Court orders parties to mediate shortly before trial

Insight

06.02.2025

For the first time, the High Court has compelled litigating parties to mediate, despite the defendant saying that mediation had no realistic prospect of success and that a ruling was needed.

Background

From 2004 [1], the established position had been that the courts would be unlikely to compel parties to participate in alternative dispute resolution (ADR). Mandatory ADR was seen as an unacceptable obstruction to the right of access to the courts.

That view was overturned in 2023 in Churchill [2], when the Court of Appeal held that the courts have the power to order parties to “engage in a non-court-based resolution process” (ie ADR including mediation) and can stay proceedings for that purpose (see our article on that decision here). To reflect that ruling, the Civil Procedure Rules (“CPR”) were amended with effect from 1 October 2024. CPR 1.4 and 3.1 now expressly provide that the court may order the parties to engage in ADR.

The recent decision in DKH Retail Ltd v City Football Group [3] marks the first time that the High Court has exercised its power to compel litigating parties to mediate.

DKH Retail Ltd v City Football Group

This was a trade mark dispute between the owners of the well-known Superdry brand and City Football Group, which runs Manchester City Football Club’s commercial operations. The core issue was whether the words “Super” and “Dry” could be used on the Manchester City kit. The claimants argued that this would likely be seen by the public as denoting the Superdry brand; the defendant contended it would be seen by the public as denoting its sponsor, Asahi Super “Dry” 0.0% lager.

The claimants applied for an order that the parties mediate before the trial. This was considered by the court at the pre-trial review.

The claimants argued that the court should exercise its power to order mediation because the claim was capable of resolution. They submitted that it was not particularly complex and could benefit from out-of-court compromises (such as an agreement about the form and size of any logo) which might not be available in a judgment of the court. Mediation could also save costs.

The defendant, however, submitted that the court should only order mediation where there was a realistic prospect of success. They argued that mediation was not likely to lead to settlement and that it was too late in the proceedings to mediate, given the substantial costs already incurred. A judicial determination at trial was, the defendant said, the only way to resolve the dispute.

The court noted the defendant’s objections, but nevertheless ordered the parties to mediate. Although late in the day, a mediation of this case would be “short and sharp” and would not significantly disrupt the parties’ preparations for trial. The parties also had the advantage of their positions having been crystalised through pleadings and witness statements, which would not be the case in a mediation taking place at the outset of a dispute. In giving the judgment, Mr Justice Miles noted that mediation can sometimes succeed even where the parties appear at first to have intractable differences; bringing parties together through mediation can “overcome an entrenched reluctance of parties to negotiate, even where sincere” and be “capable of cracking even the hardest nuts”. He also noted that mediation provides a range of options to resolve the dispute which go beyond the “binary answer” a court could provide.

In a postscript to the judgment, it was recorded that the parties had subsequently notified the court that they had settled their dispute (though it is not clear whether this was through a mediation).

Commentary

The judgment shows the court’s willingness to deploy its new power to compel mediation, even in circumstances where ADR is arguably unlikely to succeed.

Parties should continue to consider mediation at every stage of a dispute – it can save considerable time and cost, and (as noted in this judgment) it can allow for a more creative solution than a more “binary” court ruling. An application to stay proceedings and engage in ADR can be justified and successful, even at a very late stage in proceedings. Parties who may not want to mediate should think carefully about the risks of resisting such an application; if they do so, and their arguments fail, the court may make a costs order against them.