In 2023, the tenant referred a dispute with Star to the PCA for arbitration. As part of this dispute, the operator alleged that Star had breached regulation 46 of the Pubs Code, relating to premises insurance.
The PCA appointed an alternative arbitrator, who issued an award, to decide the dispute.
During the arbitration, Star did not tell the tenant or the arbitrator that it had admitted breaches of regulation 46 of the Pubs Code, or that the PCA was in the process of reviewing those breaches at the time of the arbitration.
The pubco also told the arbitrator it believed its communications to tenants had satisfied its obligations under regulation 46.
Lack of transparency
However, the arbitrator decided the tenant’s complaints, including about regulation 46, were worrisome, and ordered the tenant to pay the arbitrator’s fee of £5,832.
In Pubs Code arbitrations, the pub-owing business must pay the reasonable fees and expenses of an arbitrator, except if the arbitrator decides the referral was vexatious, in which case they can require the tenant to pay some or all of those costs.
The PCA also has legal powers to request information or documents from an arbitration for regulatory purposes.
Upon reviewing the arbitrator’s award of costs against the tenant and the reasons for it, the PCA contacted Star to express concern with its conduct in this arbitration.
In particular, the PCA was concerned that Star’s lack of transparency about its admitted breaches of regulation 46 may have influenced the arbitrator’s decision to order the tenant to pay costs.
Star agreed it should have informed the arbitrator and the tenant about its breaches of regulation 46, and that the PCA was reviewing those breaches.
Agree a solution
A spokesperson for Star Pubs told The Morning Advertiser (The MA): “Following the outcome of the arbitration, the documentation was reviewed by the PCA and concerns were raised with Star Pubs.
“Star then reviewed the submissions that had been provided and took the view that in this instance the costs of arbitration should be reimbursed to the tenant.
“We are pleased that we were able to agree a solution with the tenant and to the PCA for bringing the situation to our attention.”
The pubco also acknowledged it was possible the information could have influenced the arbitrator’s decision, including in respect of costs.
A statement on the Government website from the PCA reads: “The PCA expects all pub-owning businesses participating in Pubs Code arbitrations will actively seek to avoid any practice which may result in unfairness.
“For this reason, the PCA expects all pub-owning businesses will draw information about regulatory engagement with the PCA to the attention of a tenant and arbitrator where that information is relevant to the issues in dispute.”
