As of 24 March 2022, the Commercial Rent (Coronavirus) Act 2022 is in place to resolve issues surrounding commercial rent arrears which have accrued over the pandemic.
The Act introduced a legally binding arbitration process to resolve situations where landlords and tenants have been unable to reach an agreement on how to manage accrued rent.
Provided that your case is eligible, the arbitration process can conveniently be described in three stages.
Stage One: Pre-Arbitration Stage
The applicant sends a letter of notification to the other party. This will reflect their intention to refer the case to arbitration and should include an offer to settle.
The respondent has the option to submit a response within 14 days of receiving the letter of notification.
If a response is submitted, the applicant can refer their case to an arbitrator after the 14 days have lapsed. If a response is not received, the applicant can refer their case after 28 days have lapsed, beginning with the day on which the applicant served their letter of notification.
You can make a referral to the following arbitration bodies:
Chartered Institute of Arbitrators (CIArb)
Royal Institute of Chartered Surveyors (RICS)
Consumer Dispute Resolution
Falcon Chambers Arbitration
Dispute Resolution Ombudsman
London Chamber of Arbitration and Mediation (LCAM)
The Consumer Code for Online Dispute Resolution (CCODR)
The applicant can make a referral to arbitration by giving notice in writing to an approved arbitration body. The notice must confirm that you have complied with the pre-arbitration steps and include a formal proposal which resolves the dispute.
You will be required to pay the arbitrator’s fees and expenses in advance of the arbitration. The fee payable will depend on the arbitrator you choose to instruct.
You may also be required to complete an arbitration form which will be specific to the body that you choose to instruct. Forms can be found on their respective websites.
Stage Two: Eligibility
The arbitrator will check whether your case is eligible for arbitration.
Stage Three: Arbitration
Parties can submit one revised formal proposal within 28 days of submitting their original formal proposal.
Either or both parties can request an oral hearing, which will be held within 14 days of the request. The hearing should not last more than one session which is 6 hours long.
The arbitrator will assess the parties’ proposals. The proposals must comply with the principles in Section 15 of the Act. In other words, it must aim to preserve and/or restore the viability of the tenant’s business so far as it is consistent with preserving the landlord’s solvency.
The proposal that complies with these principles will form the basis of the award.
Where there is no oral hearing, the arbitrator will make the award as soon as practicable. Where there is an oral hearing, the award will be made within 14 days of the hearing.
Dhruvi Vyas 27.06.2022