non-rent review property arbitrations graham chase, katie bradford and david holland qc thursday 5...
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Non-Rent Review Property Arbitrations
Graham Chase, Katie Bradford and David Holland QC
Thursday 5th March 2015
Chartered Institute of ArbitratorsLondon Branch
PROPERTY ARBITRATION
5th March 2015 - 6 pm for 6.30 pmHosted by Linklaters
One Silk Street, London EC2Y 8HQ
THE OPTIONS AND THEIR EFFICIENCIES IN THIRD PARTY/PRIVATE
DISPUTE RESOLUTION OR
ARBITRATION V INDEPENDENT EXPERTBy
Graham F Chase FRICS C.Arb FRSA FInstCPD
1. COMMON OBJECTIVES
• Provide Alternative Dispute resolution• A decision or series of decisions to determine a
dispute• Fairness• Market friendly, relevant and proportionate• Recognised process• Speed of process• Cost effectiveness
• Independent Expert: Dispute resolution through the personal expertise and judgement of the dispute resolver in the subject matter decision.
• Arbitration: Dispute resolution through a judicial process based on the case stated by the parties and only relying on the dispute resolver’s application of expertise to the decision from the evidence as submitted.
2. SHORT FORM DEFINITIONS
3. DIFFERENCE BETWEEN ARBITRATOR AND INDEPENDENT EXPERT
3 (i) The General Approach
Arbitrator Independent Expert Acts only on evidence as submitted May draw attention to parties of issues of which they are
not aware May take the initiative in ascertaining facts and law but
must put findings to the parties for comment Award must lie between the claims of the parties Arbitrator applies expertise in deciding between parties
cases Arbitrator cannot decide without evidence (also exparte) Procedure regulated by Statute Arbitration Act 1996 Arbitrator can determine issues of Jurisdiction It is the parties case and Arbitrator bound to agreed
procedures Both parties have the right to put their case The parties must do all things necessary for the proper and
expeditious conduct of the arbitration Subject to the right to the parties to agree otherwise an
arbitrator has the power to decide all evidential matters including the strict rules of evidence
Has duty of investigation to discover facts, details and all relevant information necessary to make the determination
Only need to receive representation from the parties if prescribed in the agreement/contract or agreed by the parties as a variation.
Decision based on own knowledge and investigations Procedure is that as contracted with no statutory provision
or fallback Issues of jurisdiction must be referred to the Courts The Independent expert is to some extent master of their
own destiny Right for parties to put their case governed by the contract
on which the dispute is based or agreed variation The only duty on the parties will be that provided by the
contract The only approach to deciding the evidence will be the
Independent Experts opinion with evidence adopted or ignored at their discretion subject to any stipulations in the contract
3 (ii) Disclosure and Delegation
Arbitrator Independent Expert A party to an arbitration can seek
and request disclosure of documents and witness attendance (through the Courts - subpoenas)
No delegation of duties, powers or responsibility permissible but may seek assistance and advice
No disclosure or witness attendance powers
May seek assistance but is responsible for the results as IE is required to arrive at own decision regardless of support
3 (iii) Fees and costs of the reference
Arbitrator Independent Expert Arrangements for fees are a mandatory
provision in the Arbitration Act 1996 and therefore guaranteed through statute but may be subject to adjustment and must be reasonable
May determine quantum and liability under the Arbitration Act 1996
Fees may, if necessary be determined by the Court under the Arbitration Act 1996
Security for costs available in certain circumstances against the Claimant
The Arbitrator must adopt appropriate procedures which are fair
Costs follow the event approach in respect of all those costs and fees of the arbitration but not earlier costs
Fee arrangements only through the dispute resolution contract
Has no right to determine quantum and/or liability unless such powers confirmed by contract
Where the Independent Expert has the power to determine fees and costs there is no procedure for formal determination but process is judicial not expert driven so will follow arbitration approach
No security of costs available under any circumstances
Requirement to act carefully and diligently Fees and costs of the reference are different
so the authority for determination must be clear on extent of assessment and areas covered
3 (iv) Status of Decision
Arbitrator Independent Expert Right of appeal against an award on
part of law; jurisdiction or serious irregularity
Unless the Arbitrator has acted in bad faith there cannot be any claim for negligence
Award may be enforced as if it were a judgement of the Court by way of leave of the Court
No right of appeal although in some limited circumstances the Court may set it aside
Liable for damages for any loss through negligence
Determination is binding on the Parties through contract
3 (v) Notes in respect of the differences
• Where the Arbitrator takes the initiative in ascertaining facts and the law the differences with an independent expert are less marked in respect of negligence.
