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Update on the Commercial Rent (Coronavirus) Bill

The Commercial Rent (Coronavirus) Bill has now moved to its third reading in the House of Lords. The amendments made at the Report Stage on 9 March 2022 include a change to the moratorium period under clause 23. This was previously defined by reference to the deadline for making a reference to arbitration. Following the amendment, the moratorium period will end six months from Royal Assent to the Bill (unless the period is subsequently extended).

The Bill therefore remains on track for the targeted enactment date of 25 March 2022.

In the meantime however, a number of commercial rent arrears claims continue to progress through the Courts. Tenants may seek to stave off judgment by relying on the Bill (either as a compelling reason to proceed to trial in the context of a summary judgment application, or as a standalone reason for a stay).

Tenants in this position will seek to rely on paragraph 3 of Schedule 2 to the Bill. Paragraph 3(2) – (3) of Schedule 2 allows a party to a claim for protected rent debt to apply for a stay of the debt claim (thereby avoiding the entry of judgment). However, paragraph 3(1) expressly provides that “this paragraph applies to proceedings on a debt claim which… is made on or after 10 November 2021”, thereby excluding claims brought prior to that date. 

The remainder of paragraph 3 (subparagraphs 3(4) – (7)) deals with judgments on debt claims made on or after 10 November 2021. The effect of these provision is to provide that even where judgment has been entered, the tenant can go to arbitration to obtain relief from payment of the judgment debt.

There has been some suggestion that subparagraphs 3(4)–(7) might apply regardless of when the claim was issued and are not limited to the case where proceedings were made on or after 10 November. However, this does not sit happily with the wording of subparagraph 3(1), which suggests that the exclusion of claims issued prior to 10 November 2021 applies to the whole of paragraph 3, not just subparagraphs 3(2) – (3). This interpretation is also undermined by the reference in subparagraph 3(4) to “the” debt claim (rather than “a” debt claim), which seems to confirm that the limits set out in subparagraph 3(1) are indeed applicable.

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