The Property Litigation Association and the Property Bar Association have jointly submitted evidence to the House of Commons, highlighting numerous areas of concern about the current drafting of the Commercial Rent (Coronavirus) Bill, which is set to introduce a binding arbitration process for resolving outstanding disputes over lockdown rent arrears.
The two leading membership organisations for legal professionals specialising in property litigation, whose members represent both property owners and occupiers, have highlighted what they describe as “serious defects” in the planned arbitration process:
- Danger of inconsistency of approach between arbitrations – resulting from the significant latitude given to arbitrators to determine viability of a tenant’s business and what it can afford to pay, and the lack of specific guidance as to how viability and affordability are to be assessed.
- Risk of procedural unfairness – arising from the lack of flexibility that arbitrators have to consider anything other than the “final proposals” referred to in clause 11 of the current draft Bill.
- Creating a robust and fully operational arbitral framework in the limited time available – uncertainty over the feasibility of delivering a system equipped to handle the thousands of referrals that may be made following the legislation and to make awards within the tight timeframe prescribed by the Bill.
Mathew Ditchburn, chair of the PLA, said: “It’s clear that the Bill is problematic in its current form and a redrafting of key provisions is needed before it’s made into law. This well-meaning legislation has the potential to destabilise fragile negotiations between property owners and occupiers, the opposite of what is intended, and we have some serious misgivings about the Bill as presently drafted.”
Tiffany Scott QC, vice-chair of the PBA, added: “We have highlighted technical aspects of the drafting of the Bill that are cause for concern, and in general terms the Bill needs to grapple with various wider issues that relate to how the scheme is intended to operate in practice. These include how to ensure consistency of approach and how an award will apply to and affect the position of third parties, especially management companies and those such as guarantors. We look forward to assisting the government with the resolution of these issues.”
In submitting written evidence, the PLA and PBA have offered to serve as impartial experts as the Bill progresses through parliament.
The PLA, which represents professionals specialising in property litigation, has around 1,400 members. The PBA comprises over 450 members and is the professional body for barristers who practise in the field of property law. Each association is a powerful voice on law reform proposals.
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