• It is critical that where the arbitrator uses their own initiative or considers their own knowledge and expertise that the Award should be based on the parties’ assessment of these factors.
• Consequently, everything the Arbitrator wishes to apply in terms of facts and the law which is solely from his/her knowledge must be put to the parties for their consideration and comment and upon.
• The Independent Expert is not required, nor should they address the parties on their knowledge for assessment as the Determination should incorporate that knowledge and expertise in any event and regardless of the parties’ position.
4. EFFICIENCY COMPARED
4 (i) Cost – what is best?
Arbitrator Independent Expert Complicated issue Multiple issues Legal issues Representations necessary Hourly rate Time is measurable as an estimate
Clear issue Identifiable subject No legal issues Representations absent or limited Percentage of value of parties
representations as to value
4 (ii) Speed
Arbitrator Independent Expert Procedure accommodates formality
with time & cost determined on process
May favour the whale against the minnow which is a danger as time and cost is played out to deter
Accommodates and requires full representations on all issues
Oral hearing can be time consuming
Simple, determination without formality where IE can simply get on with the reference
Requires no representations but if they become necessary can negate benefits of speed
Meeting to consider issues of the dispute can save time of determination
4 (iii) Clear rules of procedure
Arbitrator Independent Expert Arbitration Act 1996 Courts power of control over
arbitration procedures which provides clarity
Enforceability and strength demands parties compliance
Availability of peremptory orders Issues of law can readily be
determined
No statutory procedure No Court involvement with
exception of natural rules of justice Weakness and limited ability for
compulsion unless provided for in the contract
Problems can arise in determining points of law
4 (iv) Thoroughness
Arbitrator Independent Expert Compulsion on parties to disclose Compulsion on witness attendance Testing of evidence by cross
examination/counter reps/subs Full representations or submissions
from both sides including advocacy and expert witness options
No powers of compulsion No personal attendance No formal testing of cases
submitted Solus position without submitted
evidence or representations but based on opinion and expertise of the dispute resolver
4 (v) Issues of Law and their resolution
• Several recognised methods of resolving points of law in Arbitration through the courts where the parties and Arbitrator are agreed, by the securing of a legal opinion subject to the parties rights to comment and appeal on a point of law within an Award.
• Determination by an Independent Expert of a point of law is inappropriate but parties can provide the Expert with the power to seek advice or a legal opinion or if no agreement a party apply to the Courts to determine a preliminary point of law but the power will be exercised sparingly
- Bank of South Australia v S A Health Commission (1996) (Digest) difference between role of Expert and role of the Court.
- National Grid Company v M25 Group (1999) (Digest) stay of Independent Expert determination pending Courts decision on point of law.
4 (vi) Difficulty of Challenge
Arbitration Act 1996 provides areas for challenge including jurisdiction, slips, serious irregularity and points of law
Independent Expert determination challenge requires need to demonstrate process and basis of decision has departed materially from instructions- Jones v Sherwood Computer Services (1990) (Digest)
May be impossible to litigate on a determination when the decision does not show the point. This will be problem where no reasons are provided.
5. WHICH OPTIONS TO ADOPT
• Choice of Arbitrator or Independent Expert is identified in the contract but may allow for a default option but with alternative subject to election by one party or agreement by both at the time of the dispute with default option if no agreement
• Market conditions at the time may promote preference
• Availability of evidence or precedence may promote preference
• Specialism or restriction of a market and subject matter may encourage selection of Independent Expert but this may also encounter conflicts of interest where there are few players but this can equally apply to Arbitrator selection
• In market based disputes with limited evidence the Independent Expert route may be preferable
• Technical disputes may benefit from the Independent Expert option
• Widely based and broad market issues where analysis is more prone to subjective assessment may legislate in favour of Arbitration where the subject matter may more effectively be tested through process rather than expertise
• Recovery through negligence claim on the Independent Expert Witness option
• Put the wrong, right through Courts on the Arbitration option
CIArb – London Branch
“Nipping it in the bud”
Early dispute resolution options in Real Estate
Katie Bradford, Linklaters LLP
5 March 2015
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Topics
Early Options:
•Alternatives and/or stepping stones to Litigation/Arbitration
Incorporating into Contract:
•Tiered dispute resolution provisions
•Enforceability – case law update
Real Estate Dispute Protocols:
•Encouraging early resolution in Real Estate
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Early Options
Mutual Co-operation/ Negotiation
> At local level
> Board Level/CEO’s
Neutral Assistance
> Mediation
> Early Neutral Evaluation
Expert Determination or Adjudication
> More complex/ technical disputes, valuation, construction
> Binding?
