UK government proposes mandatory mediation in small claims and consults on increased regulation of the mediation industry

The Ministry of Justice (MoJ) has launched a public consultation on Increasing the use of mediation in the civil justice system.

It has also given an indication that the government intends for the UK to sign and ratify the Singapore Convention on Mediated Settlements.

The consultation issues

The consultation document seeks views on two distinct issues:

  1. A government proposal to introduce mandatory mediation for all defended Small Claims in the County Court (ie most claims valued below £10,000). Under the proposal, all parties in such actions will be required to participate in a free one hour telephone mediation (not just an information session about mediation) conducted by mediators within HMCTS –  under expansion of the Small Claims Mediation Service (which is currently voluntary).
    It appears to assume that the proposal will proceed, with the consultation focusing on possible exemptions (by case category and/or on a case-by-case basis), sanctions for non-compliance, and how the court should assess whether a party has engaged adequately with the mediation process.
  2. In anticipation of extending mandatory mediation to other County Court claims and beyond, involving use of the private mediation sector, views are sought on whether there is a need for increased regulation and oversight of the mediation industry, such as through accreditation of mediators, formalising standards of conduct and/or establishment of an industry regulator.

The proposal for mandatory mediation of Small Claims, although modest in terms of what it demands of parties, is significant as the first instance of compulsory mediation being made a permanent feature of an entire area of the English courts. Of course, such reform has been clearly foreshadowed over the past year, since the Civil Justice Council’s groundbreaking July 2021 report endorsing compulsory ADR in principle, which has been fully embraced by both the MoJ and the senior judiciary (as noted here).

The current consultation also sits alongside a parallel workstream being pursued by the Department of Business, Energy and Industrial Strategy (BEIS) regarding ADR of consumer disputes outside the court system (such as through Ombudsmen and other ADR schemes). As we recently reported, it is examining the role of compulsion in such schemes as well as introducing measures to strengthen the accreditation framework for consumer ADR providers.

The current MoJ consultation closes on 4 October 2022.

Singapore Convention

Although not the subject of the consultation, the Singapore Convention is mentioned briefly in a section referring to other government initiatives to promote mediation. It notes that these include

“.. proposing to support UK’s intention to ratify the UN Convention on International Settlement Agreements (the “Singapore Convention on Mediation”)“.

It is not clear whether this should be read as confirmation that the government has made its decision on whether to sign the Convention, and we still expect a more formal announcement in that regard following its consultation on that specific question earlier this year. However, the above reference supports the current widespread expectation that it will do so.

For a discussion of the practical impacts of the Singapore Convention for mediating parties, see our earlier posts collected here.

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

UK government announces reforms to consumer ADR services

The UK government recently published a report announcing a wide range of far-reaching changes to the UK competition and consumer protection regulatory regimes, following a consultation last year.

The key reforms are examined on our Competition Notes blog, here.  Below, we highlight a less prominent aspect of the report, regarding the role of ADR services in consumer markets.

Under the banner of “supporting consumers to enforce their rights independently”, the report addresses the following  issues.

  • Consumer awareness:  The report recognises that the landscape of consumer ADR services is decentralised, complex and difficult to understand, with multiple schemes in some sectors and none in others.  Although noting that consultation responses advocated the creation of a single entry and signposting point, the report does not announce any specific proposals in this regard. Rather, it will continue to work with relevant stakeholders “to help promote ADR and ensure ease of access”.
  • Business response times:  The report notes that in regulated markets, most regulators have typically set an informal upper limit of eight weeks for businesses to resolve complaints before consumers are entitled to take a dispute to ADR.  The consultation process indicated support for reducing the standard response time to four weeks, although some concerns were expressed that in some sectors this could prevent traders from properly investigating claims and place additional burdens on business.  The government has decided against imposing a standardised four week response time but will continue to to explore the case for reducing the current informal upper limit while ensuring appropriate safeguards for complex cases.
  • Quality and oversight of ADR services:   In the consultation, the  government  signalled its intention to improve the quality and consistency of consumer ADR services, to increase business and consumer confidence in ADR.  In a significant announcement, the report confirms that it intends to:
    • require “all businesses that offer dispute resolution services in consumer markets” to be approved under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015; and
    • strengthen the existing accreditation framework to ensure a common set of standards are applied and that providers can be held accountable.

