Published on Mar 23, 2026
The landscape of civil dispute resolution in England and Wales is shifting rapidly, driven by an increasingly interventionist approach from the courts and a policy push towards earlier, more cost and time-effective settlements. Mediation in commercial disputes was once viewed largely as a voluntary, tactical option but it’s now moving towards being a default expectation. Businesses involved in commercial or contract disputes must now adapt to this reality, or risk facing adverse cost consequences and judicial criticism. Judges don’t like it when they feel the court’s time is being wasted.
Mediation depends upon all participants in the process being confident that they can at all times in the mediation be open and frank with each other, and the mediator, without worrying that anything they say or any document they produce only for the mediation, or any concession they may make while negotiating a settlement may later be used outside the mediation or admitted in any court proceedings. This privilege/confidentiality is something that new users of mediation might not appreciate. This is covered, together with other important points in a mediation agreement which all participants and advisors sign before the mediation begins. All this is explained before the mediation by the mediator and any lawyers advising the participants.
To appreciate the strength and value of mediation it is essential to understand Mediation privilege/confidentiality. It is also important to appreciate that in all mediations everything that is said in one room is confidential to that room, and cannot be repeated to another room without the express authority of the person making the statement or comment.
Over the past several years, English courts have expanded their willingness to signpost parties toward mediation, particularly where a refusal appears tactical or unjustified. The leading authorities already make clear that an unreasonable refusal to mediate can result in adverse costs orders, even for the party that ultimately wins the case. Recent judicial commentary reinforces this trend of promoting what was formerly called alternative dispute resolution (ADR): but mediation is no longer considered ‘alternative’ or an optional add-on but rather a central component of responsible litigation conduct. Mediation is now integrated in the Civil Procedure Rules. The message from the courts is unmistakable - parties should attempt to resolve disputes consensually wherever possible, and mediation is the tool they expect businesses to use. Furthermore, if the dispute can be resolved before proceedings are issued, so much the better, as litigation should be a last resort.
This judicial encouragement is now being matched by regulatory reform. The Ministry of Justice has introduced what it terms “mandatory mediation” for small claims valued up to £10,000. Under this scheme, parties are required to engage in a free, court-provided, ‘telephone mediation’ service before their case can proceed. (Many would say this is not a real mediation, but it is a modified dispute resolution procedure.) While the current threshold is limited to lower-value claims, policymakers have been clear that this is only a first step. Should the system prove effective in reducing court backlogs and increasing early settlement rates, the threshold is likely to rise - potentially bringing a much larger class of commercial disputes within its scope.
At the same time, changes to the Civil Procedure Rules (CPR) following the Churchill case, have given judges’ powers to order parties to mediate, even where one side objects. These orders reflect a broader recognition that business mediation can deliver faster, more creative and more cost-efficient outcomes than litigation. In practice, this means that businesses may find themselves compelled into a process they once could choose to avoid. For companies accustomed to a more adversarial mindset, this represents a significant cultural and strategic adjustment.
Globally, the trend is similar. Several jurisdictions, including parts of Europe and Asia, have already introduced compulsory mediation for specific categories of disputes. As cross-border litigation and international commercial relationships continue to grow, businesses will increasingly encounter mediation requirements in different courts and arbitral forums. A consistent, informed approach to mediation strategy is therefore becoming a competitive necessity rather than an optional skill.
For corporate legal teams, the implications are substantial. Firstly, businesses must be prepared to engage meaningfully in mediation at an early stage of a dispute. This includes before proceedings are issued. A perfunctory or ill-prepared appearance will offer little benefit and may even undermine credibility with the opposing party. Secondly, business teams need to develop a deeper understanding of mediation dynamics - from identifying settlement leverage to analysing risk, framing proposals and managing the negotiation trajectory. Thirdly, senior management must understand the commercial value of mediation as a strategic tool. When deployed effectively, mediation can protect business relationships, control legal spend and time, and deliver outcomes that litigation simply cannot achieve.
As mediation expands and judicial expectations rise, companies that delay investing in mediation skills risk being disadvantaged. Those that act now - by training their business and legal teams, updating dispute resolution policies and integrating mediation planning into early case assessment - will be better positioned to capitalise on the opportunities that mediation offers while avoiding the cost sanctions and strategic and business setbacks that come with non-compliance.
In a legal environment where mediation is rapidly becoming the norm rather than the exception, understanding how to use it effectively is not just prudent, it’s essential for modern business dispute management.
Join Roger Levitt, Leading Mediator (Legal 500 2026) as he presents Effective Mediation and Dispute Resolution for Lawyers and Business Professionals to understand how mediation works and gain the knowledge and skills to represent your company successfully.
Published on Mar 23, 2026 by Angela Spall