Small Business, Enterprise and Employment Bill (HL Bill 91)

(b) in connection with a rent assessment or assessment of money payable
by the tenant in lieu of rent;

(c) in connection with a significant increase in the price at which any
product or service which is subject to a product or service tie is supplied
5to the tied pub tenant where the increase was not reasonably
foreseeable—

(i) when the tenancy or licence was granted, or

(ii) if there has been an assessment of a kind mentioned in
paragraph (b), when the last assessment was concluded;

(d) 10after a trigger event has occurred.

(7) The Pubs Code may specify what “renewal” means in relation to a tenancy or
a licence for the purposes of subsection (6).

(8) In subsection (6) “pub arrangements”, in relation to a tied pub, means—

(a) the tenancy or licence under which the tied pub is occupied, and

(b) 15any other contractual agreement which contains an obligation by virtue
of which condition D in section 68 is met in relation to the premises.

(9) In this Part a “trigger event”, in relation to a tied pub tenant, means an event
which—

(a) is beyond the control of the tied pub tenant,

(b) 20was not reasonably foreseeable as mentioned in subsection (6)(c),

(c) has a significant impact on the level of trade that could reasonably be
expected to be achieved at the tied pub, and

(d) is of a description specified in the Pubs Code.

(10) In this Part “market rent”, in relation to particular premises at any time, means
25the rent which the premises might reasonably be expected to fetch at that time
in the open market, on the assumption that condition B in section 68 continues
to be met.

44 Market rent option: procedure

(1) The Pubs Code may—

(a) 30make provision about the procedure to be followed in connection with
an offer of a market rent option (referred to in this Part as “the market
rent option procedure”);

(b) confer functions on the Adjudicator in connection with that procedure.

(2) Provision made under subsection (1) may, in particular—

(a) 35make provision for the tied pub tenant to give notice to the pub-owning
business that the tenant—

(i) considers that circumstances are such that the pub-owning
business is required to offer the tenant a market rent option, and

(ii) wishes to receive such an offer;

(b) 40require the appointment of a person (referred to in this Part as an
“independent assessor”) to determine the market rent of the premises
concerned in a case where the pub-owning business and the tied pub
tenant cannot agree on that market rent;

(c) require that appointment to be made by the pub-owning business and
45the tied pub tenant acting jointly or (where they cannot agree on a
person to appoint) by the Adjudicator;

(d) require the Adjudicator to set criteria which a person must satisfy in
order to be appointed as an independent assessor;

(e) specify that the determination of the market rent by the independent
assessor must be conducted in accordance with provisions of
5documents specified in the Pubs Code;

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

(3) The Pubs Code may make provision for—

(a) the tenancy or licence under which the tied pub is occupied, and

(b) 10any other contractual agreement entered into by the tied pub tenant
with the pub-owning business in connection with the tenancy or
licence,

as they are in force when a notice is given by virtue of subsection (2)(a), to
continue to have effect until such time as the market rent option procedure has
15come to an end (regardless of whether any of the agreements would or could
otherwise cease to have effect before that time).

(4) The Pubs Code may, for the purposes of subsection (3), specify the
circumstances in which the market rent option procedure is to be treated as
having come to an end.

45 20Market rent option: disputes

(1) The Secretary of State may by regulations confer functions on the Adjudicator
in connection with the resolution of disputes relating to the offer of a market
rent option.

(2) The regulations may, in particular, make provision concerning the resolution
25of disputes about whether—

(a) circumstances are such that a pub-owning business is required to offer
a tied pub tenant a market rent option;

(b) a proposed tenancy or licence is MRO-compliant;

(c) a determination of the market rent of a tenancy or licence made by an
30independent assessor has been made in accordance with the Pubs
Code;

(d) any other requirement of the market rent option procedure has been
complied with.

(3) The regulations may, in particular, confer on the Adjudicator the function of
35determining the market rent of a tenancy or licence in such circumstances as
may be specified in the regulations.

(4) Nothing in sections 48 to 52 applies in relation to provision made by virtue of
section 43 or 44 but the regulations may include provision which is similar to
that contained in or made under those sections.

46 40Review of the Pubs Code

(1) The 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
review 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) 5lay 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 42(3), and

(b) any revisions of the Pubs Code which, in the Secretary of State’s
10opinion, would enable the Pubs Code to more fully reflect those
principles.

47 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
15tenant—

(a) which 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) 20which 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) 25The 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) Regulations 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) 30A term of any agreement between a pub-owning business and a tied pub
tenant is void to the extent that it purports to—

(a) prevent the tenant from referring a dispute to the Adjudicator for
arbitration in accordance with regulations under section 45 or in
accordance with section 48, or

(b) 35penalise 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) regulations under section 45,

(b) section 50,

(c) 40section 51, or

(d) regulations under section 51(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
after 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

48 5Referral for arbitration by tied pub tenants

(1) In accordance with the following provisions of this section and section 49, 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
10arbitrable, 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
15it 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
20has 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.

