What happened?
The PCA appointed an alternative arbitrator to determine a dispute in relation to a Rent Assessment Proposal in 2023. The arbitrator ordered the tenant to pay 35% of the arbitrator’s costs, despite not finding the referral to be vexatious. The PCA’s view is that the arbitrator did not have the power to make this order.
The PCA’s view is that, in Pubs Code Arbitrations, the pub-owing business must pay the reasonable fees and expenses of an arbitrator (in both MRO and non-MRO disputes), except if the arbitrator decides that the referral was vexatious, in which case they can require the tenant to pay some or all of those costs.
This provision is within s51(6) of the Small Business Enterprise and Employment Act 2015 in relation to costs for non-MRO disputes and for MRO disputes this is provided for in regulation 3 of the Fees Regulations. These provisions are explained in the PCA’s tenant factsheet What Tied Pub Tenants Need to Know about Pubs Code Arbitration Disputes.
The PCA has legal powers to request information or documents from an arbitration for regulatory purposes. The PCA reviewed Marston’s submissions to the arbitrator on costs and found that Marston’s had failed to reference s 51(6) of the Small Business, Enterprise and Employment Act.
What did the PCA do?
The PCA contacted Marston’s to express concern about this failure. The PCA met with Marston’s, who did not provide an adequate explanation for this failure on the part of lawyers instructed to act on their behalf. Following discussions with the PCA, Marston’s agreed to pay 100% of the arbitrator’s costs and not recoup them from the tenant.
In August 2023, Ciarb wrote to all panel arbitrators at the request of the PCA to remind them of the PCA’s position as to the relevant costs provisions which apply to Pubs Code arbitrations.
The PCA’s expectations of pub-owning businesses in Pubs Code Arbitrations
The PCA wishes to promote conduct in arbitrations that supports the process to reach an outcome on the proper application of the regulations in a timely manner and which upholds the core Code principles.
The PCA expects all pub-owning businesses to have a thorough understanding of the Pubs Code legislative framework, as well as information contained in guidance, advice and other material published by the PCA. The PCA further expects pub-owning businesses to be transparent in arbitrations and be clear where they are taking a different view of the law to the PCA, and to inform the PCA in advance if they apply a different view of the application of the Code on which the PCA has published advice or guidance.
The PCA office can be contacted at office@pubscodeadjudicator.gov.uk