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Incorporating into Contract
Tiered dispute resolution provisions
• Contractual ADR procedure for escalating disputes:
> Executive meeting
> Mediation, Expert Determination, Adjudication
> Litigation or Arbitration
• Can specify:
> Pre-condition to or (parallel) option to Litigate/ Arbitrate
> Certain types of dispute only
> Procedure: timetable, appointment, specialism of appointee, form of decisions, reasons
> Binding nature, options for appeal etc.
Pros and cons
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Tiered Dispute Resolution Clauses
Enforceability – case law update
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Tiered Dispute Resolution Clauses
English Courts reluctant to enforce agreements to negotiate/ mediate:
Walford v Miles [1992] (Court of Appeal):
Lockout agreement.
Bare agreements to negotiate lack necessary certainty and are, therefore, unenforceable.
Duty to negotiate in good faith inherently inconsistent with position of a negotiating party.
See also Courtney & Fairburn v Tolaini Bros Ltd [1975]:
Too uncertain to enforce.
Practical difficulties of monitoring and enforcing compliance.
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Tiered Dispute Resolution Clauses
Certainty is key:
•Needs to be expressed in unqualified and mandatory terms.
•Process must be set out and suitably clear.
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Tiered Dispute Resolution Clauses
Cable & Wireless v IBM [2002] (Commercial Court):
First decision where agreement to negotiate in ADR procedure held to be enforceable.
IT services contract.
Dispute escalation clause stated: “Parties shall attempt in good faith to resolve any dispute or claim … promptly through negotiations between the respective senior executives … [if not resolved] parties shall attempt in good faith to resolve the dispute or claim through an alternative dispute resolution procedure as recommended to the parties by CEDR...”
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Tiered Dispute Resolution Clauses
Cable & Wireless v IBM [2002] (Commercial Court):
Colman J:
The obligation to mediate was expressed in unqualified and mandatory terms. Mutual intention that Litigation was last resort.
Public policy reasons.
Parties had identified a particular procedure which was sufficiently certain so as to make the agreement to undertake the ADR procedure enforceable.
Went much further than a simple agreement to negotiate. Had the clause simply required the parties to attempt, in good faith, to resolve their differences, this would have been void for uncertainty.
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Tiered Dispute Resolution Clauses
Holloway and another v Chancery Mead Ltd [2007](TCC)
Construction contract incorporating National House-Building Council (NHBC) Buildmark scheme resolution service. Reference to NHBC pre-condition to arbitration.
Ramsey J: 3 requirements for clause to be binding:
The process had to be sufficiently certain, in that there should not be the need for any agreement at any stage before matters could proceed.
The administrative processes for selecting a party to resolve the dispute and to pay that person had to be defined.
The process or, at least, a sufficient model of the process should be set out so that the detail is sufficiently certain.
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Tiered Dispute Resolution Clauses
Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2012] (Court of Appeal)
Insurance policy.
Undertaking that, "prior to a reference to arbitration, [parties] will seek to have the Dispute resolved amicably by mediation“.
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Tiered Dispute Resolution Clauses
Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2012] (Court of Appeal)
Cooke J: Applied Holloway
The undertaking did not define parties' rights with sufficient certainty:
>The clause did not impose any unequivocal commitment to mediate.
>The clause did not identify any clear mediation process.
>There was no provision for selection of the mediator.
Not enforceable as condition precedent to the existence of a binding arbitration agreement.
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Tiered Dispute Resolution Clauses
Wah (Aka Alan Tang) and another v Grant Thornton International Ltd and others [2012] (Chancery Division)
Network agreement contained escalating ADR provisions:
First - referring the matter to chief executive for amicable conciliation.
Second - submission to panel in event dispute was still not resolved.
Partners were expelled and brought challenge.
Arbitration award given in favour of Grant Thornton.
