Resolving Commercial Rent Reviews in Ireland: Expert Determination or Arbitration?
Typically rent reviews are agreed by way of negotiation between the Landlord and Tenant. However, disputes can often arise. When they do, the lease will typically specify a dispute resolution mechanism, most commonly expert determination or arbitration.
Understanding how these processes work, and the key differences between them, is essential for landlords and tenants seeking to resolve rent review disputes efficiently and effectively.
When Do Rent Review Disputes Arise?
Rent Review disputes typically arise when the parties cannot agree on the Open Market Rent at the rent review date. Common areas of disagreement include:
- Comparable market evidence
- Treatment of fit-out works or improvements
- Market conditions at the review date
Where negotiations fail, the dispute resolution mechanism in the lease will determine the next steps including:
- Who can trigger the process (Landlord, Tenant or both)
- Whether the Open Market Rent will be determined by an Independent Expert or an Arbitrator
- Relevant time limits and notice requirements
What is Expert Determination:
Expert determination involves the appointment of an independent valuer or surveyor to decide the rent. The expert uses their professional expertise and knowledge, together with submissions from both parties, to determine the market rent.
What is Arbitration:
Arbitration is a more formal dispute resolution process governed in Ireland by the Arbitration Act 2010. An independent arbitrator (often a surveyor or legal professional) considers evidence and submissions from both the Landlord and Tenant before issuing a binding award.
Key Differences between Independent Expert Determination and Arbitration:
There are important differences between Expert Determination and Arbitration.
Expert Determination |
Arbitration |
| Governed by common law | Governed by Arbitration Act 2010 |
| Can make their own investigations based on own market knowledge |
Decision based on evidence and submissions from both parties
|
| Not always obliged to hear both sides | Must hear both sides |
| Under no obligation to provide a reasoned determination, unless specified in the Lease |
Award/Determination must contain reason
|
| Can be sued for Professional Negligence | Award can only be challenged on a point of law |
Conclusion:
Disputes at rent review are not uncommon in the Irish commercial property market, but they can be managed with the right strategy and a clear understanding of the processes.
Ultimately, the most appropriate route will depend on the provisions of the rent review clause in the lease, the nature of the dispute, and the commercial priorities of the parties involved.
If you have an upcoming Rent Review please get in touch!
