Small Business, Enterprise and Employment Bill (HC Bill 11)

(6) An investigation under this section may also include an investigation of—

(a) preparations for the exercise of a relevant function relating to
procurement, and

(b) the management of a contract entered into in the exercise of such a
5function.

(7) But the exercise of a function—

(a) by—

(i) the governing body of a maintained school (see section 19 of the
of the Education Act 2002), or

(ii) 10a person who is the proprietor of an Academy (see section 17(4)
of the Academies Act 2010 and section 579(1) of the Education
Act 1996), or

(b) which is regulated by the National Health Service (Procurement,
Patient Choice and Competition) (No. 2) Regulations 2013 (S.I. 2013/
15500) (functions relating to the procurement of health care services for
the purposes of the NHS),

may not be investigated under this section.

(8) A person conducting an investigation under this section may publish the
results of the investigation.

20Part 4 The Pubs Code Adjudicator and the Pubs Code

The Pubs Code Adjudicator

35 The Adjudicator

(1) A Pubs Code Adjudicator is established.

(2) 25Part 1 of Schedule 1 makes provision about the Adjudicator.

(3) Part 2 of that Schedule contains the Adjudicator’s powers to require
information.

(4) Part 3 of that Schedule contains amendments consequential on the
establishment of the Adjudicator.

30The Pubs Code

36 The Pubs Code

(1) The Secretary of State must, before the end of the period of one year beginning
with the day on which this section comes into force, make regulations about
practices and procedures to be followed by pub-owning businesses in their
35dealings with their tied pub tenants.

(2) In this Part the regulations are referred to as “the Pubs Code”.

(3) The Secretary of State must seek to ensure that all provisions of the Pubs Code
are consistent with the principle of fair and lawful dealing by pub-owning
businesses in relation to their tied pub tenants.

(4) The Secretary of State must seek to ensure that any provisions of the Pubs Code
which apply only in relation to large pub-owning businesses are also
consistent with the principle that tied pub tenants should not be worse off as a
result of any product or service tie.

(5) 5The Pubs Code may, in particular—

(a) contain requirements as to the provision of information by pub-owning
businesses to their tied pub tenants;

(b) require pub-owning businesses, in specified circumstances, to provide
the following assessments in relation to their tied pub tenants—

(i) 10rent assessments, or

(ii) assessments of money payable by the tenant in lieu of rent;

(c) make provision about the information that such assessments must
contain and how they are to be calculated and presented;

(d) specify that such assessments must be conducted in accordance with
15provisions of documents specified in the Pubs Code;

(e) where any document is specified for the purposes of paragraph (d),
refer to the provisions of the document as amended from time to time;

(f) impose other obligations on pub-owning businesses in relation to their
tied pub tenants.

(6) 20The Pubs Code may require large pub-owning businesses to provide parallel
rent assessments in relation to their tied pub tenants in specified
circumstances, and in connection with such provision—

(a) may confer on the Adjudicator functions in relation to parallel rent
assessments,

(b) 25may require the payment of a fee by tied pub tenants to the Adjudicator
in connection with the exercise of those functions, and

(c) may make provision corresponding to that mentioned in subsection
(5)(c), (d) and (e).

37 Review of the Pubs Code

(1) 30The Secretary of State must review the operation of the Pubs Code for each
review period.

(2) The first review period is the period beginning on the date on which the Pubs
Code comes into force and ending 2 years after the following 31 March.

(3) Subsequent review periods are each successive period of 3 years after the first
35review period.

(4) As soon as practicable after a review period, the Secretary of State must—

(a) publish a report of the findings of the review for that period, and

(b) lay a copy of the report before Parliament.

(5) In particular, the report must set out—

(a) 40the extent to which, in the Secretary of State’s opinion, the Pubs Code
is consistent with the principles set out in section 36(3) and (if
applicable) (4), and

(b) any revisions of the Pubs Code which, in the Secretary of State’s
opinion, would enable the Pubs Code to more fully reflect those
45principles.