Partners challenged jurisdiction of tribunal under s67 Arbitration Act 1996.
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Tiered Dispute Resolution Clauses
Wah (Aka Alan Tang)
Hildyard J:
Did not take issue with the principle that dispute escalation clauses would be enforceable if their provisions were sufficiently certain.
But dispute escalation clause was too equivocal (in terms of the process) and nebulous (in terms of the parties' respective obligations) to be treated as an enforceable condition precedent to arbitration.
No detail as to:
What form the process of conciliation should take, who was to be involved in it and what (if anything) participants were required to do.
Form or process of panel resolution, nor whether such a reference should include participation by the parties.
Court unable to determine or to direct the parties to comply with the relevant clause.
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Tiered Dispute Resolution Clauses
A shift away?
Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] (Commercial Court)
Agreement to purchase iron ore.
Clause 11.1 "In case of any dispute or claim … the Parties shall first seek to resolve the dispute or claim by friendly discussion. Any party may notify the other Party of its desire to enter into consultation to resolve a dispute or claim. If no solution can be arrived at in between the parties for a continuous period of 4 (four) weeks then the non-defaulting party can invoke the arbitration clause and refer the disputes to arbitration.“
Emirates failed to purchase required amount.
Number of meetings between Jan-April 2009.
Settlement negotiations failed. Prime sought to refer to arbitration.
Emirates challenged jurisdiction of tribunal under s67 Arbitration Act 1996.
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Tiered Dispute Resolution Clauses
Emirates Trading
Emirates’ submissions: Clause 11.1 constituted a binding condition precedent. Although friendly, meetings were not discussions for the purposes of Clause 11.1 and/or did not last for a continuous period of four weeks.
Prime’s submissions: Clause 11.1 not enforceable- mere "agreement to agree“ (relying on Walford v Miles). Alternatively, if condition precedent was enforceable, had been satisfied by the meetings which took place.
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Tiered Dispute Resolution Clauses
Emirates Trading
Teare J:
Clause 11.1 constituted an enforceable condition precedent to engage in "friendly discussion”.
…"an obligation to seek to resolve a dispute by friendly discussions in good faith has an identifiable standard, namely, fair, honest and genuine discussions aimed at resolving a dispute”...
“Word “shall” indicated a mandatory, legally binding condition.
Time limitation (4 weeks) also crucial.
Made commercial sense and consistent with public policy - resolve disputes before resorting to arbitration or litigation.
Clause 11.1 was satisfied. Did not require continuous discussions to take place for the entire 4 week period. 4 weeks should elapse between first discussions and commencement of legal proceedings.
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Tiered Dispute Resolution Clauses
Emirates Trading Extends the concept of what is enforceable further than previous judgments.
Appears inconsistent with Wah:
Query whether content of the "friendly discussion" was any more clearly defined than the dispute escalation steps contemplated in the Wah agreement.
Number of uncertainties remain on basis of drafting:
Discussions in person, phone or writing? Conducted by parties or legal reps? Supervised by neutral party? Confidential and/or without prejudice? Is concession needed to satisfy requirement to participate?
But
In line with public policy on ADR and Court’s desire to give effect to provisions of commercial agreements.
Court will strain to imply criteria/supply machinery to clarify the process required, and how determined to succeed/fail/end.
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Tiered Dispute Resolution Clauses
Emirates Trading
A controversial decision.
Teare J distinguished previous English authority on the basis that:
The obligation to seek to resolve disputes by friendly discussions was said to import an obligation to seek to do so in good faith.
An identifiable standard.
Preferred the reasoning of the courts of Australia and various ICSID tribunals, which have held such clauses to be enforceable.
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Real Estate Dispute Protocols
Encouraging ADR in Real Estate
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Real Estate Dispute Protocols
Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy (“the Dilapidations Protocol”):
•Encourages early resolution of dilapidation disputes, without recourse to litigation.
•Adopts Property Litigation Association (“PLA”) protocol – widely used by practitioners.
•Expected behaviour: Process and timetable for the exchange of information relevant to a dispute; standards for the content and quality of schedules/ landlord’s claims and conduct of pre-action negotiations. Sets out stages the parties are expected to undertake before the commencement of proceedings.
•Encourages:
• the exchange of early and full information about the dispute;
• Avoidance of litigation by agreeing a settlement of the dispute before proceedings are commenced; and
• efficient management of proceedings where litigation cannot be avoided.
