As long as the Pubs Code, regulating the relationship between the large pub owning businesses and their tied pub tenants, raises issues which haven’t been resolved, the risk of further political interference in the tied pub sector increases. In the first of a series of articles about making the Pubs Code work, we look at whether Paul Newby as Pubs Code Adjudicator is the man to do just that.

What’s the fuss?

The appointment of Paul Newby as the Pubs Code Adjudicator has been dogged by public controversy, centring around his continuing financial interests in Fleurets, delays in the progression of MRO disputes and his meetings with representatives of the regulated pub companies.

Continuing financial interests in Fleurets

In a previous article last summer we suggested that it was Paul Newby’s continuing financial interests in Fleurets that might form the basis of successful challenges to him acting as arbitrator in MRO disputes. Last December the Telegraph reported that “… four out of twelve challenges made by pub landlords [have been] upheld by the Chartered Institute of Arbitrators, of which [Mr Newby] is a member, since his office was created in July last year.

It transpires that a total of six challenges have been upheld against Paul Newby acting as arbitrator, and that at February 2018 one challenge remained undetermined, suggesting that the majority of challenges against him have been upheld. It should be a matter of great concern to the sector that:

  • All the challenges were made by tied pub tenants;
  • The majority of challenges have been upheld;
  • Mr Newby continues to act as arbitrator, even where the challenges were successful;
  • The PCA is in public dispute with the Chartered Institute of Arbitrators, whose rules apply to the arbitrations, about the effect of successful challenges.

How long can the status quo continue without lasting damage being caused?

This January Richard Harrington, the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, confirmed that he was responsible for the Pubs Code and that the Government was committed to both the Code and ensuring that “… tied tenants can operate in a fair environment that allows their businesses to thrive”. In addition he:

  • Acknowledged that “individual tenants do not have confidence in [Mr Newby’s] approach [to arbitrate individual disputes concerning the pubs code]”.
  • Admitted that he “would be very ignorant, blind and deaf to what has been said today if I said everything was fine.
  • Identified “key concerns about the speed of the arbitration process”.
  • Noted the appointment of Fiona Dickie as Deputy Pubs Code Adjudicator, and that she is arbitrating individual disputes.
  • Recognised that a point made about “… the lack of enforcement is a valid one.”

Lack of confidence

The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. The fact that challenges have succeeded against Mr Newby means that it is the view of the Chartered Institute of Arbitrators’ Challenge Panellists, who upheld challenges, that “circumstances exist that give rise to justifiable doubts as to [Mr Newby’s] impartiality or independence”.

For Mr Newby to continue arbitrating those matters means that he is not abiding by the very rules that Parliament directed be followed in the Small Business, Enterprise and Employment Act 2015. Where he has been successfully challenged, he suffers from apparent bias, and he is not achieving the object of the Arbitration Act 1996 by continuing to sit as arbitrator. Yet he refuses to accept that he is no longer arbitrator in those arbitrations where challenges have been upheld.

This puts the regulated tied sector in unique territory, forcing tied pub tenants to decide whether to sue the Adjudicator in the High Court due to doubts as to his impartiality.

Lack of speed in the arbitration process

Data published by the Pubs Code Adjudicator’s office shows that it has 63 arbitrations which have been running for more than 6 months – nearly a third of the continuing arbitrations referred to the office. In March, 21 cases (or more than 10%) referred for arbitration in 2016 remained unresolved. Those may well be from tied pub tenants who are determined to see the process to the end.

There are a number of efficiencies that the PCA’s office could consider to speed up the arbitration process. We would recommend the following priorities:

  1. Given the concerns identified about tenant confidence in Mr Newby, and that either he or Fiona Dickie has the discretion to appoint third parties to arbitrate disputes, careful thought should be given to appointing third party arbitrators from the outset, particularly where legal issues are involved and it might be desirable to have a lawyer act as arbitrator in any event
  2. Secondly, there are likely to be case management issues. The way to resolve these is to:
  • Streamline the way that parties set out their cases, limiting the number of statements of case, and their length.
  • Automatically list cases for a hearing after the last statement of case has been filed, with directions for the parties to file their proposed directions in advance, and agree those directions if possible. The uncertainty associated with hearings is a good reason for parties to agree matters between themselves.
  • At the first hearing, list a time window within which a final decision on the issues will be reached, either in writing or on the papers. This will focus minds on the timescales within which issues must be resolved.

Meetings with representatives of the regulated pub companies

Finally, there is some consternation that Mr Newby has been meeting with representatives of the regulated pub companies. This should not come as a surprise as the regulator / regulated relationship must involve a degree of interaction between the two. His meetings also mirror the behaviour of the Groceries Code Adjudicator.

The concern appears to be that the meetings are not being conducted in a transparent way. In view of Mr Newby’s fairly obvious connection with the pub-owning companies through his financial interests in Fleurets, the problem Mr Newby faces in conducting his meetings with those that he regulates appears to be a lack of confidence in him.

There is no easy way of overcoming this apparent lack of confidence in Mr Newby. Perception is everything in quasi-judicial roles. It is notable that Fiona Dickie has quickly gained the confidence of tied pub tenants, whereas anxiety for some individual pub tenants lingers over Mr Newby.

In the second part in this series we consider the MRO Option – read more HERE

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.