Arbitrator’s powers
Both landlords and tenants might want to dig out the agreements for lease they have signed and have a close look at any arbitration clauses, following a recent case. You would expect an arbitrator to be able to fix the sum that one party should pay another, or to decide a question of fact such as whether a major item of plant can be repaired or needs replacing. But you probably wouldn’t expect him to act like a High Court judge and order one party to perform an obligation set out in the agreement. In fact, under section 48(5)(b) of the Arbitration Act 1996, an arbitrator can order specific performance just like a High Court judge, but with one important exception: he cannot do so as regards “a contract relating to land”. However, Tilia Sonera AB v Hilcourt Docklands Ltd (4 July 2003, unreported) establishes that while this exception would prevent an arbitrator from ordering specific performance of the obligations to grant or take a lease, it does not prevent him from ordering the tenant to carry out works to the property in accordance with the agreement.
Odd though it might sound, an agreement to improve or alter (or perhaps even construct) a property is apparently not “a contract relating to land” for that purpose. It is possible to exclude by agreement the arbitrator’s power to order specific performance, so that may be something worth bearing in mind for future agreements.
Mark Shelton, professional support lawyer at DLA
Arbitrator’s powers
Both landlords and tenants might want to dig out the agreements for lease they have signed and have a close look at any arbitration clauses, following a recent case. You would expect an arbitrator to be able to fix the sum that one party should pay another, or to decide a question of fact such as whether a major item of plant can be repaired or needs replacing. But you probably wouldn’t expect him to act like a High Court judge and order one party to perform an obligation set out in the agreement. In fact, under section 48(5)(b) of the Arbitration Act 1996, an arbitrator can order specific performance just like a High Court judge, but with one important exception: he cannot do so as regards “a contract relating to land”. However, Tilia Sonera AB v Hilcourt Docklands Ltd (4 July 2003, unreported) establishes that while this exception would prevent an arbitrator from ordering specific performance of the obligations to grant or take a lease, it does not prevent him from ordering the tenant to carry out works to the property in accordance with the agreement.
Odd though it might sound, an agreement to improve or alter (or perhaps even construct) a property is apparently not “a contract relating to land” for that purpose. It is possible to exclude by agreement the arbitrator’s power to order specific performance, so that may be something worth bearing in mind for future agreements.
Mark Shelton, professional support lawyer at DLA
