Small Business, Enterprise and Employment Bill (HL Bill 57)

(10) The Secretary of State shall confer on the Adjudicator functions and powers in
relation to the Market Rent Only Option, that include—

(a) determining what constitutes a significant increase in price, as
mentioned in subsection (6)(b) in the event of a dispute between tenant
5and business;

(b) adjudicating in disputes concerning the process or outcome of the
market rent assessment; including the power to set the market rent if
the Adjudicator deems the process or decision to have been flawed; and

(c) receiving, investigating and adjudicating in relation to complaints
10made under subsection (9)(b).

(11) The Secretary of State shall make provisions for the implementation of the
following measures in this section by regulations amending the Pubs Code.
Such regulations shall be made under negative resolution procedure. The
Secretary of State may make provisions changing the types of agreement that
15fall under subsection (2) by regulations. Such regulations shall be made under
negative resolution procedure.

43 Review of the Pubs Code

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

(2) 20The 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
review period.

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

(a) 25publish 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) the extent to which, in the Secretary of State’s opinion, the Pubs Code
is consistent with the principles set out in section 41(3) and (if
30applicable) (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
principles.

44 Inconsistency with Pubs Code etc

(1) 35The 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) which are inconsistent with the Pubs Code,

(b) which purport to penalise the tenant for requiring the business to act,
40or 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 or assessment of
money payable by the tenant in lieu of rent in relation to the tied pub—

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

(ii) may only determine that the rent or money payable in lieu of
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) 5Regulations 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) 10prevent the tenant from referring a dispute to the Adjudicator for
arbitration in accordance with section 45, 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) 15section 47,

(b) section 48, or

(c) regulations under section 48(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
20after 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

45 25Referral for arbitration by tied pub tenants

(1) In accordance with the following provisions of this section and section 46, a
tied pub tenant may refer a dispute between the tenant and the pub-owning
business concerned to the Adjudicator for arbitration.

(2) If the Pubs Code specifies that particular provisions of the Pubs Code are
30arbitrable, 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.

(3) 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
35it relates to an allegation by the tenant that the pub-owning business has failed
to comply with any other provision of the Pubs Code.

(4) If 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
40has failed to comply with any provision of the Pubs Code.

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

(a) arbitrate the dispute, or

(b) appoint another person to arbitrate the dispute.

46 Timing of referral for arbitration by tied pub tenants

(1) This section makes provision as to the period within which a tied pub tenant
may refer a dispute to the Adjudicator in accordance with section 45.

(2) Except in the case mentioned in subsection (3), the dispute may not be referred
5until 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
rent 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
10comply 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
months beginning with the first date on which the dispute could have been
referred.

47 15Arbitration commenced by pub-owning businesses

(1) This section applies where—

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

(b) the business commences arbitral proceedings about a matter which is,
20or which includes, a Pubs Code dispute between the business and the
tenant.

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

(a) which relates to an allegation by the tied pub tenant that the pub-
owning business has failed to comply with a provision of the Pubs
25Code, and

(b) which the tenant would have been able to refer for arbitration by the
Adjudicator in accordance with section 45 (were it not for the
commencement of arbitral proceedings by the business).

(3) Subsection (4) applies where—

(a) 30in 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) 35The Adjudicator must either—

(a) arbitrate 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) 40the Adjudicator.

(6) In 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
45to be appointed as arbitrator.

(7) In 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.

48 5Arbitration: supplementary

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

(a) refers a dispute to the Adjudicator under section 45, or

(b) gives notice as mentioned in section 47(3)(b) that the tenant wishes the
Adjudicator to be appointed to arbitrate a dispute.

(2) 10The tenant must pay a fee to the Adjudicator of an amount prescribed in
regulations 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) 15specify when the fee must be paid,

(b) specify 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) 20Except where this Part makes different provision, the arbitration must be
conducted 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
25arbitrator.

(6) The 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 45, and

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

(7) 30The 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
determined in accordance with, the regulations, and

(b) 35specify circumstances in which the arbitrator may make an award
requiring the tenant to pay costs exceeding that amount.

49 Information about arbitration

(1) If the Adjudicator appoints another person as arbitrator under section 45(5)(b)
or 47(4)(b), the Adjudicator may require the arbitrator, or the pub-owning
40business 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.

Investigations by Adjudicator

50 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
5suspect 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
53.

(2) The Adjudicator may not carry out an investigation until the guidance
10required by section 58(1) has been published.

51 Investigation 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
15section 52.

(2) An 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) 20An investigation report need not identify the pub-owning business concerned.

(4) If 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.

52 Forms of enforcement

(1) 25If, as a result of an investigation, the Adjudicator is satisfied that a pub-owning
business has failed to comply with the Pubs Code, or has failed to follow a
recommendation made under section 53, the Adjudicator may take one or
more of the following enforcement measures—

(a) make recommendations;

(b) 30require information to be published;

(c) impose 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) 35not to take any enforcement measures against one or more of the
businesses.