‘Consumer ADR’ is usually understood as referring to the services provided by dispute resolution bodies set up specifically to deal with consumer/trader disputes, such as Ombudsmen and  trade association schemes.  It is currently not clear to what extent the new approval requirement could extend to individual mediators/neutrals or small independent ADR bodies which do not operate within any particular consumer sector but are available to deal with disputes that could be categorised as consumer disputes.

  • Improving business take-up of ADR in non-regulated markets:   The consultation recognised that, while in the regulated consumer sectors it is generally mandatory for traders to participate in ADR schemes, in sectors where participation is voluntary there is little engagement by business particularly amongst SMEs.  Although the report notes strong support for it in the consultation responses, the government appears to be not proceeding with a proposal that business participation in ADR should be made mandatory in the motor vehicles and home improvements sectors.  The report’s conclusion with respect to improving business take-up is limited to supporting the Ministry of Justice’s ongoing wider policy review of the role of ADR in civil disputes generally.

 

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

 

 

Brexit: UK unwinds implementation of EU ADR laws

Jan O’Neill
Professional Support Lawyer, London

 

The UK Government has published legislation to effectively revoke the implementation of the EU Mediation Directive (2008/52/EC) after Brexit.

The Cross-Border Mediation (EU Directive) (EU Exit) Regulations 2019 (the Regulations) were made on 1 March 2019 and will come into effect on exit day, whenever that occurs.

Why?

The development is part of a wider policy decision by the Government to revoke/repeal UK domestic legislation that implemented EU law in instances where that law is based on reciprocity between EU Member States. Continue reading

The EU Online Dispute Resolution (ODR) Platform – an update on timing

It has been confirmed that online businesses will have an extended timeframe in which to comply with new obligations to signpost customers to the Online Dispute Resolution (ODR) Platform being set up by the EU Commission.

As we have previously reported, the EU ODR Regulation which came into force last year (and was implemented in the UK as part of new ADR Regulations) includes a requirement that, from 9 January 2016, all businesses selling goods or services online within the EU carry a link on their website (and in some cases in their contractual terms) to the ODR Platform. While businesses have been preparing to comply with the obligation by 9 January, the missing piece of information to enable them to do so has been the ODR Platform website address, which has not yet been released by the EU Commission.

The UK Department for Business, Innovation & Skills (BIS) has now confirmed that it has been advised by the EU Commission that the 'go live' date for the ODR Platform has been delayed to 15 February 2016.  Businesses will therefore now not be required to carry a link to the ODR Platform until it is launched on this new date.  BIS has confirmed:

'We can reassure you that although the date of 9 January remains in our Regulations, we fully understand that it will not be possible for businesses to meet this date as the ODR platform will not yet be launched. There will of course be no question of enforcement action before 15 February".

We will continue to monitor and report when the link to the ODR Platform becomes available. The EU Commission's most recent factsheet can be accessed here.

UPDATE 1.2.16:  The EU Commission has now announced the website address for the ODR Platform, which will be operational from 15 February:  http://ec.europa.eu/consumers/odr/

 

New ADR consumer information obligations apply from today

From today, almost all UK businesses selling goods or services to consumers in the EU need to comply with new requirements to provide consumers with information about ADR options, under legislation implementing the new EU ADR Directive.

The new rules include obligations (in respect of complaints handling procedures) that apply to all traders regardless of whether they are committed to using ADR or intend to use it.

Click here for details on what businesses need to do to comply with the new obligations.

 

ADR for consumer disputes: New obligations on UK traders from 1 October 2015

The UK government has now published the principal legislation that will implement the European ADR Directive and the European Online Dispute Resolution (ODR) Regulation, both of which seek to encourage the use of ADR to resolve consumer disputes across the EU.  (See our previous posts for details of the EU legislation and the UK’s implementation plans).

Alongside provisions aimed at improving the UK infrastructure for ADR in consumer disputes, the legislative package also extends the obligations on businesses to provide consumers with information about ADR options.

Almost all UK businesses selling goods, services or digital content to consumers in the EU will need to ensure that they comply with the new requirements, which may involve reviewing websites, contractual terms and complaints handling procedures before the first operative date, 1 October 2015. Continue reading

UK Government announces plans for implementation of the EU ADR Directive and ODR Regulation

The UK Government has announced its plans for implementing the ADR Directive and the ODR Regulation, both of which are aimed at promoting the use of ADR schemes in disputes involving consumer complaints throughout the EU.

