Arbitration
The Act provides certainty to both tenants and landlords by setting out a process for resolution, where agreement has not been reached, of rent accrued during the period of closure measures. The Secretary of State approves suitable arbitration bodies, which will in turn maintain a list of suitably qualified and independent arbitrators and administer arbitrations, to which either the landlord or tenant can apply. A statutory arbitration process is then applied, making provision for tenant and landlord to state their case, for types of award the arbitrator can give and the principles that govern this award.
	The Act provides that arbitration will be available in respect of business tenancies where the business tenant was required by COVID-19 related regulations, to close its premises or business in whole or part. For all tenancies affected by COVID-19, the parties are free to reach agreement and the Act will have no effect on those agreements. For those tenancies within the scope of the Act, failing agreement, either party can apply for arbitration. If the arbitrator decides that there is unpaid rent for the protected period and that the tenant’s business is viable or would be a viable business but for the protected rent debt, then the arbitrator will consider the circumstances and the proposals of the parties and reach a decision. The arbitrator’s award may provide for some or all the ringfenced debt to be paid by instalments and/or to be reduced. The arbitrator’s award may also reduce any interest payable by the tenant under the terms of the tenancy.
	The arbitrator considers the proposals put forward by the parties against the statutory principles. Where only the proposal of one of the parties is consistent with the principles, the arbitrator must make the award in that proposal. Where the proposals of both parties are consistent with the principles, the arbitrator must adopt the one they consider is most consistent. Where neither party’s proposal is consistent, the arbitrator must make whatever award they consider is appropriate applying the principles. The principles encourage the resolution of these debts, ensuring that those with the means to pay protected rent debt while remaining viable will be required to do so. Preservation of the viability of the tenant needs to be consistent with preserving the solvency of the landlord, so a balance is achieved.
	The arbitration process incorporates and builds on provisions from the existing Arbitration Act 1996 and provides for an effective, streamlined process, compatible with the rights of the parties to a fair process.