Judgments in Arbitration Appeals and Publication of Arbitration Awards

Question 1

1. How to make an arbitration referral

Accepted Answer

The process to follow for making a Pubs Code arbitration referral can be found here

Question 2

2. Arbitration Awards

Accepted Answer

The PCA routinely publishes awards made in Pubs Code arbitration cases, or where appropriate summaries of the findings in awards. This is to create greater transparency in the arbitration process and provide equality of arms between pub companies and tied tenants. These can be accessed here.

Question 3

3. Court Judgments in Appeals of Decisions in Pubs Code Arbitrations

Accepted Answer

Appeals from a decision of an arbitrator in a Pubs Code arbitration are made to the High Court.

The following are judgments made by the Court in appeals brought since the introduction of the Pubs Code.

Judgments in the Courts may create precedent as to how the law should be interpreted and applied in future. This differs from awards made in Pubs Code arbitration referrals which are not binding on future arbitrators or precedent setting (although the PCA does expect Pub Owning Businesses to note arbitration awards and to take any appropriate steps to consider their position and view of the law going forward).

Certain key points and findings from each court judgment are detailed below. These do not form part of the judgment and should not be relied upon as being complete or as forming legal advice about any issue. They are not a substitute for reference to the judgment itself.

The full judgments can be accessed by clicking the links below.

Star Pubs & Bars Ltd & Punch Partnerships v McGrath (PTL) Ltd [2021] EWHC 1640 (Ch)

Key Code areas:

Rent Assessment Proposal
Market Rent Only option

Summary of key points:

In determining this application for permission to appeal that decision, the Judge held that the arbitrator’s award had not been shown to contain serious irregularity, and it had not been shown that the decision of the arbitrator was obviously wrong or that the question of law was of general public importance and the decision was at least open to serious doubt. Therefore, permission to appeal the arbitrator’s decision that the tied tenant was entitled to request a rent assessment proposal was refused.

Ei Group PLC v (1) John Clarke & (2) Lesley Minnett [2020] EWHC 1858 (Ch)

Key Code areas:

Market Rent Only option

Summary of key points:

In determining this application for permission to appeal, the Judge held that the arbitrator should not have regarded the existing tied lease as a “benchmark” when assessing whether the proposed MRO tenancy was reasonable. Section 42(3)(b) of the Small Business, Enterprise and Employment Act 2015 (the “no worse off” principle does not require a comparison between the tied lease and the proposed MRO lease to determine whether a particular term would leave the tenant worse off than under the existing tied lease.

Punch Partnerships (PTL) Ltd & Star Pubs & Bars Ltd v Jonalt Ltd [2020] EWHC 1376 (Ch)

Key Code areas:

Market Rent Only option
Stocking requirement

Summary of key points:

The arbitrator had proceeded on the basis that it was for the POB to prove the reasonableness of a stocking requirement, rather than it being for the tenant to establish the unreasonableness. The Judge considered that the usual approach would be for the party making a claim to have to prove that assertion, and the arbitrator should have invited submissions from the parties on the burden of proof before departing from the usual approach.
The Pubs Code statutory framework does not give an arbitrator who finds a MRO proposal is non-compliant the power to order specific terms to be included by the POB in its MRO revised response. The Judge therefore found that in ordering that the POB should offer a lease with a 20% keg stocking requirement, the arbitrator had exercised a power that they did not have.

Punch Partnerships (PTL) Ltd & Star Pubs & Bars Ltd v The Highwayman Hotel (Kidlington) Ltd [2020] EWHC 714 (Ch)

Key Code areas:

Market Rent Only option

Summary of key points:

The duration of the MRO tenancy that a POB must offer to a TPT must be reasonable in the circumstances and it is not automatically reasonable just because it is the same length as the remaining term of the existing tied tenancy.
It is implicit in the Pubs Code framework that one of the PCA’s powers is the proper resolution of disputes as to MRO compliance through arbitration. There is no absolute separation between the information the PCA knows in the role as regulator and as arbitrator.
The Pubs Code statutory framework does not give an arbitrator who finds a MRO proposal is non-compliant the power to order specific terms to be included by the POB in its MRO revised response. The arbitrator can identify that an offer is unreasonable because it does not contain a particular term (for example as to a specified tenancy length), but cannot order a particular term must be included in a proposed MRO tenancy in the revised response (such as a minimum tenancy length). The Judge therefore found that the arbitrator did not have the power to require the POB to offer a lease period of at least 5 years.

Order dated 19 January 2018 for leave to appeal an arbitration decision – Ei Group PLC

Key Code areas:

Market Rent Only option

Summary of key points:

In determining this application for permission to appeal, the Judge considered the arbitrator’s decision that the Code does not require a MRO-compliant tenancy to be in the form of a new tenancy (as opposed to a deed of variation of the existing tenancy) had been “neither obviously wrong nor seriously open to question”.
The Judge held that in respect of parts of the arbitration award containing the arbitrator’s consideration of allegedly unreasonable terms and conditions of the proposed MRO tenancy, the thresholds for a party to be granted permission to appeal were met.