In DKH Retail Ltd v City Football Group Ltd [2024] EWHC 3231, a trademark dispute, the High Court ordered compulsory mediation between the owners before it was due to go to trial. The outcome? Success! In this article, we have outlined the key components of this important case and how it highlights broader trends in dispute resolution. 

Previous landmark case

Prior to DKH Retail Ltd v City Football Group, a landmark case changed the law regarding the role that compulsory mediation could play in resolving disputes.  In this case, Churchill v Methyr Tydfil County Borough Council [2023] EWCA Civ 1416, the Court of Appeal determined that Courts had the power to order unwilling parties to engage in ADR, which includes mediation.  

Following the decision in Churchillthe Court’s general powers of management under the Civil Procedure Rules (“CPR”) were amended. Under CPR 3.1(o), the Courts now have the power to order parties to participate in alternative dispute resolution.   

Background to Superdry v Manchester City FC

DKH Retail Ltd (“DKH”) owns the brand which we have most likely all heard of, Superdry. DKH brought a claim against City Football Group Ltd (“CFG”), who own and run Manchester City Football Club (“MCFC”). The claim alleged that CFG was infringing DKH’s Superdry trademark.

MCFC was sponsored by the Japanese beer brand, Asahi, and was promoting its 0.0% alcohol Super “Dry” Beer. CFG attempted to register and use the name Super Dry on the MCFC merchandise, which included apparel and training kits. 

Superdry has a well-established presence in the apparel industry. DKH’s argument was that the use of the name by CFG would confuse consumers and undermine the Superdry brand. In a witness statement from DKH, it stated that football supporters are notoriously tribal and the claimants have already received abuse by reason of the association of the words “Super “and “Dry” with Manchester City”. DKH brought the infringement proceedings and passing off claims based on its rights in Superdry.

Pre-trial review – Mediation

The parties had settlement discussions which did not amount to anything. DKH applied for an order for the Court for compulsory mediation.  DKH relied on the decision made in Churchill. DKH argued that even though they had settlement discussions, there had not been any mediation prior to the pre-trial. DKH also submitted that the costs for both parties for a full trial would be high, and by ordering a one-day mediation, the parties could significantly reduce costs and also save the Court’s time and resources. 

CFG rejected the mediation request and argued that there was no realistic prospect of success and that the timings were too close to the trial date. CFG argued that due to both parties being commercial and having experienced solicitors, they would have settled already if there was one that was to be reached. CFG also made a comment that judicial determination was necessary and they wanted to know “once and for all” whether they could place the wording Super Dry on their apparel in support of the Asahi branding.

The decision

Mr Justice Miles, the Judge, disagreed and ordered that the parties attend compulsory mediation to attempt to resolve the issues before the trial. He made reference to the changes in the CPR and the ruling in Churchill. 

Following the one-day mediation, the parties notified the Court that a settlement had been reached.

Comment

It would appear from this decision that the Courts are using their power under CPR 3.1(o) and the decision in Churchill to push parties to mediate to resolve issues before reaching trial. This was the first reported instance of the High Court using its new powers, but this move is expected to become more common in future proceedings. 

This case shows that under the correct circumstances, settlements can be reached even when mediation is forced on the parties, and there are clear differences between the parties. This case is likely to encourage other judges to order alternative dispute resolution between parties. This will not only save the parties time and money, but it will also assist in the workflow of the courts, allowing for cases that truly cannot settle to be seen, and those with a slight chance of reaching a settlement, to be done out of the way of a full trial.  

On the other hand, compulsory mediation ordered between parties could prevent the precedent decisions from being made by the courts after hearing cases go to full trial. Judges will need to weigh up the legal issues being argued and use their knowledgeable experience to determine whether forcing mediation on the parties is in line with the best interest of the parties, but also in the interest of the justice system, the rule of law and, of course, the ‘cityzens’.

It’s likely there will always be tension with those considerations, but to end with the words of Mr Justice Miles…

“Experience shows that mediation is capable of cracking even the hardest nuts”.

If you have any questions about compulsory mediation or are currently engaged in a dispute and require expert legal advice, the dispute resolution solicitors at Kitson Boyce are on hand to help. Our solicitors in Torquay, Plymouth and Exeter are experienced in providing trusted advice in disputes of all kinds and can advise you on the appropriate next steps in your situation. To discuss your circumstances, simply get in touch via the form below or email [email protected].