Tied Pubs - Scottish Pubs Code - part 2

The Scottish Arbitration Centre welcomes the Scottish Government's decision to adopt arbitration as the method for resolving disputes for Tied Pubs under the Scottish Pubs Code and we remain committed to working with Ministers and officials on the implementation of this scheme. However, we remain concerned about the lack of clarity surrounding the proposed arbitration scheme. The wording of sections 14 and 15 of the Tied Pubs (Scotland) Act 2021 (“the 2021 Act”) uses the formulation contained with the equivalent English Act and refers to “the rules regarding arbitration issued from time to time by the Chartered Institute of Arbitrators, or […] the rules of another dispute resolution body nominated by the arbitrator.” So, there is ambiguity about the rules. There are no provisions within the 2021 Act to stipulate that these arbitrations would be governed by the regime for statutory arbitrations set up by the Arbitration (Scotland) Act 2010 (“the 2010 Act”). As it stands, it would be open to landlords based in England to try to use the disparity in parties negotiating power to contractually bind tenants in Scotland to arbitrations governed by the English legal system. This would run counter to the spirit of the 2010 Act. We note the explanation of the provisions of section 15 of the 2021 Act contained in paragraph 41 of the relevant Explanatory Notes. We welcome the stated intention that “[s]uch arbitrations will be “statutory arbitrations”” under the 2010 Act, as well as the acknowledgement that Scottish Ministers are empowered to “make further provision about the handing of statutory arbitrations”. It is clear from this that the intention of the Scottish Government is that the arbitration scheme will follow the Scottish arbitration system and rules established by the 2010 Act, be seated in Scotland and be subject to the oversight of the Scottish courts. However, the wording in the Explanatory Notes does not change the current provision and we remain of the view that an amendment to the 2021 Act is required. These issues were previously raised during the debate on the Bill in the Scottish Parliament. During that debate, on 23 March 2021, Jamie Hepburn MSP, the Minister for Business, Fair Work and Skills, acknowledged these concerns and went on to “reassure members and any stakeholders who are watching, including the Scottish Arbitration Centre, that any issues can be worked through properly through consultation and engagement”. He said: “That engagement will, of course, include the Scottish Arbitration Centre, whose knowledge and input is valued. The time for such engagement, though, is when the code is being developed and not when the overarching legislation is being discussed.” We believe that the 2021 Act should be amended to deliver on the Scottish Government's intention expressed both in the Explanatory Notes to the Act and in Parliament. Arbitration for these disputes should be governed by the 2010 Act and the Scottish Arbitration Rules, and this should be clear, certain, and enforceable. We look forward to engaging further with the Scottish Government on amending the legislation now that the code is being developed.