Court orders mediation in “Super Dry” Manchester City dispute

In a recent blog we discussed how the landscape in relation to alternative dispute resolution (ADR0 had changed over the years and how the case of Churchill v Merthyr Tydfil [2023] EWCA Civ 1416 paved the way for changes to the Civil Procedure Rules (CPR) which now formally recognises that the Court can order parties to engage in ADR.

In what may be one of the first times that the Court has invoked the new CPR provisions, in DKH Retail and others v City Football Group Ltd [2024] EWHC 3231, the Court ordered the parties to mediate despite objection from the Defendant (on the basis that it considered the prospects of mediation being successful were low).

What happened in DKB Retail?

 The Claimant, owner of the Superdry clothing brand, and the Defendant, which is responsible for Manchester City Football Club’s (“Manchester City”) commercial operations, became embroiled in a trademark dispute over wording (Super “Dry” Asahi 0.0%) appearing on players’ kits.  Manchester City had a sponsorship deal with beer manufacturer, Asahi (behind the brand “Super Dry” beer) and, in 2023, agreed a deal with Manchester City that would see Asahi’s new 0% beer feature on players’ kits.

The Claimant argued that the branding was likely to confuse and lead the public to believe that it referred to its Superdry clothing brand and, at the pre-trial review, sought an order that the parties engage in compulsory mediation in accordance with the revised CPR.  The Defendant opposed the order on the basis that (i) there was no real prospect of mediation being successful, (ii) the Claimant’s application had been made too late in the day when parties were near the trial of the claim and (iii) the Defendant was entitled to the Court determining whether the branding could appear on the players’ kits which could not be achieved through mediation.

Mr Justice Miles, whilst noting that the there was “some force” in the Defendant’s arguments relating to the delay in the Claimant making the application, ultimately ordered the parties to mediate and said that “experience shows that mediation is capable of cracking even the hardest nuts” and that “the purpose of mediation is to remove roadblocks to settlement”.  The fact that the parties were substantially ready for trial also meant that mediation was likely to be brief and, considering that parties could, in a mediation, reach settlement in ways that a court would not be able to order (such as placement and size of logos) it was right, in the circumstances, to exercise the court’s new powers under the CPR.

In vindication of the Court’s decision to impose mediation, and despite the Defendant’s arguments that there was no prospect of mediation being successful, the case did in fact settle prior to trial.

 It is clear from the decision in DKH Retail that parties should not underestimate the importance of ADR, which can assist the most stubborn of opponents in reaching a resolution, and that the court will not shy away from exercising its powers under the CPR.