The High Court has exercised its newly conferred powers to compel mediation in the case of DKH Retail Ltd & others v City Football Group Ltd.  This ruling evidences the significant shift in attitude towards alternative dispute resolution (ADR) in commercial disputes. 

Background

The dispute between the owners of a prominent clothing brand, Superdry, and City Football Group Ltd, the commercial entity behind Manchester City Football Club, centred around alleged trademark infringement. 

The core issue was the use of the words "Super" and "Dry" on Manchester City football kits, which the claimants argued could cause confusion with their "Superdry" brand.  The Defendant, City Football Group Ltd, contended that the branding was associated with their sponsor, Asahi Super Dry 0.0% lager, and not with the claimants' products. 

The case had progressed significantly and was listed for a pre-trial review. One of the issues for the court to consider at this hearing was the claimants' application for a compulsory mediation order, which the court has the power to make following recent changes to the Civil Procedure Rules (CPR) (detailed below). 

The claimants argued that such an order was appropriate as the dispute was capable of resolution and there were several variables (such as reaching agreement about the form and sizing of the lettering on the relevant football kit) that might lend themselves to the kind of commercial compromise that would not be available through a court judgment. There had been unsuccessful settlement negotiations but no mediation had taken place. 

The defendant argued that it was "too late in the day" for a mediation given the proximity to trial, the defendant had limited availability for a mediation and this was a case where a ruling was needed.  

The court's decision

The High Court granted the application for compulsory mediation. 

This follows the Court of Appeal's 2023 ruling in Churchill v Merthyr Tydfil County Borough Council, which affirmed that the court could mandate ADR. Relevant amendments to the CPR followed with effect from October 2024. Both CPR 1.4 (the court's duty to actively manage cases) and CPR 3.1 (the court's general case management powers) now include express powers of the court to order parties to participate in ADR. (Read more about this and the Civil Justice Council's future recommendations on page 4-5 of our Litigation Radar 2025.)

The court acknowledged the defendant's objections, including the potential irreconcilability of the parties' positions.  However, the judge emphasised that experience has shown that mediation can be effective even in seemingly intractable disputes, stating that it is "capable of cracking even the hardest nuts". 

The court was also influenced by the principle that mediation offers a flexible and creative approach to dispute resolution, allowing for commercial outcomes that might not be achievable through a judicial determination. In addition, the parties had set out their positions in full through their pleadings and evidence – therefore mediation could not be said to be premature, which can be an objection to engaging in the process.   

In this particular case, the judge was of the view that the parties were well-prepared, having already engaged extensively in the litigation process, and that a "short, sharp" mediation could potentially resolve the dispute without further escalating costs. 

It is interesting to note that, according to a postscript to the judgment: "on 13 January 2025 the parties notified the court that they had settled their dispute."

Commentary

This case highlights the court's willingness to compel mediation, even when one party is resistant, and demonstrates the importance of parties considering ADR as a viable option throughout the dispute resolution process, given that it may well be mandated further down the line and even very close to trial.  We have recent experience of a case which reached a settlement at a mediation ordered by the court following the decision in Churchill (but before the recent change to the CPR).

The decision also showcases the increasingly wide-ranging nature of the court's case and costs management powers under the CPR. In exercising its powers to mandate mediation, the court's aim includes avoiding unnecessary costs and litigation, and managing the court's resources. Parties to litigation should be aware that engaging in mediation can potentially save significant costs compared to undergoing a full trial.

The court recognised the ability, through mediation, to achieve outcomes that might not be possible through litigation. Parties should remain open to the creative solutions that mediation can offer, which can preserve commercial relationships and provide mutually beneficial resolutions.

The decision in this case is a clear example of the court's evolving approach to ADR. Businesses and legal practitioners must adapt to this changing landscape and recognise the strategic advantages of mediation in resolving complex disputes efficiently and cost-effectively.