Cordoba was Ballymore’s tenant of premises in London which were originally offices but had been converted into a data centre. The parties were unable to agree the rent payable following rent review and the matter was referred to arbitration. The lease provided that improvements to the premises carried out by the tenant, its subtenants or their predecessors in title were to be disregarded for the purposes of review.
The arbitrator determined the rent at £2.8m per annum on the basis that the hypothetical tenant would have been able to use the premises as a data centre and not just as offices. Cordoba issued court proceedings seeking permission to challenge the arbitrator’s determination. It argued that the arbitrator had been wrong to find that the hypothetical tenant could use the premises as a data centre as this use was only available as a result of the substantial improvements it had made to the power supply to the premises. Ballymore argued that it was incumbent on Cordoba to establish any disregard on which it relied, that its expert had failed to do so in his first statement, that its expert was unable to provide any of the necessary evidence and that the two issues of fact with which the arbitrator was faced did not include the issue now relied on by Cordoba.
The Court accepted Ballymore’s arguments and rejected Cordoba’s challenge. It found that, as a matter of law, it was incumbent upon Cordoba to establish that the power supply was to be disregarded, which it has failed to do in the course of the arbitration process. The arbitrator was therefore entitled to proceed on the basis that the improved power supply was not to be disregarded.