The Court deploys new powers to order a party to mediate

The High Court has recently deployed powers that it acquired in the Autumn of 2024 to force a party to mediate.

These powers were incorporated into the Civil procedure Rules following on from the decision in Churchill v Merthyr Tydfill (and others) [2023] EWCA Civ 1416. In that case, the Master of the Rolls held that the court had the power both to stay proceedings and to order non court-based dispute resolution to take place. This overturned 20 years of orthodox thinking, as established in Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576, which stated that whilst the court could encourage a party to mediate,  it had no power to force them to do so.

DKH Retail & others v City Football Group Limited [2024] EWHC 3231 (Ch) concerned the deployment of the words “Super” and “Dry” on players football shirts; it was argued that it would create confusion as to the Claimants brand (“Superdry”) and the Defendants principal sponsor (Ashai Super Dry 0% lager).

The case had progressed substantially and was listed for a pre-trial review. This is the final procedural hearing before the trial.

At the hearing, the Claimant applied for the case to be stayed and for an order compelling the parties to mediate. The Claimant cited Churchill and the new rules stating that these represented a shift in the courts position, and that mediation might work in this case.

The Defendant actively resisted the application. It said that it would be wrong to order parties to mediate that close to  trial, bearing in mind the substantial costs that had been incurred up to that stage. It also stated that the parties’ positions were irreconcilable and therefore a judicial determination at trial was the only realistic way of resolving the dispute. Finally, it cited a lack of its key stakeholder availability in the run up to a trial.

The Court noted the Defendants objections but granted the application. In doing so, the judge said that:

• Mediation can be effective even in a case where, on the face of it, the parties’ positions are irreconcilable;
• Now was as a good time as any to mediate, given the substantial work that had been done in the litigation. This meant that the parties and their advisers were well aware of the issues, the arguments they faced and their own risk – all factors that need to be addressed at a mediation.
• Mediation is a highly flexible process, meaning that commercial outcomes were possible that would not be in the gift of the Court. The court felt that a “short, sharpe” mediation would be useful in this case;
• The Court noted the Defendants concerns about availability but indicated that it was sure that a workable date could be found.

Interestingly, it is reported that the case did settle prior to trial, but it is not recorded whether that resulted from a mediation or some other process.

What this case shows is that the courts are very keen to get parties talking to each other, and that even reasonably good arguments to resist an application to stay proceedings may fail. It means that parties will have to think hard about resisting such an application (therefore risking a costs order being made against them if the arguments fail) as against investing the time and money in a mediation to see whether that works.

It also shows the continued judicial enthusiasm around mediation as a process, and so it makes sense to engage in mediation at the earliest practical stage.

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