38 Inconsistency with Pubs Code etc

(1) The Secretary of State may by regulations make provision about terms of a
tenancy or other agreement between a pub-owning business and a tied pub
tenant—

(a) 5which are inconsistent with the Pubs Code,

(b) which purport to penalise the tenant for requiring the business to act,
or not act, in accordance with any provision of the Pubs Code with
which the business is bound to comply,

(c) which purport to provide that a rent assessment in relation to the tied
10pub—

(i) may be initiated only by the business, or

(ii) may only determine that the rent is to be increased.

(2) The regulations may include provision about the effect of a term of a tenancy
or other agreement being void or unenforceable as a result of the regulations.

(3) 15Regulations under subsection (1) may make provision about terms of tenancies
or other agreements entered into before the date on which the regulations come
into force.

(4) A term of any agreement between a pub-owning business and a tied pub
tenant is void to the extent that it purports to—

(a) 20prevent the tenant from referring a dispute to the Adjudicator for
arbitration in accordance with section 39, or

(b) penalise the tenant for making such a referral.

(5) A term of an arbitration agreement between a pub-owning business and a tied
pub tenant is unenforceable to the extent that it is inconsistent with—

(a) 25section 41,

(b) section 42, or

(c) regulations under section 42(7).

(6) Subsections (4) and (5) apply to agreements entered into before the date on
which those subsections come into force, as well as those entered into on or
30after that date.

(7) The Secretary of State may by regulations make provision about the effect of a
term of an agreement being void or unenforceable as a result of subsection (4)
or (5).

Arbitration by Adjudicator

39 35Referral for arbitration by tied pub tenants

(1) In accordance with the following provisions of this section and section 40, a
tied pub tenant may refer a dispute between the tenant and the pub-owning
business to the Adjudicator for arbitration.

(2) In this section “the pub-owning business” means the landlord of the tied pub
40in question.

(3) If the Pubs Code specifies that particular provisions of the Pubs Code are
arbitrable, a dispute may be referred to the Adjudicator only to the extent that
it relates to an allegation by the tenant that the pub-owning business has failed
to comply with an arbitrable provision of the Pubs Code.

(4) If the Pubs Code specifies that particular provisions of the Pubs Code are not
arbitrable, a dispute may be referred to the Adjudicator only to the extent that
it relates to an allegation by the tenant that the pub-owning business has failed
to comply with any other provision of the Pubs Code.

(5) 5If the Pubs Code does not specify whether any of its provisions are arbitrable
or not arbitrable, a dispute may be referred to the Adjudicator only to the
extent that it relates to an allegation by the tenant that the pub-owning business
has failed to comply with any provision of the Pubs Code.

(6) Where a dispute is referred for arbitration under this section, the Adjudicator
10must either—

(a) arbitrate the dispute, or

(b) appoint another person to arbitrate the dispute.

40 Timing of referral for arbitration by tied pub tenants

(1) This section makes provision as to the period within which a tied pub tenant
15may refer a dispute to the Adjudicator in accordance with section 39.

(2) Except in the case mentioned in subsection (3), the dispute may not be referred
until after the expiry of the period of 21 days beginning with the date on which
the tenant notifies the pub-owning business of the alleged non-compliance.

(3) Where the Pubs Code requires a pub-owning business to provide a parallel
20rent assessment within a period of time specified by the Adjudicator, a dispute
which relates to an allegation that the pub-owning business has failed to
comply with that requirement may not be referred until the day after the day
on which the specified period ends.

(4) In all cases, a dispute may not be referred after the expiry of the period of 4
25months beginning with the first date on which the dispute could have been
referred.

41 Arbitration commenced by pub-owning businesses

(1) This section applies where—

(a) there is an arbitration agreement between a tied pub tenant and a pub-
30owning business, and

(b) the business commences arbitral proceedings about a matter which is,
or which includes, a Pubs Code dispute between the business and the
tenant.

