Arbitration in action again

Welcome to the first of our RED Alerts of 2023.

Featured in this month's update:

• Arbitration in action again
  
• Time to watch your purse strings! Costs of waking watch recoverable from leaseholders
  
• Tenant breathes sigh of relief: Court grants relief from forfeiture of option agreement
  
• Keep the noise down! When does noise amount to nuisance?
  
• Rent cuts for telecoms landlords?

Further to our previous analysis of arbitration awards,  there are now (at the time of writing) 10 published awards made by Falcon Chambers Arbitration since the arbitration scheme created by the Commercial Rent (Coronavirus) Act 2022 (the Act) came into effect.  We have examined the 4 latest awards and set out the takeaway points.

Awards

TPIF (Portfolio No.1 GP) LLP TPIF (Portfolio No.1) Nominee Limited and Nuffield Health

• A landlord's proposal for the tenant to pay the entirety of its arrears without deferment constitutes a valid proposal for the purposes of the Act.

• The tenant did not engage in the arbitration process and the arbitrator determined that the tenant should pay the debt in its entirety, further interest that had accrued and reimburse the landlord for the arbitrator's costs.

• Settlement proposals made in a letter of notification prior to a referral to arbitration cannot be relied upon as a formal proposal pursuant to section 11 of the Act Consequently, it was determined that no formal proposal had been made.
• As no formal proposal had been made, it was further held that a referral had not been properly made in accordance with the Act.
• As a result, the tenant's reference to arbitration was dismissed and the relevant arrears became unprotected.

The Entertainer (Amersham) Limited and British Overseas Bank Nominees Limited and WGTC Nominees Limited

• The tenant had already paid 50% of rent payable during the protected period and requested further relief (the extent of which is unclear from the award).
• The arbitrator concluded that the tenant's financial information evidenced that it could meet its contractual liabilities and pay the arrears in full.
• An arbitrator is required to have regard to the tenant's business as a whole and not just a specific store.

Our comment

There have been fewer arbitration awards than initially envisaged and the deadline to refer a dispute for arbitration under the Act elapsed on 23 September 2022.

These latest awards demonstrate that parties should engage in the process and comply with the procedural requirements in order to maximise their chance of obtaining a favourable outcome.  It is also useful to note that it is undisputable that it is the tenant's business in its entirety which is relevant and not just a specific store.