Supplementary memorandum from BBPA
LETTER FROM DLA PIPER TO BBPA
LEGAL CONSEQUENCES OF THE UK PUB INDUSTRY
FRAMEWORK CODE OF PRACTICE AND INDIVIDUAL PUB COMPANY CODES OF
PRACTICE FOR TIED TENANTED AND LEASED PUB
During the hearing of the Business, Innovation
and Skills Committee "Pub Companies: follow up" on 8 December
2009 you promised to let the Committee have an explanation
of the legal consequences of the new Framework Code of Practice
(FCOP). This letter sets out our view of the legal position.
The FCOP reflects an agreement between various
parties to observe and carry out certain functions in relation
to the letting of pubs. Those parties are the BBPA as an organisation,
the members of the BBPA (insofar as they are concerned with the
letting of pubs), the BII (who will undertake certain tasks under
the FCOP) and the FLVA. The agreement between the parties is legally
binding in the sense that any such contract would be. The effect
of the FCOP is therefore that, as between the contracting parties,
all BBPA members concerned with letting pubs are obliged to comply
with its terms, one of which is an obligation to produce individual
company codes of practice.
These companies' individual company codes must
reflect the terms of the FCOP. They must then obtain accreditation
for their codes from the BII, and that accreditation must be maintained.
The introduction of a code and the maintenance of accreditation
are requirements of eligibility of membership of the BBPA, and
non-compliant members can be expelled.
Individual company codes are necessary first
because companies must be given the freedom to compete by going
further than the FCOP requires; and secondly because the FCOP
cannot be directly relied upon by individual tenants or lessees,
whose contractual relationship is with the company.
Company codes will be signed by the pub company
and the individual tenants or lessees, provided, of course, those
tenants or lessees are prepared to comply with their terms. Tenants
and lessees cannot be compelled to enter into this agreement.
As well as new tenants and lessees, existing tenants and lessees
will be invited to sign to the company code. In view of the fact
that company codes will include obligations on the part of the
tenant or lessee, the codes will constitute a legal contract between
the parties, again enforceable in the way that such arrangements
are usually enforceable.
If, therefore, a company fails to comply with
its own code, aggrieved tenants or lessees would, in principle,
be able to complain to a court of law or other tribunal, such
as an arbitrator if appropriate. However, an aggrieved tenant
or lessee would first be able to make complaint to the BBPA, the
BII or the FLVA, who would then consider the status of the relevant
company's BII accreditation and BBPA membership. Such a complaint
may itself resolve any difficulty.
These arrangements should, therefore, secure
access to the benefits of the FCOP for all tenants and lessees
of BBPA member companies. Whilst the arrangements do not cover
companies who are not members of the BBPA the BBPA believes that
non-member companies will appreciate the value of a BII accredited
code, and are therefore likely to fall into line.
Finally, a particular question was also raised
concerning upward only rent review clauses. We understand that
it has been suggested that any lease containing such a clause
may need to be amended by way of a Deed of Variation. The cost
of this would not be necessary given the agreement that will exist
between the company and the tenant/lessee based on the company
code. Should the lessee want the additional protection offered
by a Deed of Variation it is not unreasonable that such a cost
be met by that licensee.
8 January 2010