(2) In this section a “Pubs Code dispute” means a dispute—

(a) 35which relates to an allegation by the tied pub tenant that the pub-
owning business has failed to comply with a provision of the Pubs
Code, and

(b) which the tenant would have been able to refer for arbitration by the
Adjudicator in accordance with section 39 (were it not for the
40commencement of arbitral proceedings by the business).

(3) Subsection (4) applies where—

(a) in accordance with the arbitration agreement, the Adjudicator is
appointed to arbitrate the Pubs Code dispute, or

(b) the tied pub tenant wishes the Adjudicator to be appointed to arbitrate
that dispute, and has given notice to that effect in accordance with
subsections (5) to (7).

(4) The Adjudicator must either—

(a) 5arbitrate the Pubs Code dispute, or

(b) appoint another person to arbitrate that dispute.

(5) Notice under subsection (3)(b) must be given in writing to—

(a) the pub-owning business, and

(b) the Adjudicator.

(6) 10In a case where the arbitration agreement provides for the arbitrator to be
appointed by a person other than the pub-owning business or the tied pub
tenant, notice under subsection (3)(b) must be given within 21 days beginning
with the date on which that person notifies the tenant of the person proposed
to be appointed as arbitrator.

(7) 15In any other case, notice under subsection (3)(b) must be given within 21 days
beginning with the date on which arbitral proceedings commenced.

(8) Section 14 of the Arbitration Act 1996 makes provision about the
commencement of arbitral proceedings.

42 Arbitration: supplementary

(1) 20Subsection (2) applies where a tied pub tenant—

(a) refers a dispute to the Adjudicator under section 39, or

(b) gives notice as mentioned in section 41(3)(b) that the tenant wishes the
Adjudicator to be appointed to arbitrate a dispute.

(2) The tenant must pay a fee to the Adjudicator of an amount prescribed in
25regulations made by the Secretary of State (except in specified cases as
mentioned in subsection (3)(b)).

(3) The regulations may make further provision as to the fee, and may in
particular—

(a) specify when the fee must be paid,

(b) 30specify cases in which the tenant is not required to pay the fee,

(c) specify cases in which the fee is to be refunded to the tenant.

(4) The following subsections apply in all cases where the Adjudicator or a person
appointed by the Adjudicator arbitrates a dispute.

(5) Except where this Part makes different provision, the arbitration must be
35conducted in accordance with—

(a) the rules regarding arbitrations issued from time to time by the
Chartered Institute of Arbitrators, or

(b) the rules of another dispute resolution body nominated by the
arbitrator.

(6) 40The pub-owning business concerned must pay the reasonable fees and
expenses of the arbitrator in respect of the arbitration, except where—

(a) the arbitration follows a referral by the tenant under section 39, and

(b) the arbitrator concludes that the referral was vexatious.

(7) The Secretary of State may by regulations make provision in relation to the
costs payable by a tied pub tenant in respect of the arbitration, and the
regulations may in particular—

(a) provide that those costs are limited to an amount prescribed in, or to be
5determined in accordance with, the regulations, and

(b) specify circumstances in which the arbitrator may make an award
requiring the tenant to pay costs exceeding that amount.

43 Information about arbitration

(1) If the Adjudicator appoints another person as arbitrator under section 39(6)(b)
10or 41(4)(b), the Adjudicator may require the arbitrator, or the pub-owning
business and tied pub tenant concerned, to provide information to assist the
Adjudicator in carrying out functions under this Part.

(2) The Adjudicator may enforce the requirement to provide information by
bringing civil proceedings to obtain an injunction.

15Investigations by Adjudicator

44 Investigations

(1) The Adjudicator may investigate whether a pub-owning business has failed to
comply with the Pubs Code if the Adjudicator has reasonable grounds to
suspect that—

(a) 20the business has failed to comply with the Pubs Code, or

(b) the business has failed to follow a recommendation made under section
47.

(2) The Adjudicator may not carry out an investigation until the guidance
required by section 52(1) has been published.

45 25Investigation reports

(1) Following an investigation, the Adjudicator must—

(a) publish a report on the outcome of the investigation, and

(b) consider whether to use any of the enforcement powers mentioned in
section 46.

