Fun Ahead:This Week’s Tenancy Conundrum

Exciting times in the world of agricultural tenancies.  The Agriculture Bill now being considered by the House of Commons introduces a new idea on arbitration.

Arbitration has always been one of the main remedies available when a landlord and tenant can’t settle their own differences.  If they can’t even agree the name of a suitable arbitrator they have been able to resort to the President of the Royal Institution of Chartered Surveyors to appoint one for them.  Very few appointments have to be made every year, and only a small number of these end up going ‘all the way’ to a full arbitration award.  In practice the arbitrator often takes up the appointment, the parties carry on negotiating and reach an agreement before the arbitrator actually has to do anything of substance beyond confirming the appointment.

The new idea on arbitration is that the RICS monopoly on the appointment of arbitrators will be broken by adding two new organisations to the list of who can make these statutory appointments.  The two organisations are the Central Association of Agricultural Valuers and the Agricultural Law Association.  This, we are told, will widen the choice of arbitrators.  These two will join the RICS as ‘professional authorities’ empowered to appoint arbitrators.  There are powers to add other professional authorities in future.

The Agriculture Bill contains an interesting clause which is a consequence of this extension.  It says:

“A party may not make an application to a professional authority under subsection (2) in any case if the other party has already made an application to a professional authority under that subsection in that case.”

Simple enough, or so it seems.  A and B are deadlocked.  A applies to the RICS for an arbitrator; B cannot then apply to the CAAV or ALA.

But what if, unknown to each other, A and B make separate applications on the same day?  A applies to the CAAV; B applies to the ALA.  This is plausible.  After another meeting which has ended in deadlock A and B sleep on the matter and rise in the morning to conclude that there is only one way forward: arbitration.  They both send off their applications.

The question therefore arises of which of A and B under the clause above made their application first?  Which of the two ‘professional authorities’ is debarred from making an appointment? The Arbitration Act 1986, and the practice of the courts more generally, is that an application is ‘made’ when it is received by the court; not when it is sent by the applicant.  See for example the company law case of Kaneria -v- Kaneria [2014] EWHC 1165 (Ch) So does this come down to who gets their post earlier?  The CAAV or the ALA?

An argument in favour of adding new ‘professional authorities’ is that it will extend the choice available to landlords and tenants.  But choice of what precisely?  We don’t yet know what this choice will amount to.  Will the three organisations all charge the same for example?  Will they all supervise the activities of their appointments with equal rigour?  In practice will the lists from which they draw their arbitrators actually be that different?  There is a considerable overlap of membership between the three professional authorities.  The most obvious scope for extending the current group of statutory arbitrators lies with the legal membership of the ALA, allowing solicitors etc to preside as well as valuers.  There could also be a real opportunity for one of the professional authorities to grab a first-mover advantage in offering a much wider service than just agricultural tenancy arbitrations – supply trade disputes, partnership problems, neighbour arguments and so on.

Meanwhile the shrewd operator will realise that if they wish to exercise the newly-given ‘choice’ they will have to make sure their application is the first to be ‘made’.

An interesting diversion from the tidal wave about to swamp the agricultural industry ….

2 thoughts on “Fun Ahead:This Week’s Tenancy Conundrum

  1. Dear Charles

    Hope you are well and thriving.

    All this arbitrator tweaking is the real stuff of dinosaurs. The number of actual hearings is miniscule……..

    There ought to be a mandatory reference to mediation before entering the full blown litigation of arbitration.

    Best wishes

    Hugh

    1. Thanks Hugh, yes serious attempts at resolution through mediation or other ADR should all be an absolute pre-requisite for what in many cases should be seen as an ultimate symptom of professional failure to agree a sensible outcome.

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