The landscape of dispute resolution in England and Wales is undergoing significant changes, with a growing emphasis on Alternative Dispute Resolution (ADR) methods such as mediation. Recent legal developments have suggested that mediation is becoming a mandatory step in certain litigation proceedings in England and Wales. This article explores the concept of mandatory mediation, its implementation in other countries, and how it is being introduced in England and Wales.
Traditionally, ADR has been viewed as an alternative/addition to court proceedings, providing a less adversarial and more cost-effective means of resolving disputes. One method of ADR is mediation, where the disputing parties agree to appoint an independent mediator for a (usually) one-day mediation in an attempt to facilitate a resolution to the case. Whilst all the parties will be responsible for the mediator’s fees (among others), mediation is generally faster and more cost-effective than going to court. Over 90% of mediations are successful, and even if not the respective claims can still be pursued/defended.
With the courts increasingly burdened by a high volume of cases, there is a growing recognition that ADR should play a more prominent role in the dispute resolution process. The principle of mandatory or compulsory mediation has therefore been developed with the view to expediting dispute resolution, reducing litigation costs, and alleviating the pressure on courts.
Helpfully, the Civil Justice Council’s 2021 report on compulsory ADR concluded that compelling parties to participate in ADR does not necessarily violate Article 6 of the Human Rights Act 1998, which guarantees the right to a fair trial. This has set the stage for a broader acceptance of mandatory mediation within the legal system of England and Wales.
The discussion around mandatory mediation in England and Wales gained momentum following the Court of Appeal's decision in James Churchill v. Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 in November 2023. This landmark case affirmed the courts' power to order mediation or other forms of ADR, moving beyond the previous stance in Halsey v. Milton Keynes NHS Trust (2004) [2004] EWCA Civ 576 which limited judicial encouragement of ADR to costs and sanctions. Section 11 of the Practice Direction on Pre-Action Conduct makes it clear that litigation should be a last resort, and that parties should provide evidence to the court that ADR has been considered. If a party fails to do so or a refusal to participate in ADR is considered unreasonable, the court may impose sanctions and order said party to pay additional/not be permitted to recover some or all of their legal costs. Even if successful at trial, a party may find the amount of costs it can recover is significantly reduced due to a failure to engage in ADR.
In alignment with the Civil Justice Council's findings, the Court of Appeal ruled in the Churchill case that courts could compel parties to engage in ADR if it was proportionate and did not impair the claimant's right to a judicial hearing. Proportionality in this instance requires the judge to consider whether an order to compel the parties to engage in ADR is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
Further consultations arising from the Churchill case have also led to changes in the Civil Procedure Rules for England and Wales which allow the court to order the parties to engage in ADR and/or stay proceedings to enable them to engage in ADR. These changes were implemented on 1 October 2024 and only apply to cases issued on our after this date.
This judicial development has propelled the UK government's plans to introduce compulsory mediation for all small claims in the county courts, covering claims up to £10,000, which is expected to divert approximately 20,000 cases annually from the court system.
As of 22 May 2024, parties to many small claims disputes are now required to attend a mediation through the HMCTS Small Claims Mediation Service (SCMS). Prior to 22 May 2024, the SCMS was only available to parties in disputes for up to £10,000 and was not mandatory anyhow.
This free, one-hour, integrated mediation session is designed to resolve the case efficiently and with little to no cost. The SCMS is currently achieving settlements in around half of all cases. Plans are underway to expand the SCMS with additional mediators and administrative staff and improve its internal appointment booking systems.
On 5 November 2024, this requirement was also extended to claims for money not exceeding £10,000 issued via the Online Civil Money Claims service. This will only apply to claims issued on or after 11:00am on 5 November 2024.
Several jurisdictions have already implemented mandatory mediation measures similar to those recently adopted in England and Wales. For example, Italy mandates mediation for various civil and commercial disputes, including real estate and landlord-tenant conflicts. Failure to comply can result in penalties, such as the termination of judicial proceedings. Similarly, Canada, particularly in Ontario, has embraced compulsory mediation since the late 1990s for certain civil disputes, resulting in quicker resolutions and a higher rates of settlements. In the US, mediation is usually voluntary, but in some states a court can order a case to mediation for divorce, child custody or civil actions.
Meanwhile, India has taken a more cautious approach by making pre-litigation mediation voluntary (and not compulsory) through the Mediation Act 2023, influenced by concerns that mandatory mediation could deny access to justice for those unwilling to partake. Mediation in India was only mandatory in certain circumstances (e.g. in certain commercial claims) and the original 2021 Mediation Bill sought to expand this. However, the Indian Parliamentary Standing Committee recommended making it voluntary. One reason for this was that, in making mediation mandatory for parties, significant delays could be put on those wanting access to justice and provide another instrument in the hands of litigants wishing to prolong litigation.
These developments in England and Wales reflect a broader re-evaluation of the role of ADR in the justice system. The traditional view that access to justice means access to the courts may now appear antiquated, particularly in light of the success of mandatory mediation in other jurisdictions. These changes, coupled with the increasing burden on UK courts, suggests that ADR should no longer be considered merely as an alternative but a fundamental component of the dispute resolution process.
However, the move towards compulsory mediation is not without its critics. The Law Society has raised concerns that making mediation mandatory could create a two-tier justice system where some parties are denied the right to a fair trial. They argue that compulsory mediation should only be implemented if it does not impede access to justice and should be accompanied by a robust infrastructure to support it.
Technology also plays a crucial role in this evolving landscape. Online dispute resolution platforms offer cost-effective and time-efficient alternatives to traditional litigation, enabling parties to make more informed decisions about mediation. As these technologies continue to develop, they are likely to become an integral part of the dispute resolution process, further blurring the lines between ADR and traditional litigation. With the advent of fast developing AI technologies, one would also expect these to be implemented into this process in the future.
This is a welcome approach by the English courts. Generally speaking, iLaw’s dispute resolution team already frequently advises and assists our clients on mediation. In the vast majority of mediations where iLaw has represented its clients, we have achieved a settlement on the day.
Most litigators will agree (and it is also our view) that mediation is a much more efficient and cost-effective way of settling a commercial dispute, far preferable than the uncertainty that comes with proceeding to trial. Additionally, with the increased demand and stretched resources of the English Civil Courts, the diversion of thousands of low value claims into a mandatory mediation regime should help alleviate the pressure.
Those who fear the development of a two-tier justice system and concern themselves with access to justice should also consider whether the courts can truly continue to currently meet their overriding objective of dealing with cases justly and at proportionate cost without these changes.
Furthermore, imposing sanctions on parties who refuse and/or fail to participate in ADR has been a successful method in ensuring the courts meet the overriding objective, and it makes sense to extend these sanctions further.
