Arbitration and ADR (Property)
Property law goes back a long time in the UK – originating in feudal law 1,000 years ago. Since then government and the EU have added many more rules and regulations. Now, in the 21st Century, we are almost overwhelmed by them: but if you are involved with property you need to know the rules.
- Arbitration – A means of resolving disputes using an independent arbitrator as opposed to a court of law – RICS provide such a service.
- Often used for lease contract disputes, rent reviews etc.
- The Small Claims procedure in the County Courts is an arbitration service.
The Courts & Property Dispute Resolution
The courts are one means of resolving disputes between individuals, companies and landlords and tenants, but they are not necessarily the most effective, particularly where the parties previously enjoyed and may well want to continue to enjoy a close working relationship.
The main problem with the court system is that it is primarily an antagonistic process: it pits one party against the other in order to determine ultimately a winner and a loser.
As a consequence the court system tends to emphasise and heighten the tension and conflict between the parties as each tries to show the other in the worst possible light, rather than trying to reach an amicable compromise.
Alternative Dispute Resolution (ADR)
The courts themselves recognise the effectiveness and increasing importance of alternative means of resolving disputes, and indeed judges will sometimes suggest this course of action prior to a court hearing.
What is Arbitration
This is a procedure where the parties to a dispute refer the issue to a third party (usually an expert in the field) for resolution rather than taking the matter to the law courts.
Section 1 of the Arbitration Act 1996 states:
- The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
- The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.
Many lease agreements make provision for disputes arising between landlord and tenants to be dealt with by arbitration as opposed to a court of law, and usually specify how the arbitrator is to be appointed, often with ultimate reference to the President of RICS.
If one party seeks to start a court action in the face of a prior agreement to arbitration, the other party can request a stay of litigation from the court. If, on the other hand both parties opt for court action the arbitration agreement can be ignored.
There a limited rights of appeal after an arbitration decision is made and may only be allowed at the discretion of the courts on a point of law.
The court has the power to order a party to comply with an order of an arbitration tribunal.
In general the courts have no objections to individuals settling their disputes by voluntary means such as arbitration though they are careful to maintain their supervisory role.
Arbitration agreements are no different to other forms of contract and as with other forms of contract law disputes thecourts will strike out any attempt to oust their ultimate jurisdiction as being against public policy.
Both parties to an arbitration dispute will be jointly and severally liable for the costs and fees involved.
The Advantages of Arbitration:
- Privacy - Arbitration tends to be a private procedure so outsiders do not have access to sensitive information and the parties do not have the risk of bad publicity arising from newspaper reports.
- Informality - the proceedings are much less formal that a court case and scheduling is often more flexible.
- Speed - The process is usually much quicker that a court case. However, if one party decides to challenge the decision through the courts then the process will be ultimately longer and greater in cost.
- Expertise - The person appointed is usually someone with expert knowledge of actual practise in the filed, whose decision should reflect this.
- Cost - Arbitration is usually a much cheaper process. However, the cost of expert’s fees should not be underestimated.
Small Claims Procedure in the County County
The Small Claims procedure is another for of arbitration service which has been available since 1973.
The procedure is operated by county court district judges.
Reference to arbitration is now automatic in cases involving amounts of less than £5,000, and may also be used for greater amounts when both parties agree. See Small Claims Court
Arbitration for Codes of Conduct
As part of its remit in the regulation of trade practices the Office of Fair Trading has encouraged the development of several voluntary codes of practise within several areas. It is usual that such schemes provide for arbitration schemes to resolve the most intractable of disputes.
These schemes are not compulsory and do not replace the consumers legal rights, but they do provide a quick and inexpensive means to resolves disputes shout of court actions. Consumer Arbitration Act 1988
The Housing Ombudsman Scheme
The Independent Housing Ombudsman Scheme deals with disputes between landlords and tenants in England.
The Scheme was established under the Housing Act 1996 with covering more than 2,000 landlords.
The Housing Act 1996 requires all social landlords to belong to the Scheme. But it does NOT include local councils: council tenants must complain to the Local Government Ombudsman.
It includes all landlords registered with the Housing Corporation and any landlord who has taken over local authority homes, such as a ‘local housing company’.