53 Recommendations

(1) If the Adjudicator chooses to enforce through making recommendations, that
means recommending what the pub-owning business should do in order to
40comply with the Pubs Code, and specifying the time by which the business
should do it.

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

54 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
5information 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) 10the 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.

55 Financial penalties

(1) 15If 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) 20the 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) 25the 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
30Consolidated Fund.

(6) The Secretary of State must make regulations—

(a) specifying the permitted maximum, or

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

56 Recovery of investigation costs

(1) 35The Adjudicator may require a pub-owning business to pay some or all of the
costs 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
4053.

(2) The 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) 5the Adjudicator is satisfied that the complaint was vexatious or wholly
without 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) 10by when the costs are to be paid, and

(d) how 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) 15the amount to which it relates.

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

Advice and guidance by Adjudicator

57 Advice

20The Adjudicator may give advice on any matter relating to the Pubs Code to—

(a) tied 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.

58 25Guidance

(1) The 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
30carrying out investigations,

(c) the 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 55.

(2) 35In addition, the Adjudicator may publish guidance about the practices and
procedures 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) 40steps that pub-owning businesses need to take in order to comply with
the 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)
and (d) within 6 months beginning with the day on which section 40 comes into
5force.

(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

59 Annual report

(1) 10After 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) investigations carried out by the Adjudicator,

(c) 15cases in which the Adjudicator has taken the enforcement measures
mentioned in section 52, and

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

(3) If the Adjudicator has made recommendations under section 53, the report
20must 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) In this section “reporting period” means—

(a) 25the period beginning with the day on which section 40 comes into force
and ending with the following 31 March, and

(b) each successive period of 12 months.

Funding of Adjudicator

60 Levy funding

(1) 30The Adjudicator may require pub-owning businesses to pay in each financial
year a levy towards the Adjudicator’s expenses.

(2) Before 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
35sums received or expected to be received from other sources.

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

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

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

(b) 5when 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
as a debt.

(8) The Adjudicator must publish details of levies and an explanation of how the
10amounts 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) In 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
15for that financial year.

61 Loans by Secretary of State

The Secretary of State may make loans to the Adjudicator.

Supervision of Adjudicator

62 Review of Adjudicator and guidance from Secretary of State

(1) 20The 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 40
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
25review period.

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

(5) A review may consider whether it would be desirable to amend or replace any
regulations for the time being in force under section 48(2) or (7) or 55(6).

(6) 30As 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.

(7) As a result of the findings of a review, the Secretary of State may give guidance
to the Adjudicator about any matter relating to the Adjudicator’s functions.

(8) 35The Adjudicator must take account of the guidance in carrying out functions.

63 Abolition of Adjudicator

(1) The Secretary of State may by regulations abolish the Adjudicator—

(a) if, as a result of the findings of a review, the Secretary of State is
satisfied that the Adjudicator has not been sufficiently effective in
securing compliance with the Pubs Code to justify the continued
existence of an Adjudicator,

(b) 5if, as a result of the findings of a review, the Secretary of State is
satisfied that it is no longer necessary for there to be an Adjudicator to
secure compliance with the Pubs Code, or

(c) if the Pubs Code is revoked and not replaced.

(2) The regulations may include provision transferring the Adjudicator’s
10property, rights and liabilities.

(3) For the purpose of giving effect to the abolition of the Adjudicator, the
regulations may amend or repeal this Part or any other enactment, including
an enactment comprised in subordinate legislation within the meaning of the
Interpretation Act 1978.

64 15Information to Secretary of State

The Secretary of State may require the Adjudicator to provide information to
assist the Secretary of State in carrying out functions under this Part.

Supplementary

65 “Tied pub”

(1) 20In this Part a “tied pub” means premises in relation to which conditions A to D
are met.

(2) Condition A is that the premises have a premises licence authorising the retail
sale of alcohol for consumption on the premises.

(3) Condition B is that the main activity or one of the main activities carried on at
25the premises is the retail sale of alcohol to members of the public for
consumption on the premises.

(4) Condition C is that the premises are occupied under a tenancy or licence.

(5) Condition D is that the tenant or licensee of the premises is subject to a
contractual obligation that some or all of the alcohol to be sold at the premises
30is supplied by—

(a) the landlord or a person who is a group undertaking in relation to the
landlord, or

(b) a person nominated by the landlord or by a person who is a group
undertaking in relation to the landlord.

(6) 35In this section—

• “alcohol” has the meaning given by section 191 of the Licensing Act 2003;

• “premises licence” has the same meaning as in that Act.

66 “Pub-owning business”

(1) In this Part a “pub-owning business” means a person who is the landlord of 500
40or more tied pubs.