Compulsory ADR in Construction Litigation: an update
Daniel Shaw examines the High Court’s recently published decision in DKH Retail Ltd v City Football Group Ltd [2024] EWHC 3231 (Ch).
In a previous article, Daniel considered Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, and its potential implications for construction litigation.
In that case, it was held that the court does have the power to compel the parties to participate in ADR, and may stay the litigation in order to allow ADR to take place.
That was an important departure from previous authority, such as the Court of Appeal’s decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 which had held that forcing unwilling parties to refer their dispute to ADR would impose an unacceptable obstruction of their right of access to the courts, and that even if it had jurisdiction to order unwilling parties to refer their disputes to mediation, it was difficult to conceive of circumstances in which it would be appropriate to exercise that jurisdiction.
Now, in DKH Retail, the courts have confirmed for the first time that they will force parties to engage with ADR (in this case, mediation) even where one of them is unwilling.
The owners of the Superdry clothing brand brought a trade mark claim against Manchester City Football Club over promotional branding linked to its sponsor, Asahi Super “Dry” 0.0% lager. The case was being heard under the Shorter Trials Scheme, a streamlined process for cases that can be tried within four days. Pre-trial, the claimants sought an order forcing the parties to mediate. Mr Justice Miles granted that order.
The defendant did not dispute that the court had the power to compel mediation but argued that mediation should only be ordered where there was a realistic prospect of success, which they said was lacking in the circumstances.
The court disagreed and ordered mediation, holding that:
- whilst a trial was imminent, there was in fact value in mediation taking place at that time (i.e. after pleadings and witness evidence had been exchanged);
- whilst the parties were commercially sophisticated and had experienced solicitors, that is not to say that a settlement would have already been reached if one was possible: mediation often breaks entrenched positions even where parties are resistant; and
- a mediation in this particular case could be quick and focused, and would not unduly disrupt trial preparation.
DKH Retail therefore offers one of the first examples of the High Court forcing parties to engage with ADR even when one of them thinks that doing so is pointless. However, it should be noted that the court was careful to consider whether the dispute suited mediation, and whether it could be carried out without undue disruption to trial preparation, and so it is easy to see that the application might be decided differently in a different case.
Interestingly, the final paragraph of the judgment states “Postscript: on 13 January 2025 the parties notified the court that they had settled their dispute.” Assuming that this settlement arose from the ordered mediation (which may not be the case), the view taken in Churchill v Merthyr Tydfil and effected in DKH Retail – that ADR might resolve litigation even when the parties think it will not – is one which the courts might increasingly be encouraged to take.
Daniel Shaw specialises in construction and engineering disputes, including adjudication and litigation.