While the Government is not at this stage pressing forward with a suggested proposal to restructure the entire UK landscape for consumer ADR, the plans include:

  • the creation of a new ‘residual’ ADR scheme to fill the current gaps in the existing consumer ADR landscape;
  • the appointment of the Trading Standards Institute (TSI) as the UK’s competent authority to monitor ADR providers in the non-regulated sectors;
  • an 8 week extension to the standard 6 year limitation period for bringing court proceedings (in disputes covered by the Directive) in cases where ADR is ongoing at the expiry of the 6 year period; and
  • new statutory obligations on businesses to provide information to consumers regarding the availability of ADR schemes.

Businesses engaged in selling to consumers in the EU will need to familiarise themselves with the new consumer information obligations and ensure that they take steps to comply, including by amending contractual terms and website information where necessary. Continue reading

EU: ADR Directive and ODR Regulation to enter into force

We have previously reported on EU legislative proposals for a directive on ADR in consumer disputes and a supporting regulation on online dispute resolution (ODR).

On 18 June 2013, the  ADR Directive  (Directive 2013/11/EU) and the ODR Regulation (Regulation (EU) 524/2013) were published in the Official Journal of the European Union.  Both will enter into force on 8 July 2013.

The key features of the legislation are outlined  in our earlier post, here.   In summary:

  • The ADR Directive seeks to promote ADR in the consumer sphere in the EU by encouraging the use of approved ADR entities that ensure minimum quality standards.  In particular, it requires Member States to ensure that their approved ADR entities are impartial and provide transparent information about their services, offer their services at no or nominal cost to the consumer, and hear and determine complaints within 90 days of referral.  The Directive applies to domestic and cross-border disputes concerning complaints by a consumer resident in the EU against a trader established in the EU.  Notably, it does not apply to traders’ complaints against consumers (such as claims for payment) or to trader-to-trader grievances.
  • The ODR Regulation provides for the EU Commission to establish a free, interactive website through which parties can inititate ADR in relation to disputes concerning online transactions (offline transactions are excluded).  National ADR entities will receive the complaint electronically and seek to resolve the dispute through ADR, using the ODR platform exclusively if they wish.

Nothing in the legislative package imposes any form of mandatory ADR on any party.    The use of ADR entities or the ODR platform will require the agreement of both the consumer and the trader.

EU Member States are required to bring into force the legislation and administrative provisions necessary to comply with the ADR Directive by 9 July 2015 at the latest.   The ODR Regulation, which is binding on Member States directly,  will take effect from 9 January 2016 in respect of the bulk of the provisions.

We will continue to report on developments with respect to the national implementation of the legislation, both in the UK and across Europe.

 

Improving consumer protection on a European level

Consumer rights have received further support with the announcement that the UK will adopt the proposed Directive on Alternative Dispute Resolution (ADR Directive) and a Regulation on Online Dispute Resolution (ODR Regulation). Anita Phillips, a professional support lawyer in our London office,  looks at the role the legal profession will have to play in ensuring its success. This article was first published on Lexis Library/Lexis PSL on 10 May 2013. Continue reading

European Parliament adopts legislative Resolutions on ADR proposals

On 12 March 2013, the European Parliament adopted two key legislative measures regarding ADR in respect of consumer disputes. The first Resolution deals with the proposed Directive on alternative dispute resolution (ADR) and the second Resolution deals with the proposed Regulation on online dispute resolution (ODR). The EU Parliament adopted the amendments proposed in 2012 by the EU council (see our previous post on these proposals).

Both of these aim to increase the use of ADR schemes in the EU by giving consumers a quicker, cheaper and more informal way to settle disputes with traders. It applies to any purchase made domestically or across EU borders. The consumer ADR Directive will be supported by an ODR mechanism through the setting up of a free, interactive website accessible electronically in all languages of the EU.

The ADR Directive and ODR Regulation still need to be formally adopted by the Council. They will enter into force on the 20th day after they have been published in the Official Journal. The ADR Directive requires domestic implementation and should apply in all Member States within 24 months of its entry into force. The ODR platform will be available shortly thereafter.