DKH Retail Ltd & Ors v City Football Group Ltd
[2024] EWHC 3231 (Ch)
In Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, the CA determined that the court had power to order unwilling parties to engage in alternative dispute resolution. In line with that case, the CPR were amended with effect from 1 October 2024. The overriding objective now includes promoting or using alternative dispute resolution and, under R 3.1, the court’s case management powers include the express power to order the parties to use and facilitate the use of ADR.
In light of these changes, the claimants here sought an order for mediation, noting that there had been a “sea-change” in the approach of the courts to ADR. The case was a trade mark dispute and the core issue was whether promotional branding appearing on professional sports players’ kit was likely to be seen by the public as branding denoting the Superdry brand or as branding denoting Manchester City’s sponsor, Asahi Super “Dry” 0.0% lager.
The claimants said that their case was one where the court should exercise its power to order a mediation. The dispute was capable of resolution; it was not “a particularly complicated one” and there were “several variables in the dispute between the parties which might allow an out-of-court compromise (and which might not be available in a judgment of the court)”.
There had not been any mediation to date, although there had been unsuccessful settlement negotiations:
“A short, sharp mediation of one day before the end of December may well allow the parties to avoid at least some of those costs. This would also potentially save court time and resources.”
The defendant agreed that there was no dispute about the power of the court to order mediation, but said it should only do so where there was a realistic prospect of success. This was not the position here. Both parties wanted their position to be judicially determined. Even if the claimants said they were prepared to compromise, the defendant wished to know “once and for all” whether it could place particular branding on football kit and other clothing. Mediation was not realistically likely to lead to settlement.
The defendant also noted that in a witness statement, the claimants had said that they would not be prepared to allow the Superdry brand to be shown as the sponsor on any particular club’s kit. It was noted that: “football supporters are notoriously tribal, and that the claimants have already received abuse by reason of the association of the words ‘Super’ and ‘Dry’ with Manchester”. It was very late in the day to seek the order; the parties had already spent significant sums and the trial was imminent. This was not a case where the defendant was being obstructive. Mediation would fail. This was a case where a ruling was needed.
Miles J noted that:
“in many cases, the parties’ positions in the litigation are diametrically opposed and it may easily be said that each party requires a judicial determination. But nonetheless the parties come through ADR to recognise the desirability of settling for less than their strict legal rights and compromising their positions. Experience shows that mediation is capable of cracking even the hardest nuts. The process sometimes succeeds in cases where the parties appear at first to have intractable differences.”
The judge further noted that the dispute was self-contained. Any “mediation would be able to focus on possible solutions rather than raking over historical grievances”.
Whilst it was late in the day to be seeking an order, there may be some advantage as the parties’ positions would have been crystallised. It is sometimes said that the proposed mediation is premature. That could not be said here.
Miles J also saw some force in the suggestion that these were commercial parties with experienced solicitors and that, if there was realistically to be a settlement, one would have expected it already to have been reached.
The judge continued that experience shows that bringing the parties together through mediation can overcome an entrenched reluctance of parties to negotiate, even where sincere:
“The purpose of mediation is to remove roadblocks to settlement. I am unable to accept the submissions of the defendant that a mediation here has low prospects of success and that adjudication by a court is necessarily required. The range of options available to the parties to resolve the dispute through mediation goes beyond the binary answer a court could provide. There may be solutions other than yes or no.”
Any mediation here would be “short and sharp”. The documents would be brief and the defendant had not suggested that mediation would significantly disrupt the parties’ preparations for trial.
Accordingly, the judge was satisfied that this was a case where the parties should be ordered to mediate with a view to seeking, if possible, to resolve the dispute between them. The parties were further asked to report the outcome to the court as soon as possible after the mediation was complete.
And there was a postscript to the judgment. On 13 January 2025, the parties notified the court that they had settled their dispute.
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