Summary
In a recent decision in DKH Retail Ltd & Ors v City Football Group Ltd1 (DKH Retail), the English court has demonstrated its increased willingness to compel parties to engage in mediation aimed at settling their commercial disputes. We have seen the groundwork for this in amendments to the Civil Procedure Rules (CPR), and in an earlier appellate decision in litigation involving an individual's dispute with his local authority regarding Japanese knotweed2. DKH Retail signals that it applies just as much in commercial disputes.
The English court's support for alternative dispute resolution (ADR) is becoming ever clearer, as is international support in the form of the Singapore Convention on Mediation (the Convention). There are now significant risks to a party to any dispute – even the most complex, acrimonious, and high value disputes – in refusing to engage in mediation or other forms of negotiated dispute resolution (NDR), as a refusal may lead to being compelled to do so, and adverse costs orders.
This support is warranted: it is a rare dispute that will not benefit from genuine attempts to settle, not least on the basis that there is almost always a better outcome for each party than the costs and risks of a trial. DKH Retail proved no different: the order to mediate led to a successful settlement.
Mediation affords parties a significant degree of autonomy over the process (as they can choose the mediator and set the agenda and scheduling), and can facilitate tailored, creative solutions that litigation cannot. Mediation can also help parties save time and avoid the uncertainty and expense of trial and can bypass the potentially negative consequences of a public judgment. It may also foster a more amicable resolution between the parties than the handing down of judgment following an adversarial trial.
This article provides an overview of recent changes to the CPR, the decision in DKH Retail, and an examination of a recent speech by Lady Carr exploring how mediation might evolve in light of the Convention.
Recent amendments to the CPR
In 2024, the CPR was amended in three ways following the Court of Appeal's 2023 decision in Churchill v Merthyr Tydfil County Borough Council,3 in which the Court of Appeal determined that the Court had the power to stay proceedings for, and order, parties to engage in ADR, provided that (a) the order did not impair the claimant's rights to proceed to a judicial hearing, and (b) was proportionate to achieving the legitimate aim of setting the dispute fairly, quickly, and at reasonable cost.
The Overriding Objective: The most wide-ranging amendment to the CPR was to the scope of CPR 1.1, which sets out the overriding objective of "enabling the court to deal with cases justly and at proportionate cost". CPR 1.1(2) has been broadened to incorporate "(f) promoting or using alternative dispute resolution". Additionally, CPR 1.4(2), which addresses the court's duty of active case management, now includes "(e) ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution".
Court's Management Powers: The second set of amendments concerns the court's authority in relation to the ordering of ADR:
CPR 3.1(2): This rule, which is part of the Court's case management powers, now permits the court to "(o) order the parties to engage in alternative dispute resolution".
CPR 28.14: This rule, which contains general provisions governing the management of cases allocated to the fast and intermediate tracks, now includes in matters to be dealt with by directions to include "(f) whether to order or encourage the parties to engage in alternative dispute resolution".
CPR 29.2(1A): This rule, which governs case management in cases of greater value and complexity, now specifically requires the court when giving directions to consider "whether to order or encourage the parties to engage in alternative dispute resolution".
Costs Provisions: The third amendment was to CPR 44.2(5), which regulates the court's discretion to award costs, specifically regarding the conduct of litigation by the parties. This now includes "(e): Whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution."
DKH Retail
Background
DKH Retail concerned an alleged trademark infringement by the Defendant arising from the use of the words "Super" and "Dry" on Manchester City football kits (which referred to the club's sponsor, Asahi Super Dry). The Claimant, the owners of the well-known brand Superdry, alleged that this caused confusion with its brand.
Relatively late in the proceedings, at the pre-trial review, the Claimants applied for an order for compulsory mediation. The Claimants referred to the recent amendments to the CPR, and argued such an order was appropriate because (i) the dispute was not particularly complicated and was capable of resolution by mediation; (ii) some issues in dispute could be more readily resolved by solutions reached by compromise rather than by court order (for example, in relation to the form and size of the logo and lettering on the sports kit and the timing of certain changes); and (iii) the parties were about to incur hundreds of thousands of pounds of further costs in the leadup to and during trial.
