A benefit of Mediation, is that it offers litigants an opportunity to reach an early resolution and avoid getting drawn into protracted litigation.
A key aim of the Ministry of Justice (MoJ) and the civil courts is to encourage parties to resolve disputes as early as possible and without resorting to Court proceedings. To further this cause, the MoJ has recently completed a consultation on a proposal by the Government that all cases in the small claims track of the County Court (those valued under £10,000) to be automatically referred to a free mediation service. Mediation is one of the most popular methods of Alternative Dispute Resolution, where an independent third party will meet with the parties and attempt to broker a settlement between them.
One of the greatest benefits of mediation is that it offers litigants an opportunity to reach an early resolution and avoid getting drawn into protracted litigation, where legal costs can quickly escalate. Mediation can make an earlier settlement easier to achieve because it enables parties to reach agreements which can be as flexible or creative as they wish. A settlement doesn't just have to be about money changing hands but could, for example, include the exchange of property and assets, potentially working around cashflow issues caused by litigation or other external factors.
It is likely that the ability to reach early, flexible compromises to disputes will only become more attractive if fears of an impending recession are realised, and as other external factors such as rising energy prices give businesses increasing overheads to consider.
HM Courts and Tribunals service already offers a free voluntary mediation service to parties involved in disputes on the small claims track, although according to the MoJ's consultation document uptake of the service has been limited, it being used in only 21% of cases. As a result, the Government proposes to introduce automatic referral to mediation for all small claims and the MoJ anticipates that this will give 272,000 more parties each year the opportunity to resolve their dispute consensually, diverting an anticipated 20,000 cases each year from the courts and freeing up around 7,000 judicial sitting days.
The MoJ also states in its consultation document that a future ambition is to extend the requirement to mediate to all County Court users. This will cast the net much wider and mean that even more parties may become involved in mediation, in cases far more complex and of higher value than those on the small claims track. It remains to be seen how this would work in practice, but the benefits of mediation are clear and those parties involved in more complex and valuable disputes are just as likely to be facing the same cash flow and macro-economic challenges which make an opportunity to settle early attractive.
As mentioned above, the MoJ ran a consultation between 26 July 2022 and 4 October 2022 seeking court users' views on the Government's proposal, the results will be published soon. It will also be interesting to see how any future proposal to expand mandatory mediation to all County Court cases will be structured.
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