The Scheme also includes private landlords which have joined it voluntarily. Many unregistered subsidiaries of registered social landlords have joined, as have some other landlords.
Tenants can search our online for registered landlords.
Complaints should be made as soon as possible to the landlord, and within any time period they specify in their procedures. The Ombudsman will normally only accept a complaint which was made to the landlord within 12 months.
Complaints about landlords generally fall into the following categories:
- Failure to carry out repairs in a reasonable time
- Claiming tenants were in rent arrears when they were not
- Charging you more than anybody else for the same service
- Unreasonably refusing to give tenants a home or a transfer
Generally the Ombudsman will not deal with:
- Complaints because tenants do not agree with general policies or decisions of the landlord
- Quarrels between tenants and neighbours – but the Ombudsman will consider a complaint about how the landlord dealt with a nuisance created by a neighbour
- Problems that are about to go to court (or have already done so), or that the Ombudsman thinks would be dealt with better that way
- Complaints about the level and amount of rent and service charges – rent offices or rent assessment committees will generally consider these. But the Ombudsman will consider complaints about how rents or service charges are administrated or calculated, failures to supply services, or how charges are applied to an individual
- Complaints from contractors, consultants, employees or others who are paid by the landlord, about their professional or commercial relationship
- Complaints from neighbours who live near a landlord’s property.
Administrative Tribunals examples include:
- The Rent Assessment Committee
- The Lands Tribunal
- Social Security Appeals
- The Rent Assessment Committee
Types of Tribunal
There are two main types of tribunal: the policy tribunal – for example, welfare tribunals; and the court-substitute tribunal – for example, industrial tribunals.
For policy tribunals it is important to limit appeals, since one of the main reasons for the tribunal rather than the court is to avoid legal decisions that would inevitably result from the court’s involvement.
Tribunals heard 1.15 million cases in 1995-96.
The three largest tribunals heard 940,000 cases and decided 290,000. The Valuations Tribunal 670,000 cases (58%) (cost £10.9 m), the Social Security Appeals Tribunal 160,000 cases (14%) (cost £42.5m), and the Industrial Tribunal – 110,000 cases (10%) (cost £ 34.7m).
Some Examples of Tribunals
- The industrial tribunals. These have legally qualified chairmen, and an employer’s (usually from the CBI) and employee’s representative (usually from a trade union). Appeals lie to the Employment Appeal Tribunal on law or as a rehearing before a differently constituted IT on fact.
- The social security appeal tribunals, of which there are more than 200. They, like the ITs, have a legally qualified chairman and two lay members. Appeals lie to the Social Security Commissioner, on point of law. Similar tribunals include the NHS and mental health review tribunals.
- The Lands Tribunal - on the same level as the High Court
- Valuation Tribunals - tax and VAT assessment appeals.
Why has Tribunal use Grown?
Tribunals become more popular because:
- there has been an extension of the powers and duties of the State – e.g. in welfare, housing and tax
- there has been a creation of rights and duties between private individuals and companies – e.g. in employment
- administrative decisions are now more complex and too legal in nature for the departments of government, and too many in number for them to be dealt with solely by the courts – there are now more cases taken to administrative tribunals than to ordinary courts
- tribunals are made up of experts in the field making it more efficient for them to deal with specific aspects of the law.
Tribunals are essentially courts with simplified procedure, and such differences as there are not significant in most cases.
The Tribunals and Inquiries Act 1992 requires reasons for decisions to be given by tribunals, and allows for appeals to the High Court from most tribunals.
The Advantages and Disadvantages of Tribunals
- Lower cost
- Expert knowledge of their particular subject
- Legally qualified chairmen – helping to ensure justice is done
- The no-costs rule and lack of legal aid penalise poor litigants, although they do keep costs down.
- The procedure means that if you do not know what you are doing the tribunal will help you.
- Tribunals’ local knowledge can be beneficial.
- The lack of fees encourages poor applicants, although it may also result in ill-founded claims.
- They help reduce the workload of the judiciary.
- They reduce the workload of government departments.
How are Tribunals Controlled
- Judicial review
- Appeals are usually to the High Court on points of law
- Appeal tribunals