High Court orders parties to mediate dispute shortly before trial

In DKH Retail Ltd & Ors v City Football Group Ltd [2024] EWHC 3231 (Ch) the High Court exercised its power to compel the parties to the claim to undertake mediation shortly before the trial of the matter, despite the defendant’s objections. This follows the Court of Appeal’s decision in Churchill v Merthyr Tydfil Council [2023] EWCA Civ 1416 which recognised the power of the courts to compel parties to participate in alternative dispute resolution (ADR) (see our previous post here) and the changes to the Civil Procedure Rules (CPR) introduced in October 2024 to reflect this power (see here).

The decision illustrates some of the factors a court may consider when deciding whether to exercise its discretion to order ADR. We can expect to see an increased use of this power in appropriate cases in the future.

Background

The dispute was between the owners of a well-known clothing brand and the defendant operator of Manchester City Football Club’s commercial operations. The claim related to an alleged trade-mark infringement. At a pre-trial review hearing, the claimants made an application for an order for compulsory mediation before the trial. The claimants argued that the dispute was capable of resolution as it was not overly complicated, there were several variables which could provide scope for a commercial compromise to be reached and although there had been unsuccessful settlement negotiations, the parties had not attempted a mediation.

The defendant opposed the application for several reasons including that the application was made very late in the day in the litigation (prior to a trial under the Shorter Trials Scheme), they were commercial parties with experienced solicitors and if there was a realistic prospect of settlement it would already have been reached, and the defendant required a judicial determination of the issue in dispute.

Court’s decision

The High Court was satisfied that it was an appropriate case to order the parties to mediate their dispute and a ‘short, sharp’ mediation of one day before trial could enable the parties to avoid incurring further significant legal costs.

The Judge commented that in many cases the parties’ positions in the litigation are diametrically opposed and it may easily be said that a party requires a judicial determination. However, “experience shows that mediation is capable of cracking even the hardest nuts.” The Judge did not accept the defendant’s submission that a mediation would have low prospects of success, noting the range of commercial options available to the parties to resolve the dispute which went beyond what a court could order. The Judge acknowledged the defendant’s concern that it was late in the day to seek such an order but noted that the timing could be an advantage in that the parties’ positions had been crystallised in their statements of case and witness statements.

A postscript to the judgment records that the Judge’s decision was vindicated: in January 2025 the parties notified the Court that they had settled their dispute.

Key takeaways

This appears to be the first reported decision where the High Court has exercised its power to compel parties to undertake ADR to resolve the substantive dispute; in a decision last year, the High Court ordered mediation prior to proceedings for the detailed assessment of costs (see our article on the Elphicke case here). The decision illustrates how the court will not always accept the parties’ views on the likelihood of settlement and that a court could order ADR even if the parties had undertaken earlier unsuccessful settlement negotiations.

Will we see more such orders?

• Yes, in short we can expect to see more use of this power by the courts, at all stages of litigation.
• Notwithstanding that much of the preparation for trial had been completed, and it was a case on the Shorter Trials Scheme, the Court was prepared to order mediation. The Judge noted that there can be benefits to mediating at a later stage when the issues in dispute have been crystallised, and a successful mediation would mean the parties avoiding the further significant costs of the trial. The Judge also noted that the dispute was “self-contained’ involving commercial points that could lend themselves to a flexible out-of-court compromise beyond the scope of a court judgment. Such an order may not be appropriate in all cases.
• Where the parties have already attempted mediation or can demonstrate that a mediation would disrupt the parties’ preparation for trial, especially in larger and more complex commercial disputes, then a court may be more reluctant to exercise its discretion to order ADR at such a late stage.
• ADR as a proxy for mediation? As we have previously noted, the amendments to the CPR empower the courts to “order the parties to engage in alternative dispute resolution” (CPR 3.1(o)). Here, as in Elphicke, the Court ordered mediation. We are yet to see an order for a different form of ADR following the updating of the CPR, although the courts have the discretion to order other forms.