Legislation introducing compulsory mediation for small claims up to £10,000 is expected to come into force during this parliament, the Ministry of Justice has announced.

When a claim is currently issued and becomes defended, the parties must complete a directions questionnaire – at this point, they may decide whether they want mediation, which is optional. However, under the new rules (for which we don’t yet have a start date) mediation for small claims will become compulsory.

Understanding compulsory mediation for small claims

Compulsory mediation requires parties to engage in a mediation process before proceeding with formal legal action. Once introduced, it will mean that a case will not be permitted to proceed to a hearing unless mediation has been undertaken.

There will not be any exemptions to the requirement to undertake mediation and if either party fails to participate, they will face sanctions applied by the court.

Mediation will take the form of a one-hour phone call with a trained mediator who will speak to each party in turn. The parties will not speak to each other but will be expected to engage with the mediator ‘in good faith’ (although the mediator will not be asked to say whether the parties engaged adequately).

With around 180,000 parties expected to be referred each year, His Majesty’s Courts and Tribunal Service will expand its Small Claims Mediation Service by recruiting and training more mediators and updating technology where necessary.

Is compulsory mediation free?

Compulsory mediation will be free insofar as there will be no fee payable to the mediator. However, it is important to note that there will be a cost to clients for preparing for the mediation hearing, conducting the hearing and reporting back. Overall costs are likely to be around £500+vat.

Advice on compulsory mediation

There has been voluntary mediation since 2007 but uptake has been limited. Compulsory mediation for small claims has the potential to promote collaboration and achieve cost-effective resolutions in cases where litigation costs would be disproportionate to a claim’s value. Watch this space for a start date!

For advice on any debt recovery matter, please contact Richard Anderson at Beswicks for further information. You can email richard.anderson@beswicks.com or call us on 01782 205000. or 0161 929 8494. Take a look at our services to find out more about how we can help you.