49 25Timing 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 48.

(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
30the 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
comply with that requirement may not be referred until the day after the day
35on 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.

50 Arbitration commenced by pub-owning businesses

(1) 40This 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,
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) 5which 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 48 (were it not for the
10commencement 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
15that dispute, and has given notice to that effect in accordance with
subsections (5) to (7).

(4) The Adjudicator must either—

(a) arbitrate the Pubs Code dispute, or

(b) appoint another person to arbitrate that dispute.

(5) 20Notice under subsection (3)(b) must be given in writing to—

(a) the pub-owning business, and

(b) the 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
25tenant, 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) 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) 30Section 14 of the Arbitration Act 1996 makes provision about the
commencement of arbitral proceedings.

51 Arbitration: supplementary

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

(a) refers a dispute to the Adjudicator under section 48, or

(b) 35gives notice as mentioned in section 50(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
regulations made by the Secretary of State (except in specified cases as
mentioned in subsection (3)(b)).

(3) 40The regulations may make further provision as to the fee, and may in
particular—

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

(a) 5the 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) The pub-owning business concerned must pay the reasonable fees and
10expenses of the arbitrator in respect of the arbitration, except where—

(a) the arbitration follows a referral by the tenant under section 48, 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
15regulations 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) specify circumstances in which the arbitrator may make an award
requiring the tenant to pay costs exceeding that amount.

52 20Information about arbitration

(1) If the Adjudicator appoints another person as arbitrator under section 48(5)(b)
or 50(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) 25The Adjudicator may enforce the requirement to provide information by
bringing civil proceedings to obtain an injunction.

Investigations by Adjudicator

53 Investigations

(1) The Adjudicator may investigate whether a pub-owning business has failed to
30comply with the Pubs Code if the Adjudicator has reasonable grounds to
suspect 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
56.

(2) 35The Adjudicator may not carry out an investigation until the guidance
required by section 61(1) has been published.

54 Investigation reports

(1) Following an investigation, the Adjudicator must—

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

(b) 40consider whether to use any of the enforcement powers mentioned in
section 55.

(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) 5An 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.

55 Forms of enforcement

(1) 10If, 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 56, the Adjudicator may take one or
more of the following enforcement measures—

(a) make recommendations;

(b) 15require 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) 20not to take any enforcement measures against one or more of the
businesses.

56 Recommendations

(1) If the Adjudicator chooses to enforce through making recommendations, that
means recommending what the pub-owning business should do in order to
25comply 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.

57 Requirements to publish information

(1) If the Adjudicator chooses to enforce through requiring information to be
30published, that means requiring the pub-owning business to publish
information 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) 35how it must be published, and

(c) the 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.

58 Financial penalties

(1) If 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) 5The financial penalty is imposed by giving the pub-owning business written
notice specifying—

(a) the grounds for imposing the penalty,

(b) the amount of the penalty,

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

(d) 10how it must be paid.

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

(a) the imposition of a financial penalty, or

(b) its amount.

(4) Financial penalties under this section are recoverable by the Adjudicator as a
15debt.

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

(6) The Secretary of State must make regulations—

(a) specifying the permitted maximum, or

(b) 20specifying how the permitted maximum is to be determined.

59 Recovery of investigation costs

(1) The 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) 25the business has failed to comply with the Pubs Code, or

(b) the business has failed to follow a recommendation made under section
56.

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

(a) 30the 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
without merit.

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

(a) 35the 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) how they are to be paid.

(4) A person required to pay costs under this section may appeal to the High Court
40against—

(a) the imposition of the requirement, or

(b) the 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

60 Advice

5The 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.

61 10Guidance

(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
15carrying 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 58.

(2) 20In 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) 25steps 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) 30The Adjudicator must publish the first guidance under subsection (1)(a), (b), (c)
and (d) within 6 months beginning with the day on which section 41 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.

35Adjudicator’s reporting requirements

62 Annual 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) 40arbitrations conducted by the Adjudicator,

(b) investigations carried out by the Adjudicator,

(c) cases in which the Adjudicator has taken the enforcement measures
mentioned in section 55, and

(d) cases in which the Adjudicator has exercised functions in relation to the
5offer of a market rent option or the provision of parallel rent
assessments.

(3) If the Adjudicator has made recommendations under section 56, 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
10Secretary of State.

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

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

(a) the period beginning with the day on which section 41 comes into force
and ending with the following 31 March, and

(b) 15each successive period of 12 months.

Funding of Adjudicator

63 Levy funding

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

(2) 20Before 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) 25The 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) 30The 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
35as 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) 40In 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.