Ashurst Morris Crisp has attacked a new scheme designed to avoid costly rent disputes for leaving out any mention of mediation.
Under the scheme, which was launched by the Law Society and the Royal Institution of Chartered Surveyors in July, landlord and tenants can agree that any disputed rent or lease terms be determined by a solicitor arbitrator or an expert surveyor.
The new scheme, called Professional Arbitration on Court Terms (PACT), is meant as an alternative to fighting disputes in the county courts, previously the only avenue open to aggrieved landlords or tenants.
However, in a briefing note to clients, Ashursts property partner Michael Madden says: “It is unfortunate that the proponents of the scheme did not incorporate some initial reference to mediation… Before launching the parties down the adversarial route of arbitration/expert determination, they should be encouraged to review constructively their present and possible future commercial relationship.”
He generally supports PACT but argues that mediation can avoid expensive oral hearings which might arise if the parties went straight to arbitration or experts.
“Rent review arbitrations can take on a life of their own if the arbitrator is not sufficiently firm,” he told The Lawyer. “They have been known to go on for over 30 days. When that happens the only people smiling are the ones who rent out the arbitration suites for £1,000 a day.”
But Linklaters & Paines head of property litigation Katie Bradford, who sat on the Law Society/RICS joint working party which devised PACT, said: “I think mediation arises automatically. PACT is something that parties have to agree to use in the first place to resolve simple points like rent.”
If the parties involved want more complicated points resolved, she said, then they are likely to agree to mediation as well.