Time to bring on the referee? The Government's proposed Adjudicator for the Groceries Code - Business, Innovation and Skills Committee Contents

3  Arbitrations

What the draft Bill provides for

49. The draft Bill would make the Adjudicator or their appointee the designated arbitrator of disputes under GSCOP. Clauses 2 and 3 set out duties and functions of the Adjudicator in relation to arbitration.

Discussion and conclusions

50. In its Response to Consultation, the Government summarised the concerns of retailers in relation to the Adjudicator's arbitration functions:

    All of the retailers expressed concern over the arbitration function where the body's suitability to rule on a complaint might be called into question if the body had already determined there were grounds for investigation and success in arbitration.

    There were further concerns that such a power could provide incentives for parties to make speculative complaints or threats to retailers in the hope of obtaining improved commercial terms. There was also a danger of suppliers being encouraged by professional consultants to bring cases on a no win, no fee basis.[40]

51. Clause 2(1)(b) of the draft Bill states that the arbitrator can: "appoint another person to arbitrate." The Explanatory notes to the draft Bill provide further detail :

    […] the Adjudicator could appoint another person where a conflict of interest may exist (for example where the Adjudicator has previously advised on or investigated an issue which is relevant to the dispute) […]. [41]

52. The draft Bill therefore provides the Adjudicator with the means to avoid conflicts of interest by appointing alternatives if necessary.

53. As mentioned, there was concern that suppliers might be encouraged to initiate disputes by professionals operating on a 'no win, no fee' basis. However, we are not convinced that these concerns are of greater significance than for any other dispute resolution system. The Department clarified the position on the use of 'no win no fee' arrangements, stating that:

    […] we do not think that the Order provides any great spur to a "no win, no fee" culture […] The fact there have been no known arbitrations to date seems to support that conclusion.[42]

54. We conclude that the provisions in the draft Bill relating to arbitration and potential conflicts of interest of the Adjudicator are satisfactory and provide the necessary safeguards.

40   Paragraphs 3.5-3.6 Back

41   Paragraph 25 Back

42   Response to question 2, at paragraphs (i)-(j) Back

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Prepared 28 July 2011