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Real Estate Dispute Protocols
The Dilapidations Protocol
Incorporated into CPR (from January 2012):
• PRACTICE DIRECTION ON PRE-ACTION CONDUCT, Para 5.
• PLA and RICS initiative.
Costs sanctions for non compliance:
• Pre-action PD Para 5: When considering compliance, the court will take account of the relevant pre-action protocols.
• Pre-action PD Para 4.6 and CPR 44.2: Costs sanctions for non-compliance with practice direction/ or because of conduct.
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Real Estate Dispute Protocols
Protocol for Applications for Consent to Assign or Sublet
•www.propertyprotocols.co.uk: Guy Fetherstonhaugh QC, Jonathan Karas QC (Falcon Chambers), Nicholas Cheffings and Mathew Ditchburn (Hogan Lovells).
•The Landlord and Tenant Act 1988 imposes obligations on a landlord who receives an application for consent to assign or sublet, where such consent is not to be unreasonably withheld.
•Provides guidance on form and content of application to assist landlord in considering application.
•Recommends enforceable undertaking (preferably from solicitor) to meet Landlord’s reasonable and proper costs or for appropriate amount. Avoids Landlords using costs as an excuse to defer dealing with application.
•Timeline for acknowledgement and request for further information (5 days), and landlord decision (21 days).
•Encourages agreement on ADR in event that Tenant believes landlord has unreasonably withheld or delayed its consent.
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Real Estate Dispute Protocols
RICS Code of Practice: Service Charges in Commercial Property, 3rd edition
Good practice guidance in relation to service charges: transparency of costs, timely communication, standards of management etc.
Aims to: Improve general standards and promote best practice, uniformity, fairness and transparency; Ensure the timely issue of budgets and year end certificates; Reduce the causes of disputes; Provide guidance to solicitors.
Promotes ADR as more cost effective way of resolving service charge disputes than court.
Recommends that ADR is used even when leases do not expressly provide for it.
Highlights Court encouragement of ADR and potential costs sanctions for failing to consider ADR.
Suggests the following forms of ADR as appropriate to service charge disputes:
• Early neutral evaluation;
• Mediation;
• Independent expert determination;
• Arbitration
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Real Estate Dispute Protocols
PACT: LTA 1954 Lease Renewals
The Landlord and Tenant Act 1954 (“LTA 1954”):
•Terms of a renewal lease to be determined by the courts.
Professional Arbitration on Court Terms (“PACT”):
•RICS and Law Society Scheme.
•Form of ADR for lease renewal disputes. Voluntary process to determination by an arbitrator or independent expert.
•Binding.
•Guidance on instigating the procedure, identifying issues, appointing arbitrator/expert, process, the award, costs and producing the lease documents (including model consent orders).
•Surveyor or solicitor acting as either an arbitrator or independent expert.
•Previously, only available with approval of Court (‘in Court PACT’).
•Now, available without involvement of Court (‘out of Court PACT’).
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Real Estate Dispute Protocols
PACT: LTA 1954 Lease Renewals
Issues suitable for determination under PACT include:
•Duration of the new lease
•Other terms (e.g. repair, decoration, alienation, service charge, rent reviews, break clauses, etc.)
•Rent/ Interim rent
Issues perhaps less suitable (require Court determination) include:
•Validity of notices
•Extent of premises to be comprised in the new lease
Currently, mainly used in unopposed renewals under the LTA1954 where a determination is required to settle the terms of the lease, or the rent, or both.
In future, may be used for opposed renewals, service charges, breach of repairing covenants, insurance, construction contracts and other matters arising out of leases or contracts for sale, including the application of the Landlord and Tenant (Covenants) Act 1995.
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Real Estate Dispute Protocols
PACT: LTA 1954 Lease Renewals
Benefits:
•Specialist Knowledge
•Flexibility
•Speed
•Costs
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The Future
ADR
In Court proceedings:
•CPR endorses and encourages ADR:
CPR 1.4
(1) The court must further the overriding objective by actively managing cases.
(2) Active case management includes –
…(e) encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure…
• But parties are not compelled:
Halsey v Milton Keynes General NHS Trust [2004] – breach of article 6 of the ECHR
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The Future
ADR
However, strong pressure to consider ADR
•CPR provides power to make costs sanctions:
PRE-ACTION CONDUCT PRACTICE DIRECTION
Pre-action PD Para 4.4 The court may decide that there has been a failure of compliance by a party because, for example, that party has –
…(3) unreasonably refused to consider ADR…
Pre-action PD Para 4.6 and CPR 44.2 Costs sanctions for non-compliance with practice direction/ or because of conduct.
