Landlord & Tenant Arbitration
Arbitration differs from mediation which although a consensual and confidential process it does not attach a binding resolution and therefore may not result in a definitive and acceptable outcome to the parties.
Litigation is an uncertain drawn-out draining and costly process. Irrespective of how robust a case may appear, the desired final outcome at court cannot be guaranteed. On the other hand, arbitration is a consensual and private process to resolving disputes which can bring about a binding resolution for all parties outside of the court system. It fundamentally differs from litigation as all parties are willing participants and not at the mercy of the court.
Arbitration can bring about ownership of the process by the parties and provide autonomy and flexibility to the final outcome along with confidentiality and privacy, at quicker turnaround time and lower costs. Most disputes can be arbitrated including for breach of contract, claims for disrepairs & damages and human rights issues. However, disputes arising from ASTs pertaining to breach of the tenancy deposit scheme and rent repayment orders are governed by statute whilst matters pertaining to domestic arbitration of landlord and tenant disputes may also be subject to restrictions under the Consumer Rights Act 2015 (previously the Unfair Terms in Consumer Contracts Regulations 1999). Where terms considered unfair, not individually negotiated and significantly disadvantageous are automatically rendered void. This is also likely to apply to an arbitration clause within an AST agreement. While it still may be possible for parties to agree to utilise arbitration after a dispute has arisen, a standard arbitration clause in an AST is likely to breach the 2015 Act. If a lease contains an arbitration agreement expressed in mandatory terms, then subject to the 2015 Act, the parties are required to arbitrate. If a party then proceeds to litigate in breach of the arbitration clause, then this can be a breach of contract and court proceedings could be stayed.
It is also worth noting that arbitration agreements pertaining to claims valued at less than £5,000 are inevitably deemed unfair under the 2015 Act. However, this is unlikely to prohibit any landlord claims for rent arrears or for substantial disrepair.
