This is the first case of its kind and the Pubs Code
Adjudicator (PCA) welcomes the opportunity for clarity as
to the operation of aspects of the Pubs Code.
The tenant in this case served a request for a MRO tenancy
in November 2016 – shortly after the Pubs Code came into
force. The pub-owning business (POB) served a proposed MRO
tenancy in response, which was subsequently referred for
statutory arbitration and found by the Deputy PCA to be
non-compliant with the requirements of the Pubs Code in a
number of respects. She ordered the POB to provide a
compliant MRO tenancy to the tenant.
The tenant considered that the POB’s revised MRO tenancy
then served was still non-compliant and made a second
referral for arbitration. The Deputy PCA issued a further
award in May 2019, finding that the revised MRO tenancy was
non-compliant because the duration of the term offered by
the POB, which was not in line with its policy on MRO lease
length, was unreasonable. She ordered the POB to provide
the tenant with a MRO tenancy of at least five years in
duration. This award was challenged by the POB by way of an
appeal to the High Court. Judgement in the appeal was
handed down by the Court in March 2020. The full text of
the judgement can be found here
The judgement makes three key decisions:
- 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 (such as a
minimum tenancy length) must be included in a proposed MRO
tenancy in the revised response.
The PCA is committed to ensuring that tenants are able to
access MRO on reasonable terms and will continue to
arbitrate disputes as to the reasonableness of those terms,
or appoint alternative arbitrators to do so, as provided
for in the statutory framework. This tenant brought two
consecutive Pubs Code arbitrations in respect of MRO
proposals made by the POB, and the judgement of the High
Court means that arbitration proceedings may not bring
finality to the tenant in respect of MRO compliant terms.
The PCA is determined to do more to reduce the need to rely
on extended and/or repeated adversarial arbitration
proceedings at all which, as demonstrated by this case, can
contribute to delays for TPTs in seeking MRO compliant
terms. This includes engaging with the Secretary of State
in respect of the ongoing review of the Pubs Code.