Fitzroy Robinson Ltd v Mentmore Towers Ltd [2010]
•Failure to mediate was part of unreasonable course of conduct. Indemnity costs award.
Power to stay proceedings and order arbitration where an Arbitration Agreement is in place
•s 9 Arbitration Act 1996
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The Future
ADR
Whether arbitrators have similar powers arguable:
Arguments against:
•Tribunal mandated under Arbitration Agreement to proceed to an Award.
•Should not shirk responsibility/delegate to mediator.
Arguments for:
•Duties, powers and obligations not only from Arbitration Agreement but also Statute:
•S33 (1)(b) of Arbitration Act: General duty of the tribunal
(1) The tribunal shall—
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary
delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.
-Parallels with ‘overriding objective’ of CPR.
-International context – more supportive – ICC, SIAC.
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The Future
Protocols
•Best practice to resolve disputes without Litigation/Arbitration.
•To be used as indicator of reasonable behaviour.
•To be incorporated into leases and other binding documents as a code which the parties agree to follow.
•To be taken into account by the Courts when assessing whether parties have complied with their contractual and statutory obligations and the CPR.
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DocExplorer number: A19525517
A MISCELLANY OF ARBITRATION CASES
by
David Holland QCLandmark Chambers
DILAPIDATIONS CASE: FACTS• substantial Georgian house in Gloucester-built in
1780 and extended in 1795.• tenanted since 1980s.• lease dated 31st October 1994.• term of five years from 3rd November 1995.• expired on 2nd November 1999.• First Defendant company the tenant by way of
assignment in May 1997.• The Second and Third Defendants husband and wife,
occupiers, directors of the First Defendant and guarantors
Dilapidations case: wide repairing obligation…
To repair and to maintain keep and leave clean and in good tenantable repair all buildings for the time being on the premises and the fixtures fittings drains watercourses fences walls gates paths yards and appurtenances thereto and to keep clean the roof valleys eaves gutters and downpipes and to replace all broken glass…
But three provisos• Provided that the Tenant:
• Shall not be liable to put or keep the premises or any part thereof in better condition than they are now in as specified in the Record of Condition dated 3rd August 1982 which has been signed on behalf of the parties for identification;
• Shall not be liable to remedy any inherent defect in the premises or to carry out repairs resulting from any such defect and
• Shall not be liable for any works relating to the underground drainage system wherever situated or to the water supply system which serves both the premises and the adjoining property of the Landlords unless resulting from improper use by the Tenant or any person under its control”
Another clause
“To keep the swimming pool and tennis court in as good condition as they are now in such condition being set out in the said Record of Condition”
Landlord’s claim
£397,342.44 broken down as follows:– £243,990.81 as the cost of the works that had been carried
out.– £24,667.03 in professional fees in respect of carrying out
the works.– £8000 in out of pocket expenses.– £13,700 for the cost of negotiating the dilapidations claim.– £9500 for the preparation of the various versions of the
Scott Schedule.– £27,800 in legal fees.– £20,769.23 as loss of rent
Procedural history of Arbitration– Directions were given by the Arbitrators Order for
Directions No. 1-exchange of Statements of Case.– A Case Review meeting-Preliminary issue– Written Submissions on the preliminary issue.– Written ruling on the Preliminary issue (without a
hearing).– A Further order for directions-exchange of witness
statements and expert reports.– A five day hearing was held in London– The Arbitrator then published his award which ran
to 183 pages
Defences pout forward
Denied that there was any breach of covenant.
Asserted that the sums claimed were excessive.
Denied that, in any event, there was any diminution of value such that the statutory cap in section 18 applied to reduce the recoverable sum to nothing
Arbitrators comments on Defendants expert
“On a number of occasions Mr [] asserted (wrongly) that that law of dilapidations had no application to the lease as the dispute was being determined by an arbitral tribunal…In general I formed the view that Mr [] truly believed in the evidence he gave and did not give opinions which he knew were untruthful. However, at times, Mr [] ventured into the realms of advocacy and often showed evidence of being biased. For example he stated during the hearing that his opinion was “extremely coloured by a general feeling that landlords take advantage of tenants”; he saw it as his “duty” to keep the sums payable by his client as low as possible; and often referred to the claim being made against “us” (i.e. including him). Indeed on one occasion he even referred to the Claimant as “the enemy””.
