A blueprint for major reforms to the civil justice system which seeks to save people from lengthy courtroom battles will see individuals and businesses helped to resolve legal disputes through free mediation.

Anyone involved in a dispute worth less than £10,000 will have to take part in compulsory free mediation. The £10,000 limit would not include personal injury or housing disrepair claims which have a lower threshold.

People would be referred automatically to a free hour-long telephone session with a professional mediator provided by HM Courts and Tribunals Service (HMCTS) before their case can be progressed to a hearing.

During the session, the parties involved will speak separately to the mediator to see if there is a common ground between them. If a solution is brokered, both parties will agree over the phone for it to be made legally binding through a settlement agreement.

Judges could delay cases until people go to mediation and could order them to pay the action’s legal costs if they continue to decline.

The Ministry of Justice (MOJ) said the move is designed to ease the backlog of civil and criminal cases that built up during the pandemic and could divert up to 20,000 cases a year from the courts.

The MOJ said it anticipated about 272,000 people a year will go through arbitration where they will be referred automatically to a free hourlong telephone session with a professional mediator provided by HM Courts and Tribunals Service.

Each party will speak separately to the mediator. If a solution is brokered, both sides will agree by phone to a legally binding settlement.

Justice minister Lord Bellamy QC said: “Millions of businesses and individuals go through the civil courts every year and many of them simply do not need to.

“Mediation is often a quicker and cheaper way of resolving disputes and under our proposals this will be free of charge for claims up to £10,000.

“This could also help free up vital capacity in the civil courts to deal with more complex cases quicker.”

Views on the proposals are welcome from court users, mediators, the legal profession, the judiciary, the advice sector, and anyone with an interest in the resolution of civil disputes.

The consultation will last 10 weeks.