The Construction Industry Council (CIC) has published the second edition the Low Value Disputes Model Adjudication Procedure (LVD MAP).1
While adjudication has recently been recognised by Coulson L.J. in the Court of Appeal as "the only game in town" for most construction disputes2, many parties find themselves deterred from referring disputes to adjudication as a result of the costs involved and the perceived procedural complexity ill-suited to low-value disputes.
In 2022, the most common value of an adjudication claim in the UK was between £125,001 and £500,000.3 The CIC, in collaboration with other Adjudicator Nominating Bodies (ANBs), has therefore taken steps in recent years to make adjudication more flexible and available to a broader range of claim values.
The LVD MAP sets out a streamlined adjudication procedure for Low Value Disputes, and, by linking the Adjudicator’s fee to the amount claimed, aims to provide certainty as to how much the Adjudicator will be paid for making an Adjudicator’s Decision. By including an outline timetable for the procedural stages, it also aims to provide a flexible and simplified approach to the key elements of the adjudication process. The first edition of the LVD MAP was launched in May 2020 and catered to disputes valued at up to £50,000.
Below we highlight the key updates in the second edition of the LVD MAP, effective from May 2023.
1. The LVD MAP is now available for disputes up to the value of £100,000. For disputes exceeding £100,000, the adjudicator may at his/her discretion decide that the LVD MAP is an appropriate process if the issues in dispute are relatively straightforward and suitable for being decided under the LVD MAP. Such straightforward disputes may, for example, include 'smash and grab' adjudications based on the absence of a valid and timely payment notice and/or pay less notice.
2. Caps on the Adjudicator's fees and expenses have been amended in Schedule 1 of the LVD MAP.
2.1. The Adjudicator's fees (exclusive of VAT) are now capped as follows:
Dispute value Adjudicator’s fee
Up to £10,000 £2,000
£10,001 to £25,000 £2,500
£25,001 to £50,000 £3,500
£50,001 to £75,000 £4,500
£75,001 to £100,000 £5,000
Over £100,000 Negotiable4
2.2. Where the Adjudicator charges an hourly rate, the maximum hourly rate that the Adjudicator may charge is £250.00 per hour plus VAT, subject to the caps set out above.
2.3. The ANB may now set its own appointment fee (which was previously set at £250). For example, RICS charges an application fee of £425 inclusive of VAT for nomination of an Adjudicator under the LVD MAP.
3. A notable update is the removal of the requirement for both parties to consent to using the LVD MAP for adjudication. Where the Scheme for Construction Contracts5 applies, the procedure can be adopted unilaterally "following a request by one of the parties, or at the adjudicator's discretion".
The revised edition should remove some of the hurdles and problems experienced by parties and adjudicators since the introduction of the LVD MAP three years ago.
Removing the requirement for both parties to consent, the amended fee structure and the increase in value of the dispute to £100,000 should prove more attractive to parties and increase usage of the procedure, enabling the dispute to be managed and determined in an efficient and cost-effective manner.
[2] John Doyle Construction Ltd (In Liquidation) v Erith Contractors Ltd [2021] EWCA Civ 1452
[3] 2022 Construction Adjudication in the United Kingdom: Tracing trends and guiding reform: Centre of Construction Law & Dispute Resolution, King's College London.
[4] In such circumstance the prospective Adjudicator shall write to the Parties setting out the basis of their proposed fees and expenses.
[5] Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649)