Defendant’s experts “well-known case”
DOWDING V REYNOLDS
Issues decided
Arbitrator:•Rejected Defendants contention that, on the correct interpretation of the repairing obligation in clause 2(4), the obligations of the tenant should be limited by the state of the premises as at 31st October 1994. The relevant date was 3rd November 1982.•Rejected Claimant’s contention that “inherent defect” had narrow meaning-held that “inherent defect” should be given its “normal” meaning-a flaw or fault in the original design or construction of the building.
Issues decided
-Phrase in Record of Condition:“In order to avoid lengthy descriptions about condition, it may be assumed that the condition of anything mentioned is of good order unless a specific observation is made to the contrary.”
Meant that unless an item of disrepair was specifically mentioned in the Record of Condition, those parts not so mentioned had to be assumed to be in good condition.-damage by “fair wear and tear” not excluded
Lessons?
– Arbitration process not necessarily much quicker than court proceedings.
– Not necessarily cheaper than litigating in court.– Chosen tribunal might be an expert in one
discipline (for example a building surveyor) when the dispute involves issues (for example points of law) in another discipline.
But:– Has the benefit of having a timetable propounded
which suits the parties.– Allows the parties to choose a tribunal with the
necessary expertise and experience
Boundary dispute: facts
• Two substantial residential properties in Teddington.• Originally one very large Victorian house• Separated into two and conveyed away separately by
the sole owner in 1947.• One of the neighbours had recently built a
substantial rear extension• the other neighbour alleged that this encroached on
their land.
Boundary dispute: arbitration procedure
• Sequentially exchanged Statements of Case and Replies from each party
• An exchange of Skeleton Arguments from counsel instructed by each party.
• An agreed hearing bundle• No oral evidence• Site visit• Half day hearing• Written determination
Three significant boundary features Series of pre-cast reinforced concrete fence posts
spaced at 4 metre intervals-four at front-nine at the rear-there since the 1950s-three posts on the boundary on the other side of one of the properties.
old conservatory which had stood along part of the boundary on one of the properties.
old and very substantial hedge which ran along the disputed boundary between the two properties-there since at least 1953-very distinctive root line which ran some 20-30 centimeters on one side of the line of fence posts.
Covenant on purchasers in original conveyances in 1947
“At all times [to] maintain and keep the boundary fence on the northwest side of the said property in good repair and condition”.
Lessons?
– Although the procedure overall was not cheap, cost less than if litigated through the courts or indeed the First-tier Tribunal.
– Ruling obtained much more quickly than they would have if they had gone to court.
– Parties were able to choose a tribunal who at least purported to have some experience in the relevant area of law.
Bhatti-the facts
• Family dispute between father and his eldest son-all members of the Muslim Ahmadiyya community
• In 1990s the father fell out with his wife and they separated. Father did not wish properties or proceeds to fall into the hands of his wife.
• Transferred them into the name of his eldest son with clear words of gift
• Father and wife reconcile• Father requests son to hand back the properties• Son refuses
Ahmadiyya dispute resolution
• Qadha Board.• Appeal Panel Qadha Board in the UK.• Murafia Aaalia Rabwah in Pakistan.• Supreme Appeal Board in Pakistan. Enforcement of decision made by: • Amore-e-Ama (or Umur Ama).
Bhatti: arbitration agreement
“I the undersigned agree to the dispute being decided by the Qadha Board of the UK Ahmadiyya Muslim Association by way of Arbitration.I consent to the application of the Ahmadiyya Fiquah, Islamic Law and associated rules of the said Qadha Board and I confirm that I will act upon any decision and award which is ultimately issued in accordance with the rules and traditions of the Ahmadiyya Jamaat”
Bhatti: letter from Umur Ama
“Please note that the Jamaat’s instructions on the above case are that the parties may go to the civil court because of inherent complicated implications of the law of the land”
Bhatti: rejected arguments
• No complete arbitration award• Award vitiated by procedural
irregularity/breach of tribunal’s own rules
Non-Rent Review Property Arbitrations
Graham Chase, Katie Bradford and David Holland QC
Thursday 5th March 2015