Commercial Rent (Coronavirus) Bill

(Limited Text - Ministerial Extracts only)

3rd reading
Tuesday 15th March 2022 Lords Chamber

Moved by

[Lord Grimstone of Boscobel]

1: Schedule 1, page 21, line 19, at end insert—
“(g) in section 74 (immunity of arbitral institutions)—(i) in subsection (1), for “appoint or nominate” there were substituted “appoint, nominate or remove”;(ii) in subsection (2), for “appointed or nominated”, in both places, there were substituted “appointed, nominated or removed”.” Member’s explanatory statement
The amendment would ensure that section 74 of the Arbitration Act (which prevents an arbitration body from incurring liability) applies to the function under the Bill of removing an arbitrator on the same basis as it currently applies to the function of appointing an arbitrator.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, it is a pleasure to lead this Bill on Third Reading. As we are all aware, this legislation supports the Government’s important aim of mitigating the impacts of the pandemic. The Bill does this by protecting certain rent debt and establishing an arbitration scheme, which has been designed to balance the impact on both landlords and tenants. It has therefore been gratifying to see the level of support for the Bill across the House.

Turning first to the government amendment, I am grateful to the noble Earl, Lord Lytton, and the RICS for sharing their experience and considering the practical applications of the Bill’s provisions. I said on Report that I would consider and return to a point about the extent to which arbitration bodies may have immunity. This technical amendment follows that consideration.

Section 74 of the Arbitration Act essentially protects an arbitration body from incurring liability in relation to a function of appointing an arbitrator. Amendment 1 would provide that Section 74 also applies where approved arbitration bodies exercise their function of removal of arbitrators under the grounds listed in the Bill. The bodies will thereby have immunity for things done or omitted in the discharge of this function unless they act in bad faith. I beg to move.

[Lord Fox (LD)]

My Lords, this amendment is testament to the power of remote control over this Bill by the noble Earl, Lord Lytton, and we on this Bench welcome it. I am interested that the Minister was able to announce on Report that a large number of arbitration organisations had already been recruited to take part in this important activity. To that end, I am surprised that they did so without some assurance of immunity as now offered by this amendment; I would be interested to hear what the expectations of those organisations were, given that it is only now that that immunity is emerging. With that small question, we will support the amendment.

[Lord Grimstone of Boscobel (Con)]

My Lords, in answer to the noble Lord, Lord Fox, what I said on Report was that 12 bodies had indicated an interest in applying for this. The process of approval is under way and, no doubt, this clarification will come to light and be welcomed by them during that process.

Amendment 1 agreed.

--- Later in debate ---

Moved by

[Lord Grimstone of Boscobel]

That the Bill do now pass.

[Lord Grimstone of Boscobel (Con)]

My Lords, I start by thanking noble Lords for their thorough engagement throughout the Bill’s passage through your Lordships’ House. As ever, the erudite contributions of your Lordships have given rise to constructive and robust discussion of the Bill and it has been pleasing to see the consensus that we have reached as a result. In particular, I thank the noble Baroness, Lady Blake of Leeds, in absentia, supported so admirably by the noble Lord, Lord Lennie, as well as the noble Lord, Lord Fox, as ever, for his support for and scrutiny of the Bill. It has been a pleasure working with them on this Bill following our previous work on the Professional Qualifications Bill. I am also grateful to the noble Earl, Lord Lytton, for his expertise on arbitration. Furthermore, I give thanks to the noble Lords, Lord Lennie, Lord Shipley, Lord Thurlow and Lord Mendelsohn, and my noble friend Lord Hunt of Wirral for their interest in the Bill.

I also thank the noble Lord, Lord Brennan, QC, for his consideration of the Bill. The noble Lord wrote to me recently to discuss the focused eligibility of the scheme, on which I will take a moment to respond. Significant thought has been given to the eligibility of the scheme. It is important to remember that the capacity of the arbitral market is limited and, as such, the scheme that this Bill establishes must be targeted appropriately.

Businesses that were mandated to close were among those hardest hit by the pandemic. Some of these businesses, such as nightclubs, were required to close for over 18 months. Evidence suggests that businesses in the sectors that were mandated to close are the least likely to have reached agreements on outstanding rent. In light of this, we consider it a proportionate requirement that, in order to access the scheme, a business must have been mandated to close its premises, or businesses carried on there, in part or in whole.

I am entirely sympathetic to businesses that were not required to close but were still affected by the pandemic. Alongside the Bill’s introduction in the other place, the Government published a revised version of a code of practice for the commercial property sector. This code of practice can be used by any business to help it resolve disputes about unpaid commercial rent, regardless of the business’s eligibility to access the arbitration scheme. I hope that this provides some clarity to the noble Lord regarding the purposefully focused eligibility of the scheme.