(2) 30An investigation report must, in particular, specify—

(a) any findings that the Adjudicator has made,

(b) any action that the Adjudicator has taken or proposes to take, and

(c) the reasons for the findings and any action taken or proposed.

(3) An investigation report need not identify the pub-owning business concerned.

(4) 35If a pub-owning business is identified in a report, the business must have been
given a reasonable opportunity to comment on a draft of the report before
publication.

46 Forms of enforcement

(1) If, as a result of an investigation, the Adjudicator is satisfied that a pub-owning
40business has failed to comply with the Pubs Code, or has failed to follow a

recommendation made under section 47, the Adjudicator may take one or
more of the following enforcement measures—

(a) make recommendations;

(b) require information to be published;

(c) 5impose financial penalties.

(2) Where an investigation concerns two or more pub-owning businesses, the
Adjudicator may decide—

(a) to take different enforcement measures against different businesses,

(b) not to take any enforcement measures against one or more of the
10businesses.

47 Recommendations

(1) If the Adjudicator chooses to enforce through making recommendations, that
means recommending what the pub-owning business should do in order to
comply with the Pubs Code, and specifying the time by which the business
15should do it.

(2) The Adjudicator must monitor whether a recommendation has been followed.

48 Requirements to publish information

(1) If the Adjudicator chooses to enforce through requiring information to be
published, that means requiring the pub-owning business to publish
20information relating to the investigation.

(2) The publication requirement is imposed by giving the pub-owning business
written notice specifying—

(a) what information is to be published,

(b) how it must be published, and

(c) 25the time by which it must be published.

(3) The Adjudicator may enforce the requirement to publish information by
bringing civil proceedings to obtain an injunction or any other appropriate
remedy or relief.

49 Financial penalties

(1) 30If the Adjudicator chooses to enforce through imposing financial penalties, that
means imposing a penalty on the pub-owning business of an amount not
exceeding the permitted maximum (see subsection (6)).

(2) The financial penalty is imposed by giving the pub-owning business written
notice specifying—

(a) 35the grounds for imposing the penalty,

(b) the amount of the penalty,

(c) the period within which it must be paid, and

(d) how it must be paid.

(3) The pub-owning business may appeal to the High Court against—

(a) 40the imposition of a financial penalty, or

(b) its amount.

(4) Financial penalties under this section are recoverable by the Adjudicator as a
debt.

(5) Financial penalties received by the Adjudicator must be paid into the Consolidated
Fund.

(6) 5The Secretary of State must make regulations—

(a) specifying the permitted maximum, or

(b) specifying how the permitted maximum is to be determined.

50 Recovery of investigation costs

(1) The Adjudicator may require a pub-owning business to pay some or all of the
10costs of an investigation (including any costs incurred in exercising the
enforcement powers) if satisfied that—

(a) the business has failed to comply with the Pubs Code, or

(b) the business has failed to follow a recommendation made under section
47.

(2) 15The Adjudicator may require a person to pay some or all of the costs of an
investigation if—

(a) the Adjudicator carried out the investigation as a result of a complaint
by the person, and

(b) the Adjudicator is satisfied that the complaint was vexatious or wholly
20without merit.

(3) A requirement to pay costs is imposed by giving written notice specifying—

(a) the grounds for imposing the requirement to pay costs,

(b) how much is to be paid,

(c) by when the costs are to be paid, and

(d) 25how they are to be paid.

(4) A person required to pay costs under this section may appeal to the High Court
against—

(a) the imposition of the requirement, or

(b) the amount to which it relates.

(5) 30Costs required to be paid under this section are recoverable by the Adjudicator
as a debt.

Advice and guidance by Adjudicator

51 Advice

The Adjudicator may give advice on any matter relating to the Pubs Code to—

(a) 35tied pub tenants,

(b) any organisation representing the interests of tied pub tenants,

(c) pub-owning businesses,

(d) any organisation representing the interests of pub-owning businesses.

