Small Claim Mediation: new default opt-out position for claims worth up to £500

Low value small claims issued by consumers can often present retailers with a difficult choice about how far they want to go with defending such claims. 

Helpfully, the small claims court has for some time offered the parties a free early mediation service.  However, the take-up of small claims mediation appointments tends to be low. 

A small claims mediation can be a good opportunity to resolve a dispute early on.  It's good news therefore for retailers that changes are being made to the current pilot scheme running in small claims in order to encourage parties to participate in a mediation at an early stage. 

What is Small Claims Mediation?

A small claims mediation is currently offered by the courts for claims with a value of less than £10,000. 

The service is free and usually entails a pre-booked 1 hour telephone mediation session with a mediator from the Small Claims Mediation Service.  A mediation takes place shortly after a claim has been responded to. The mediator starts the mediation by calling each of the parties and then shuttling between them discussing the parties' perspectives and settlement offers in the hope that common ground can be identified and a resolution reached.

It doesn't always end up in a resolution of the small claim but frequently it does.  Or sometimes the parties will walk away having understood each other's position better which can be valuable too.

Why don't parties always mediate small claims?

Under the usual small claims rules, parties have to actively opt-in to a small claims mediation. 

It probably won't be surprising why parties (e.g. consumers) tend not to agree to a mediation.  Feedback has shown that this can be because:

• they might have suspicions about the other party (hence the dispute in the first place!); and/or
• because small claims mediations are scheduled early on in the claims process just after the parties have explained their positions (which is not always conducive to encouraging compromise).   

The fact that a party to a small claim (such as a consumer) has to actively choose to engage in a small claims mediation with their opponent therefore contributes towards the low take-up of the service (they frequently just want to get on and have their day in court).

However, the changes to the current pilot scheme now provide that, for claims of up to £500, parties have to actively opt-out of participating in a small claims mediation.  The up to £500 bracket is likely to be a popular value bracket for many consumer claims against retailers.

For claims worth over £500, the parties will still need opt-in to mediate.

Either way, if the parties agree to mediate, then the claim will be stayed for 28 days to allow for the case to be transferred to the Small Claims Mediation Service.

Is it worth it?

Initial indications show that it is worth participating in a mediation.

Small claims that went to mediation in the pilot scheme settled 67.5% of the time so that's a successful result in over two thirds of cases that tried it. 

We expect that this change could help retailers to settle relatively low value claims which often take up a lot of time.  The court system has also been particularly stretched this year due to the impact of Covid-19 and so further engagement in mediation could help free up valuable court time.

The pilot scheme runs until 30 November 2021. If the pilot is successful, then it is likely the scheme will continue.

For more information please contact Ben Hay or Felicity Danks.