Unfair Terms in Tenancy Agreements/Arbitration agreement

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  • Unfair Terms in Tenancy Agreements/Arbitration agreement

    I have written about this elsewhere, but I think a thread on this will be quite useful. My TA with former LL (am now in dispute with him re: deposit deductions) includes an arbitration agreement clause. I have decided not to go in for arbitration but have filed a small claim at court. There is an OFT Guidance on unfair terms in TA which states that an arbitration agreement term in a TA on disputes less than 5000.00 is unfair. As this applies in the case of my dispute I opted for the small claims court. However OFT GUidance dates back to 2005, whereas my TA predates it (2004). A member on this forum referred me to The Unfair Arbitration Agreements (Specified Amount) Order 1999 (No. 2167), which also fixes the amount under which a compulsory arbitration agreement clause is unfair at 5000.00.
    In view of this, can LL dispute the court's jurisdiction, as I did not opt for arbitration? This is a private, contractual, commercial residential tenancy.

  • #2
    This is the law.

    s.91(1) Arbitration Act 1996

    91. (1) A term which constitutes an arbitration agreement is unfair for the purposes of the Regulations so far as it relates to a claim for a pecuniary remedy which does not exceed the amount specified by order for the purposes of this section.
    The Unfair Arbitration Agreements (Specified Amount) Order 1999 (No. 2167)

    3. The amount of £5,000 is hereby specified for the purposes of section 91 of the Arbitration Act 1996 (arbitration agreement unfair where modest amount sought).

    * * * * *

    The OFT guidance is not statute, it's guidance. It tells you what the law says in plain English.

    Paragraph 3.134 of OFT Guidance on unfair terms in tenancy agreements 2005

    Section 91 of the Arbitration Act 1996 makes a compulsory arbitration clause, i.e. a term that requires that disputes between the parties must be submitted to arbitration, automatically unfair under the regulations if it relates to claims of £5,000 or less.
    So, in answer to your question "can LL dispute the court's jurisdiction", no, the LL can't dispute it because your tenancy agreement was created after the statute. The date of publication of the OFT guidance is irrelevant.


    • #3
      Thanks! That's my interpretation of the situation and I have formulated my response to the solicitor accordingly, focussing on the statute, and not the OFT Guidance.


      • #4
        are you sure it is an arbitration clause and not an adjudication or ADR clause. there is a fair bit of difference between Arb and Adj.


        • #5
          Post #43 from Eddie's main thread on the deposit saga. Provision re arbitration in the tenancy agreement.

          Originally posted by Eddie View Post
          "Any disputes between the Landlord and the Tenant arising out of any Schedule of Dilapidations which shall not have been settled within 90 days of the determination of the term hereby granted shall be referred to a single arbitrator in accordance with the Arbitration Act 1950 as amended by the Arbitration Act 1979 and the Arbitration Act 1996 or any statutory modification thereof for the time being in force and the Landlord and the Tenant will pay the costs thereof in equal shares or in such shares as the Arbitrator may determine"


          • #6
            ok. arb clause.

            even with the date, I think that it could be unfair. the oft guidance is based on the utccr and so should give a good indication. they have quite a good track record of getting it right. ask the banks and foxtons.

            With the costs of arb the other party would be mad to go for it.


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