52 Guidance

(1) 40The Adjudicator must publish guidance about—

(a) the criteria that the Adjudicator intends to adopt in deciding whether
to carry out investigations,

(b) the practices and procedures that the Adjudicator intends to adopt in
carrying out investigations,

(c) 5the criteria that the Adjudicator intends to adopt in choosing whether
to use the enforcement powers and which ones, and

(d) the criteria that the Adjudicator intends to adopt in deciding the
amount of any financial penalty under section 49.

(2) In addition, the Adjudicator may publish guidance about the practices and
10procedures that the Adjudicator intends to adopt in carrying out other
functions.

(3) The Adjudicator may publish guidance about—

(a) the application of any provision of the Pubs Code;

(b) steps that pub-owning businesses need to take in order to comply with
15the Pubs Code;

(c) any other matter relating to the Pubs Code.

(4) Before publishing guidance under this section, the Adjudicator must consult
any persons the Adjudicator thinks appropriate.

(5) The Adjudicator must publish the first guidance under subsection (1)(a), (b), (c)
20and (d) within 6 months beginning with the day on which section 35 comes into
force.

(6) Where there is any guidance in force under this section, the Adjudicator must
take account of it in carrying out functions.

Adjudicator’s reporting requirements

53 25Annual report

(1) After the end of each reporting period, the Adjudicator must prepare and
publish a report describing what the Adjudicator has done during the period.

(2) The report must include a summary of—

(a) arbitrations conducted by the Adjudicator,

(b) 30investigations carried out by the Adjudicator,

(c) cases in which the Adjudicator has taken the enforcement measures
mentioned in section 46, and

(d) cases in which the Adjudicator has exercised functions under the Pubs
Code in relation to the provision of parallel rent assessments.

(3) 35If the Adjudicator has made recommendations under section 47, the report
must include an assessment of whether they have been followed.

(4) As well as publishing the report, the Adjudicator must send a copy to the
Secretary of State.

(5) The Secretary of State must lay a copy of the report before Parliament.

(6) 40In this section “reporting period” means—

(a) the period beginning with the day on which section 35 comes into force
and ending with the following 31 March, and

(b) each successive period of 12 months.

Funding of Adjudicator

54 Levy funding

(1) The Adjudicator may require pub-owning businesses to pay in each financial year a
levy towards the Adjudicator’s expenses.

(2) 5Before imposing a levy, the Adjudicator must obtain the Secretary of State’s
consent.

(3) In deciding the amount of a levy, the Adjudicator must take into account any
sums received or expected to be received from other sources.

(4) The Adjudicator may take into account estimated as well as actual expenses.

(5) 10The Adjudicator may require different pub-owning businesses or different
descriptions of pub-owning businesses to pay different amounts of levy, but
any differences must be based on criteria broadly intended to reflect the
expense and time that the Adjudicator expects to spend in dealing with matters
relating to different pub-owning businesses.

(6) 15The Adjudicator must inform each pub-owning business of—

(a) the amount of any levy payable by the business,

(b) when payments are due, and

(c) how the levy is to be paid.

(7) A levy required to be paid under this section is recoverable by the Adjudicator
20as a debt.

(8) The Adjudicator must publish details of levies and an explanation of how the
amounts have been decided (including any criteria under subsection (5)).

(9) If the Adjudicator has a surplus, the Adjudicator may repay some or all of it to
pub-owning businesses.

(10) 25In subsection (9) “surplus” means money held by the Adjudicator at the end of
a financial year less liabilities shown in the Adjudicator’s statement of accounts
for that financial year.

55 Loans by Secretary of State

The Secretary of State may make loans to the Adjudicator.

30Supervision of Adjudicator

56 Review of Adjudicator and guidance from Secretary of State

(1) The Secretary of State must review the Adjudicator’s performance for each
review period.

(2) The first review period is the period beginning on the day on which section 35
35comes into force and ending 2 years after the following 31 March.

(3) Subsequent review periods are each successive period of 3 years after the first
review period.

(4) A review must, in particular, assess how effective the Adjudicator has been in
enforcing the Pubs Code.