Dowie was quickly sacked by the Addicks, who went on to be relegated from the Premiership, and later took over at the Ricoh Arena.
"During his four months at the club everyone has found Iain to be a hard-working, knowledgeable and conscientious manager and Coventry City believes unreservedly that he is the man to take the club forward and into the Premiership," read a club statement.
"The outcome of the court case is obviously a personal disappointment for Iain and the club will give him full support through this difficult time."