I recognise that the Government have made several changes to the Bill during its passage through your Lordships’ House. I am pleased that the changes have been well received, which is a testament to our shared desire to ensure that this Bill is as clearly drafted and fit for purpose as it can be.

Many of these amendments have been clarificatory or technical—for example, in confirming that an obligation to close either premises or businesses is regarded as a closure requirement—as well as expressly setting out the effect of an arbitral award, including how it affects the liability of the tenant and of a guarantor or former tenant. Minor amendments were also made to Schedules 2 and 3, to clarify the application of certain provisions to former tenants and guarantors, including where an indemnity was given.

However, we have also made more significant amendments, particularly following our extensive interaction with the Welsh Government and in response to the DPRRC’s report. I thank the Welsh Government and officials for their positive and extended engagement. I am extremely pleased that the Welsh Government have felt content to recommend legislative consent and that the Senedd has agreed a legislative consent Motion.

Furthermore, I thank the Delegated Powers and Regulatory Reform Committee for scrutinising the Bill and for drawing the House’s attention to Clause 28—previously Clause 27—on reapplying the Bill. We have amended the clause to ensure that its power is appropriately limited, following the committee’s report. I am grateful for the support which these amendments have received. I am also grateful to the Royal Institute of Chartered Surveyors and to the noble Earl, Lord Lytton, for raising the immunity of arbitration bodies, which prompted the amendment we brought forward today.

I also thank the stakeholders who will be most impacted by the Bill. These include arbitration bodies, and tenant and landlord trade associations. I emphasise, as I have before, that balance, inclusivity and ease of access are some of the core features of this Bill. The Government have engaged with these stakeholders at great length, including at several round tables which I held myself. They have raised relevant concerns and issues, allowing us to mould this legislation and the guidance which my officials are working on—and that we have discussed in previous debates—to make it as useful as possible. As such, I am extremely grateful for their expert input.

I am also grateful to the Bill policy and legal team which has developed this legislation. This includes Carl Creswell, Charles McCall, Jessica Barnaby, Hamza Shoaib, Radhika Sundaram, Matthew Beese, Geraldine Haden, Jane Chelliah-Manning, Justine Antill, Sarah Machen, Louise Dobrin, Simon Burke, Jahan Meeran, Rachel Campbell, Rebecca Denham, Elaine Anderson, Davy Cowie and Martin Gunther. This is a most impressive team.

I thank my private secretary, Ben Kerindi, for organising and managing me—no easy task. I thank the Leader of the House, the Whips and the Office of Parliamentary Counsel, as well as the clerks. Finally, I thank my Whip, my noble friend Lady Bloomfield of Hinton Waldrist.

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his customary courtesy and thoroughness in handling this somewhat uncontentious Bill. In fact, the Bill has been so successful that the hundreds of thousands of cases which were presumed to require arbitration are now down to either the thousands or the hundreds. They are certainly a reduced number and that is a credit to the Bill.

I place on record my appreciation for the contributions of the “Covid 2”—namely my noble friend Lady Blake and the noble Earl, Lord Lytton—who both provided detailed research, experience and commitment during the passage of the Bill, latterly from afar.

Finally, I thank the noble Lord, Lord Fox, in particular for his detailed understanding of the complexity of the Bill. I also thank the Bill team for their work and efforts in getting this Bill in shape. While we still do not know what the term “viable” means and whether there will be a sufficiency to arbitrate, time will tell—time which I have now run out of.

[Lord Fox (LD)]

My Lords, this has been a short process, but an interesting and important Bill. It is important for those businesses which found their entire business model cancelled by something over which they had no control. It is important that we find a way for those businesses to secure their future by sorting out the past. I think the Minister would agree with me that the overriding principle of this Bill has been to ring-fence the debt and then, through an arbitration process, share in the impact of that debt. I am pleased to see that the Minister is nodding as I say that.

The Minister has been sensitive to the advice he has got, and I am very pleased that the Government were able to agree with the Welsh Government on how this Bill would apply in Wales.

There was a period at Report when the number of Bill officials outnumbered the number of Peers two to one. Having heard the list that the Minister has just totted off, I can see that not all of them were there even then—but thanks to the Bill team for the hard work that it put in, and thanks to the Minister and the noble Baroness, Lady Bloomfield, as well as the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. Because of Covid and dentists, we found ourselves depleted several times during this process, but I also thank my noble friend Lord Shipley—and, back in the Whips’ Office, keeping the legislative process on track, Sarah Pughe.

[Lord Grimstone of Boscobel (Con)]

My Lords, I thank noble Lords for their generous input on the Bill throughout its passage through your Lordships’ House. It has been a pleasure to lead on a Bill that has seen such wide-ranging support alongside rightful close inspection. I beg to move.

Bill passed and returned to the Commons with amendments.