to justice, should be popular with all concerned.
However, the pilot scheme is not just about efficiency; mediation offers parties a chance to reach an agreement at an early stage, saving the expense associated with a final hearing and the preparation involved to get there. Mediation is often a win-win scenario that promotes collaboration and mutual understanding.
Where Small Claims mediation under the pilot scheme is successful, the parties enter a verbal agreement over the phone known as a settlement agreement. This is legally binding, which means that both parties must comply with it and if either party breaks the terms, then the other party can go back to court and ask for a judgment to assist in enforcing the agreement.
Looking ahead, there are aspirations to expand automatic mediation referrals to cover a wide range of civil claims, including higher-value disputes. In a previous article we talked about whether mediation would become compulsory, and if the pilot scheme is made into a permanent addition to the Court rules (as most pilots ultimately are), then this will be a very clear step in that direction.
The Commercial Dispute Resolution team at Wilkes deal with commercial mediations on a regular basis and have an excellent track record in resolving disputes effectively without the costs, stress and uncertainties of a contested trial. For more information or to discuss a commercial dispute please contact Gavin Evans on 0121 233 4333 or by email at [email protected].
