A significant step for mediation: DKH Retail and others v City Football Group Ltd

A recent order from the High Court in a trade mark dispute is being widely reported after the court used new powers under the amended Civil Procedure Rules to order the parties to mediate. This was particularly noteworthy because, despite clear opposition from the defendant, the parties did actually manage to reach a settlement.

Background

Following the Court of Appeal’s decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 (itself referring to the report of the Civil Justice Council ADR Working Group in November 2018) the Civil Procedure Rules were amended, with effect from 1 October 2024, to give courts powers to compel even unwilling parties to engage in some form of alternative dispute resolution (“ADR”). As a result, the court relied on three elements of the CPR in its ruling:

CPR 1.4: This sets out the duty of active case management and, under paragraph (e), allows the court to order parties to engage in ADR.

CPR 3.1: This covers the court’s general powers of management and, under paragraph (o) again states that the court can order parties to engage in ADR.

CPR 29.2: This concerns the giving of directions and explains that the court must, under paragraph 1(A), consider whether to encourage parties to engage in ADR.

The dispute

The case, listed under the Shorter Trials Scheme of the Intellectual Property List, concerned a dispute between the owners of Superdry on the one hand and Manchester City Football Club’s commercial operators on the other. Essentially the argument centred around the promotional branding on sports kit.

The claimants suggested to the court that it should exercise its powers under the CPR because the case was ripe for settlement (it being relatively straightforward and open to a commercial resolution which might not be in the powers of the court). The defendant however argued the court should only force parties to mediate if there was a realistic prospect of success, which they suggested wasn’t the case in the present matter. It suggested that essentially it needed a judicial determination on the issues and that it was too close to trial to drop everything and mediate.

The court disagreed with the defendant and made the mediation order at the Pre Trial-Review. Noting that that it was not unusual for parties in litigation to be at loggerheads and “‘experience shows that mediation is capable of cracking even the hardest nuts.”

Key takeaways

As a result of this decision future parties who attempt to resist a mediation order will struggle to have their arguments heard. In particular suggestions such as it’s too late in the day, would take too long or would impact trial preparations, are likely to be given short shrift. This means that litigants should be prepared to entertain mediation, irrespective of their feelings on the subject, and it will perhaps lead to a significant reduction in the number of cases which go all the way to trial.