A guide to mediation in the UK
Compulsory mediation
The Ministry of Justice (MoJ) has confirmed that mediation will become compulsory for civil claims of up to £10,000.
The requirement will be rolled out over time, beginning with specified money claims (currently 80% of small claims). So, to start with, only claims of up to £10,000 will be affected. Subsequently, personal injury and unspecified money claims will be added to the scheme.
The procedure is expected to be as follows:
- County Court proceedings will commence in the usual way.
- If a defence is filed and the case is allocated to the small claims track, the court will inform the parties that the next step is mediation.
- The case will progress to the Small Claims Mediation Service (SCMS). Mediation appointments will be offered within 28 days of the SCMS receiving the case.
- Mediation will be free of charge and carried out remotely. The parties will speak to the mediator only – not each other.
- If a settlement is reached, a legally binding formal agreement will be registered with the court. If not, the case will go on to be heard by a judge in the normal way. The MoJ has emphasised that settlement will be voluntary – all parties who need a judge hearing to resolve their dispute will be able to have one.
Parties which fail to take part in the mediation process (e.g by not attending their scheduled appointment) may face sanctions. The judge might:
- automatically rule in the other party’s favour (called strike-out); or
- order the non-compliant party to pay for all or part of the other party’s costs (even if the judgment is in the non-compliant party’s favour overall).
These sanctions will be discretionary. In some situations, the judge will be able to take mitigating circumstances into account. The government hasn’t yet stated when the changes will be introduced. Further details and timings will be announced over the coming months.
We’ll be watching developments closely, so check your account for the latest updates.
Compared to more drastic forms of dispute resolution (such as going to court), it's usually easier, cheaper and quicker to resolve a disagreement by simply talking through the problem.
On too many occasions, however, people struggle to have difficult discussions before disputes spin out of control.
But that's where mediation comes in.
Mediation allows a way of encouraging discussion and resolution between the disputing parties.
The mediation process
Mediation is a process where a neutral, experienced person helps those involved in the dispute resolve it through discussion and negotiation.
The disputing parties participate voluntarily and actively in the mediation.
The process is iterative and continues until ideally, an agreement to resolve the dispute is in place. Those involved commit to this agreement and they are responsible for any subsequent actions required under its terms.
While mediation is often used to prevent the need for court action (litigation), it can be used effectively even after litigation has started. In these situations, when mediation is started, any litigation is halted to give the parties a chance to reach a resolution. If there is no resolution, the litigation continues.
If the outcome of the mediation is that the disputing parties agree a legally binding settlement that is subsequently not fulfilled, the litigation can start at the point where it was paused.
Example scenarios that may call for mediation
1. Commercial disputes
Where a disagreement between a client and a supplier is already the subject of litigation.
2. Company founder disputes
Where founders discover, some time into the startup journey, that their commercial and/or personal objectives are markedly different, or where their relationship has simply broken down .
3. Partnership disputes
Where relationships have become strained due to, for example, an imbalance or shortfall in income or other expected contributions, disagreement over the ‘ownership’ of a particular customer relationship, customer complaints, etc.
4. Workplace disputes
Where working relationships break down because, for example, a colleague is denied promotion and blames this on their manager, or because very different working styles and expectations conflict.
5. Employment disputes
These cross a range of topics including long-term sickness and return to work, sexual assault, performance management and pending or failed grievances.
6. Shareholder disputes
With management, or between each other, including where concerns arise about business performance and strategy, business governance matters, proposals around share issues and shareholder rights or voting powers.
7. Boardroom disputes
Where the normal (challenging but fruitful) discussions about significant issues relating to performance, structure and strategy have taken an aggressive and/or resented course and directors can no longer reach agreement unassisted.
The role of the mediator
The mediator helps those in a dispute resolve their differences by:
- facilitating all discussions, whether separate or joint
- creating a clear understanding of the issues involved
- keeping up a sense of momentum, even when it feels as though there is none
- exploring assumptions and asking awkward questions, where appropriate
- coaching negotiations
- managing and concluding the process
- ensuring all documentation is in place
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