We reported in 2023 on the Court of Appeal decision in Churchill -v- Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 when the Court of Appeal ruled that the courts have power to order parties to engage in a non-court based dispute resolution process e.g. mediation, provided that the order made does not impair the very essence of the party’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
Following on from this decision, the Civil Procedure Rules (CPR) were amended with effect from 1 October 2024 to expressly permit the courts to order unwilling parties to engage in mediation.
The overriding objective as stated in CPR 1.1 (1) now states that cases must be dealt with justly and at proportionate cost. CPR 1.1(2) provides that:
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- Dealing with a case justly and at proportionate cost includes, so far as is practicable:(f) promoting or using alternative dispute resolution;….”
CPR 1.4 provides that the Court must further the overriding objective by actively managing cases and that this includes “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution.” And CPR 3.1(2)(o) now provides that the courts have power to “order the parties to engage in alternative dispute resolution;”
In the first reported decision on the application of these new powers, the High Court ordered unwilling parties to engage in mediation – DKH Retail Ltd and others -v- City Football Group Ltd [2024] EWHC 3231 (Ch).
Background
The High Court was dealing with a pre-trial review in a claim proceeding in the shorter trials scheme case concerning a trade mark dispute between the claimant, a clothing brand, and the defendant, a company which runs Manchester City Football Club’s commercial operations. The core issue in the case 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 the defendant’s sponsor, Asahi Super “Dry” 0.0% lager, with words appearing on the relevant kit including ‘Super’ and ‘Dry’.
The Claimants made an application for compulsory mediation against an unwilling Defendant. The Claimants argued that the CPR changes (referred to above) marked a sea-change in the approach of the courts to ADR. There had been no voluntary agreement to mediate between the parties, despite the Claimant stating that the dispute was capable of resolution, that it was not a particularly complicated dispute, and that 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) – a big advantage of mediation over court proceedings. Most importantly, it was noted that the parties were about to incur hundreds of thousands of pounds of further costs embarking on the trial.
The Defendant argued that, whilst there was no dispute about the power of the court to order mediation, it should only do so where there was a realistic prospect of success. It was submitted that this was not such a case and that mediation in this case would not realistically likely to lead to settlement as a judicial determination was necessary.
High Court Judgment
Whilst the Judge (Mr Justice Miles) observed that it was very late in the day to mediate (pre-trial review stage) and the parties had limited availability to attend a mediation, he still required the parties to participate in mediation with a view to seeking, if possible, to resolve the dispute in advance of the trial.
The Judge said:
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- …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 was right. A few weeks later and before the trial was due to start, the parties notified the court that they had settled their dispute. Even seemingly intractable disputes can be resolved at mediation.
For further information, please contact:
Moya Clifford, Hill Dickinson
moya.clifford@hilldickinson.com
