Marston’s agrees to pay costs in arbitration

In a significant development relating to Pubs Code arbitrations, Marston’s has agreed to cover 100% of an arbitrator’s fees and costs after failing to properly detail relevant cost provisions in their submissions. The Pubs Code Adjudicator (PCA) had appointed an alternative arbitrator to resolve a dispute around a Rent Assessment Proposal in 2023. Initially, this arbitrator ordered the tenant to bear 35% of the costs, yet did not classify the referral as vexatious, leading the PCA to argue that the arbitrator lacked authority to impose such an order.

According to the PCA, the pub-owning entity is responsible for the reasonable fees and expenses associated with an arbitrator in non-MRO and MRO disputes unless the referral is labelled as vexatious. This requirement is anchored in s51(6) of the Small Business, Enterprise and Employment Act 2015 and is further outlined in regulation 3 of the Fees Regulations pertaining to MRO disputes. The PCA has made these provisions clear in their tenant factsheet regarding arbitration disputes.

On discovering Marston’s failure to reference the pertinent legislation in their submissions, the PCA reached out to express their concerns. Following a meeting where Marston’s could not satisfactorily explain the oversight, they ultimately agreed to bear all costs associated with the arbitration and will not seek reimbursement from the tenant involved.

In August 2023, the Chartered Institute of Arbitrators (Ciarb) communicated with all panel arbitrators at the PCA's request to reiterate the proper costs provisions applicable in Pubs Code arbitrations. The PCA aims to foster a collaborative environment in arbitrations that promotes timely resolutions and respects the core principles of the Code.

In this context, the PCA expects all pub-owning businesses to possess a comprehensive understanding of the Pubs Code legislative framework and the guidance provided by the PCA. The PCA also stresses the importance of transparency during arbitrations, urging businesses to inform the PCA in advance should they adopt a differing interpretation of the Code that contradicts published advice or guidance.