Simplification of The AHA Arbitration Process Set to Become Law

New rules aimed at modernising dispute resolution mechanisms for Agricultural Holdings Act (AHA) tenancies received Royal Assent on 26 March. The new Deregulation Act 2015 amends the AHA to allow third party determination of certain agricultural tenancy disputes as an alternative to the complex, time consuming and often expensive arbitration process.

These reforms have been requested for a number of years as part of the reform of agricultural tenancies and have been welcomed by the Tenancy Reform Industry Group (TRIG) (an advisory group representing landlords and tenants of agricultural holdings in England and Wales).

Schedule 4 to the Deregulation Act 2015 (DA 2015) amends various provisions of the AHA to provide for particular disputes that are currently compulsorily referable to arbitration to be capable of determination by a jointly appointed third party, and to provide for the third party to have the same powers and be subject to the same duties as an arbitrator. These disputes include rent review, which at present form the majority of arbitration cases.

Disputes regarding notices to quit will remain referable to arbitration only.

Under third-party determination, the landlord and the tenant are free to agree on the third party best suited to determine their dispute, such as a local land agent or a local land surveyor. They are also able to agree the terms and conditions of the appointment, including timeframes and process. The notice requirements and time limits that apply to arbitration under the AHA 1986 will not apply to third-party determination.

The third-party determination procedure includes the following requirements:

  • The disputing parties must jointly appoint the third party.
  • They cannot jointly appoint a third party if an arbitrator has already been appointed.
  • If the third party dies, or is incapable of acting, the disputing parties can either jointly appoint a replacement or agree to proceed as if they had not referred the matter for third party determination.
  • The disputing parties cannot appoint an arbitrator if they have already jointly appointed a third party, unless that third party dies or is incapable of acting.

On average, arbitration costs £25,000 per case. It is thought there will be a saving of £10,000 per case under the system of new third-party determination.

A link to the Deregulation Act can be found here.

For more information or legal assistance regarding agricultural law please visit our services page or alternatively you can contact our solicitors on 0161 941 4000.

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