Overview
As part of its commitment to strengthening an effective justice system, the United Kingdom government is encouraging people to resolve disputes consensually wherever possible.
Compulsory mediation will apply to claims under £10,000, including disputes involving goods and services. These cases will be automatically redirected to mediation before they can proceed to a hearing.
Parties will be offered a free, one-hour telephone session with a professional mediator provided by HM Courts and Tribunals Service. This aims to reduce the time, cost and stress associated with court proceedings.
Background
In the previous year, the Ministry of Justice sought evidence on dispute resolution in England and Wales. Responses highlighted the benefits of mediation but also revealed limited public awareness and barriers to accessing dispute resolution procedures.
The Civil Justice System in England and Wales
The civil justice system deals with non‑criminal matters that are not family disputes or tribunal issues. Civil cases arise when an individual or business believes their rights have been breached. Examples include businesses attempting to recover money owed, individuals seeking compensation for injuries or parties disputing poorly provided goods or services.
Mediation Within the Current System
Before filing a claim, parties must follow the Practice Direction on Pre‑Action Conduct and Protocols under the Civil Procedure Rules. Courts may require evidence that parties have considered dispute resolution. In consumer disputes, this may involve using an Alternative Dispute Resolution scheme.
If a party unreasonably refuses to engage in dispute resolution, the court may pause the case or order adverse costs. Despite these measures, mediation uptake remains low, particularly for small claims under £10,000. These claims represent approximately 61% of County Court cases, yet only 21% of parties agree to mediation through the Small Claims Mediation Service.
This low participation rate means many parties miss out on a free service that could resolve disputes quickly and with less stress. It also results in unnecessary use of judicial time and delays for more complex cases.
Current Mediation Approach for Small Claims
The small claims track generally covers claims up to £10,000. It operates under Part 27 of the Civil Procedure Rules, which provides a streamlined process for low‑value disputes.
HM Courts and Tribunals Service operates the Small Claims Mediation Service, offering parties a free one-hour telephone mediation session. Access points include Online Civil Money Claims, Money Claims Online, the County Court Money Claims Centre and judicial referral. Mediation is voluntary and only proceeds if both parties agree.
Alternative Dispute Resolution
ADR encourages parties to view litigation as a last resort. Mediation is the most common ADR method in civil cases. It is a private and flexible process involving a neutral mediator who helps parties negotiate and reach a mutually acceptable resolution.
Justice Minister Lord Bellamy QC stated that many individuals and businesses use the civil courts unnecessarily. He emphasised that mediation is often quicker and cheaper and will be free for claims up to £10,000.
Martin McTague, National Chair of the Federation of Small Businesses, supported the proposals, noting that they improve accessibility and affordability while reducing the need for expensive litigation.
Over 2.5 million disputes were resolved through ADR in the previous 6 years, and 80% of consumers believed their issues would not have been resolved without ADR.
Mediation Reform Outcome
The government is seeking views from court users, mediators, legal professionals, the judiciary and the advice sector. The consultation launched on 26 July and will run for 10 weeks. The £10,000 threshold will not apply to personal injury or housing disrepair claims, which have lower limits.
It is estimated that up to 20,000 additional cases could be resolved outside court each year. This would save parties time and money and free up approximately 7,000 judicial sitting days. Overall, more than 272,000 people could gain access to free mediation.
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