Light at the end of the tunnel

UK to introduce compulsory mediation

Government reveals plans to divert thousands of civil legal disputes away from courts

Summary

  • On 26th July the UK Ministry of Justice issued a consultation paper regarding the introduction of compulsory mediation;
  • What is driving policy? The consultation is driven by a need to reduce the volume of court cases and to save money;
  • What is proposed? Although this is a consultation, it is clear the MoJ have decided to make mediation compulsory for all County Court claims (i.e. those with a value of up to £100,000), starting with small claims. The direction of policy suggests mediation may become compulsory for all civil cases.
  • What action should litigators consider; (1) bolster mediation and negotiation skills and capabilities; (2) be ready for greater scrutiny of your and your clients conduct regarding mediation; and (3) build mediation strategy from the outset of a case.

This article reviews the drivers of policy for these changes, summarises the current proposals, and considers what how litigation lawyers might respond.

What is driving policy?

Whilst issues with the UK legal system are leading to its position as the pre-eminent global legal market place being questioned, in promoting mediation the UK government is concerned with far more basic issues. In particular the volume of cases and the time they are taking to resolve is clogging up the courts, causing serious delays in the delivery of justice and, critically, escalating costs, both for litigants and for the UK Treasury. These problems have been exacerbated recently by the Covid19 pandemic.

Mediation is regarded as a key tool in addressing these problems, given it has a proven track record in settling cases quickly and at a reasonable cost. As a result of the Woolf report, mediation/ADR has been embedded in the UK Civil Procedure Rules since 1998. The courts are required to encourage the use of ADR in the pursuit of meeting the overriding objective. This principle has been reinforced in a number of cases, where emphasis has been placed on the obligations of the parties and their lawyers to use alternative methods of dispute resolution (treating litigation as a means of last resort), and costs penalties have been imposed where parties have refused unreasonably to mediate.

The benefits of mediation therefore are regarded as being unarguable and established; the issue is thought to be more that mediation is not widely enough understood and is not sufficiently promoted, and so is not being used as extensively as it should (for example only 21% of small claims are mediated). It is estimated that compulsory mediation for small claims will lead to an additional 20,000 cases settling and will free up an additional 7,000 judicial sitting days. Therefore the MoJ is seeking to build on those existing foundations by embedding compulsory mediation into the litigation process.

Consistent with that policy, procedural rules and case-law background, it is clear from the consultation paper that the decision has already been taken to introduce compulsory mediation for small claims, with the stated ambition to extend compulsory mediation to all County Court claims (i.e. claims with a value of up to £100,000). The primary purpose of the consultation therefore is to seek feedback upon ancillary questions, the answers to which will help the government shape how compulsory mediation will work in practice, both for small claims and for other claims, including at some stage, higher court claims. The headline of the MoJ press release for the consultation summarising the position succinctly; “Government reveals plans to divert thousands of civil legal disputes away from court”.

The key questions posed in the consultation include:-

  • Should any types of cases be exempt and are there any circumstances in which a party should be able to apply for and be given an individual exemption from compulsory mediation?
  • What criteria should be used to assess whether a party has engaged adequately with the mediation process, and are adverse costs and striking out orders the right sanctions where a party does not?
  • Should accreditation and regulation of mediators and any relevant accreditation or professional bodies be beefed up?

The deadline for responses to the consultation is 4th October, and readers will find a link to the consultation itself in the resources section at the end of this note.

What is proposed?

The key proposals in relation to small claims are as follows:-

  • Where a defence is filed the case will allocated to the small claims track;
  • Unless an application for an exemption is made the case will be stayed automatically for 28 days for a mediation to take place;
  • The case will then be referred to the Small Claims Mediation Service (SCMS), pursuant to which a mediator (from the HM Courts and Tribunal Service) will be appointed;
  • The mediator will then conduct a mediation by telephone lasting up to one hour;
  • The mediation service provided by the SCMS and its appointed mediator will be free of charge to the litigants;
  • If the case settles then it ends in the usual way, otherwise the litigation will proceed along the smalls claims track.

The SCMS already provides a mediation service for small claims, and it is, necessarily, a very basic one. Clearly this would not be suitable for higher value County Court cases, let alone High Court cases. The consultation paper envisages that for those higher value County Court cases, compulsory mediation referrals would be made to private mediators, not to the SCMS. However for those cases which are not small claims there are some key questions the paper does not address, such as would the mediation process be limited in any way in terms of time, process (virtual/in person) or cost, and would the mediation be funded solely by the litigants or would there be any contribution from central funds (unlikely).

Equally there is no indication whether the procedural process envisaged for small claims would be extended to other County Court claims, although it is difficult to see why it would not. If the government is serious about compulsory mediation, then why would it not provide for automatic referral as soon as a defence is filed. These and other questions will no doubt be addressed in future consultations. However the broad direction of travel seems to be quite clear.

What are the implications for litigation lawyers?

  • Bolster mediation and negotiation skills and capabilities. Lawyers in the UK are trained to prosecute cases in a system which is adversarial. Succeeding in mediation and negotiation requires different, albeit complementary, skills and capabilities. As more cases will be referred to mediation, firms must ensure that all their litigators are familiar with the particular dynamics of mediation and are trained in the commercial and psychological aspects of negotiation.
  • Be ready for greater scrutiny of your and your client’s conduct. The courts have demonstrated their willingness to impose sanctions upon parties who do not participate in mediation. The introduction of compulsory mediation will be accompanied by rules based sanctions to be imposed upon parties who do not “engage” appropriately with the mediation process. That may include more pointed enquiries as to why a case did not settle and the relative fault of the parties.
  • Build mediation strategy from the outset. Litigators work hard to shape litigation to suit the objectives of their clients. Similar thought should be given to how best to shape a mediation to achieve the optimum commercial outcome. That will include thinking laterally, beyond the evidential and legal issues, and doing so right from the start