What happened?
In 2023, a tenant referred a dispute with Star to the PCA for arbitration. As part of this dispute, the tenant alleged that Star had breached regulation 46 of the Pubs Code, relating to premises insurance.
The PCA appointed an alternative arbitrator to decide the dispute. During the arbitration, Star did not tell the tenant or the arbitrator that it had admitted breaches of regulation 46 of the Pubs Code, or that the PCA was in the process of reviewing those breaches at the time of the arbitration. Star also told the arbitrator that it believed its communications to tenants had satisfied Star’s obligations under regulation 46.
The arbitrator decided that the tenant’s complaints, including about regulation 46, were vexatious, and ordered the tenant to pay the arbitrator’s fee of £5,832. In Pubs Code arbitrations, the pub-owing business must pay the reasonable fees and expenses of an arbitrator, except if the arbitrator decides that the referral was vexatious, in which case they can require the tenant to pay some or all of those costs.
The PCA has legal powers to request information or documents from an arbitration for regulatory purposes. Upon reviewing the arbitrator’s award of costs against the tenant and the reasons for it, the PCA contacted Star to express concern with Star’s conduct in this arbitration. In particular, the PCA was concerned that Star’s lack of transparency about its admitted breaches of regulation 46 may have influenced the arbitrator’s decision to order the tenant to pay costs.
Action taken by Star
Star now agrees that it should have informed the arbitrator and the tenant about its breaches of regulation 46, and that the PCA was reviewing those breaches. Star also acknowledges that it is possible that this information could have influenced the arbitrator’s decision in the arbitration, including in respect of costs.
As a result, Star has now reimbursed the tenant for the costs the tenant was ordered to pay.
The PCA’s expectations of pub-owning businesses in Pubs Code Arbitrations
The PCA expects all pub-owning businesses participating in Pubs Code arbitrations will actively seek to avoid any practice which may result in unfairness.
For this reason, the PCA expects all pub-owning businesses will draw information about regulatory engagement with the PCA to the attention of a tenant and arbitrator where that information is relevant to the issues in dispute.
The PCA office can be contacted at [email protected].
