Subsidised arbitration and mediation now available for Covid commercial rent disputes
Subsidised arbitration and mediation services are now available to commercial tenants and landlords of small to medium-sized businesses that have been unable to agree upon rent reductions during Covid-19 alert levels 3 and 4.
The services are subsidised by the Ministry of Justice. Their aim is to enable disputes to be settled quickly and cost-effectively. The services are available for six months from 25 September 2020 to 26 March 2021.
How much is the subsidy?
Arbitration services will be subsidised up to $6,000 (including GST) per dispute. Participants may need to fund any remaining costs of the service up to a maximum of $2,000 if the arbitration includes other issues in addition to a rent reduction. Mediation services will be fully funded, up to a value of $4,000 (including GST) per dispute.
The subsidy is only available to businesses that use the Ministry-approved suppliers and will not cover legal fees incurred by either party.
Will my business be eligible?
To be eligible to access the services the dispute must be considered a 'qualifying dispute' and at least one of the parties must satisfy the eligibility criteria.
A dispute is a 'qualifying dispute' where:
- It is about the payment of rent and outgoings where the lessee has experienced a material loss of revenue during alert levels 3 or 4 because of government restrictions put in place to combat Covid-19 (for example if you have received the Covid-19 wage subsidy); and
- The payment of rent and outgoings during the relevant period at alert levels 3 and 4 has not previously been the subject of an agreement or arbitration between the parties to the dispute.
In order to be eligible to apply for the subsidy, at least one party must be a New Zealand based business which:
- in the case of the lessee, has 20 or fewer full-time equivalent staff per leased site; or
- in the case of the lessor, has 20 or fewer full-time equivalent staff total.
Arbitration or Mediation?
Arbitration is available where the lease includes a clause that allows for a reduction of rent in an emergency. Mediation is available where both parties agree to mediate regardless of whether there is a rent abatement clause in the lease.
How can my business apply?
You can apply for the subsidised services by contacting a Ministry of Justice approved supplier and completing an eligibility form to declare that you're eligible for the subsidy. More information on this can be found here, including a list of the approved service providers.
If you need advice about accessing the subsidised arbitration and mediation services, then please contact our litigation team for further details.