The Defendant argued that (i) mediation was only likely to succeed in the context of a claim which had a realistic prospect of success which, according to the Defendant, this did not, and (ii) mediation would not be appropriate because both parties wanted a judicial determination of their rights. According to the Defendants, the fact that the Claimant had previously stated that they would not allow the Superdry brand to be associated with any football club's kit indicated that mediation would not lead to a compromise. The Defendant also raised concerns about the timing of the mediation request, given the imminent trial and the significant costs which had already been incurred.
Decision
The Court ordered the parties to mediate, recognising the potential for mediation to crack "even the hardest nuts" and emphasising the potential for mediation to facilitate creative resolution of disputes in a manner that "goes beyond the binary answer a court could provide". the fact that the order for mediation had been sought close to trial was not a bar to such order being granted, and the fact that the parties' positions had been crystallised through pleadings and the service of witness statements was likely to assist. The Court also did not consider that mediation would significantly disrupt the parties' preparations for trial.
The order clearly worked: somewhat pointedly, the reported judgment now finishes with the postscript "on 13 January 2025 the parties notified the court that they had settled their Dispute".
The effect of the Singapore Convention
It is not just the English court that is adept at resolving international disputes. The Convention is a multi-lateral treaty establishing "a uniform and efficient framework for international settlement agreements resulting from mediation" aimed at supporting the direct cross-border enforceability of such agreements without the need to bring proceedings for breach of contract. This should afford contracting parties further assurance that their counterparties will comply with mediated settlement obligations. Its creation involved the participation of 85 Member States and 35 non-governmental organisations. As at the date of this article, it has 58 signatories (including the UK, the US, and China), of which 15 have ratified it (albeit not yet the UK), most recently Israel.
Perhaps more importantly, the Convention has seen significant judicial support, most recently from Lady Carr – the Lady Chief Justice and a member of the Court of Appeal that decided Churchill – in the Presidents Circle Lecture 2025 that she delivered to the British Institute of International and Comparative Law in January 2025.
In the lecture, Lady Carr noted the "shift in mindset" in recent years from the view that litigation and ADR were in tension, and towards the view that ADR is "an essential element in a range of tools […] available to resolve disputes". She considered that the Convention specifically, and the promotion of international mediation more generally, would enhance the rule of law, and signal the commitment of participating states to that principle. She identified that this might include the development of international commercial mediation centres, the growing role of trained and skilled mediators, and the support of courts to assist international mediation just as they do for international arbitration.
In particular in relation to the UK, Lady Carr speculated on the establishment of a London Dispute Resolution Committee to make recommendations as to how London could develop a "a more fully holistic approach to the three forms of international dispute resolution" (litigation, arbitration, and mediation), on further amendments to the CPR, and on how the Commercial Court might provide effective support for international mediation.
These developments are ongoing, but the direction of travel is now visible and distinct. Businesses engaged in disputes, and those who see the advantages of preparing for them, can reasonably expect the English courts to support increasing efforts to encourage, and where appropriate compel, parties to resolve their disputes through negotiated dispute resolution in parallel to pursuing litigation.
Practical takeaways
Amendments to the CPR, the decision in DKH Retail, and recent commentary from senior members of the judiciary emphasises the growing role of ADR in the English judicial process.
Parties to litigation should consider proposing mediation at the appropriate time in a dispute. This might be not only at the outset of a dispute, when costs have yet to mount up and parties' positions might not have become entrenched, but also at later stages of proceedings, when pleadings have been exchanged and the parties' positions have crystallised, and the merits might more readily be assessed.
Parties should also recognise, and consider utilising (i) the court's increased willingness to order mediation or another form of ADR, and; (ii) the threat of an adverse costs order for non-compliance, or even a failure to participate in voluntary ADR. Even before disputes arise, contracting parties should also consider how best to incorporate provisions for mediation and/or other forms of ADR into contractual dispute resolution clauses.
