High Court orders mediation in a pre-trial review – DKH Retail Ltd and others v City Football Group Ltd [2024] EWHC 3231 (Ch)

This is a case between the owners of the Superdry brand and the company which runs Manchester City Football Club’s commercial operations. The claim arises from a dispute about the branding on the kit of Manchester City players, which uses the words “Super” and “Dry” to promote its sponsor, Asahi Super Dry 0.0% lager.

At the pre-trial review hearing, shortly before trial, the judge considered (amongst other things) an application made by the Claimants for an order that compulsory mediation take place.

In their application, the Claimants made reference to the case of Churchill v Merthyr Tydfil County Borough Council and to the subsequent amendments that have been made to the Civil Procedure Rules, which extend the court’s discretionary case management powers to  order the parties to participate in ADR (alternative dispute resolution).

The Claimants submitted that this was a case where the court should exercise its  discretion to order mediation, their reasoning being:

• The claim is not particularly complicated
• It is capable of resolution
• There were several variables between the parties that might allow for an out-of-court compromise that would not otherwise be available in a court judgment
• Costs that will be incurred by the parties continuing to trial could be saved, which they estimated to be hundreds of thousands of pounds
• It was in compliance with the overriding objective to enable the court to deal with cases justly and at proportionate cost.

Whilst the Defendant agreed that the court had the power to order mediation, it argued that the court should only order mediation in circumstances where there is a realistic prospect of settlement. The Defendant submitted that an order for mediation would not be suitable because:

• There was not a realistic prospect of settlement
• There was a need for judicial determination as to whether the Defendant could place the Asahi branding on its products
• The timing of the order was too close to trial and the parties had already spent a large amount in legal costs to get to this point
• The Defendant had limited availability to attend a mediation before the trial date
• The parties had tried to negotiate before and if there was realistically to be a settlement it would have been reached already.

Mr Justice Miles made an order for the parties to mediate during December 2024. In his reasoning he made the following observations:

• There was some merit in the Defendant’s argument that the order was sought late in the proceedings, but this could be seen as a benefit for the mediation as the parties had crystalised their position through pleadings and the exchange of witness statements, which can sometimes be a barrier to reaching a settlement
• The fact that the parties had been unable to reach a settlement to date did not mean that the matter was incapable of settlement at mediation. Mr Justice Miles noted that experience “shows that bringing parties together through mediation can overcome an entrenched reluctance of parties to negotiate, even where sincere”
• Mediation would offer a range of options for the parties that would not be available to them through the court.

In a postscript to the judgment it was confirmed that, on 13 January 2025, the parties notified the court that they had settled their dispute. In the words of Mr Justice Miles, “mediation is capable of cracking even the hardest nuts”.

This is an interesting development in the court’s attitude towards ADR, and its willingness to flex the judicial discretion to order mediation, in seemingly difficult circumstances. It shows that an application for court ordered mediation can still be justified, and successful, even at an advanced stage in the claims process. If you have any questions about the use of ADR, please get in touch.