Having The Last Word – Finality Clauses In Leases

No-one enters into a lease of commercial property looking for a fight, but experience has shown it is prudent for the parties to provide for what will happen if a dispute arises.

It is common for commercial leases to contain provisions for alternative dispute resolution, by referring any matter to an arbitrator or expert for determination. Such clauses invariably provide that the decision of such arbitrator or expert will be "final and binding on the parties". But how final is "final"?

Rent review determinations

Often the parties to a lease will have difficulty in agreeing the amount of the new rent where there is provision for rent review during the lease, and on these occasions the question will be referred to an expert – typically a surveyor with experience in assessing rent levels of similar properties – for a determination of the amount of the new rent, and the parties agree they will accept that surveyor's decision.