The Construction Industry Council (CIC) has this month published the 2nd edition of their low value disputes adjudication procedure (LVD MAP). The CIC produced the 1st edition in February 2020.
The LVD MAP provides a simplified adjudication procedure for lower value disputes and caps the adjudicator’s fees based on the value in dispute. There is a maximum hourly rate an adjudicator may charge. The LVD MAP is intended for use where the law of the contract is that of England and Wales.
The 2nd edition defines a low value dispute as one where the total amount in dispute is less than £100,000 (excluding VAT), which is double the limit in the 1st edition. However, the LVD MAP can be used on disputes with a value more than the upper limit but only for relatively straightforward disputes and where the adjudicator agrees that it is an appropriate procedure to use.
The dispute value directly relates to the capped fee an adjudicator can charge. For example, for disputes with a value up to £10,000 the fee is capped to £2,000. For disputes where the value is in the range £75,001 – £100,000 the fee is capped to £5,000. Where the dispute value is over £100,000 the fee is negotiable. The level of cap on the adjudicator’s fee has significantly reduced in the 2nd edition.
Where the adjudicator decides that a meeting or site visit is necessary, such events have a cap of £1,000 each for the adjudicator’s fee plus reasonable travel expenses.
The 2nd edition has also included a new provision that sets a maximum hourly rate of £250 plus VAT.
Parties can use the LVD MAP when:
- the underlying Contact includes a provision to use it; or
- the parties agree on an ad-hoc basis when a dispute arises; or
- where the Scheme for Construction Contracts (England & Wales) Regulations 1998 (Scheme) applies and the adjudicator decides it is the appropriate procedure following a request by one of the parties or at their own discretion.
The LVD MAP provides that a dispute can be referred to adjudication at any time and is commenced by a notice of adjudication. The notice should identify the entitlement to use the LVD MAP.
After the adjudicator is appointed, the adjudicator can decide whether the LVD MAP is suitable for the dispute referred. The LVD MAP includes a non-exhaustive list of factors that may show a dispute is not suitable. These include:
- where the total value of the dispute is greater than £100,000; and/or
- where a non-financial remedy such as a declaration of entitlement is sought; and/or
- the documents included in the referral, the response, or the reply exceed more than one A4 lever arch file (when printed) per submission.
If the adjudicator decides that the LVD MAP is not suitable then the adjudication proceeds under the Scheme. This is a new provision in the 2nd edition.
Philip Eyre, Glovers’ head of construction, commented "The changes made by the 2nd edition are positive steps for bringing increased numbers of adjudications within the ambit of the LVD MAP procedure. The jury is out as to whether there will be a trend for adjudicators to routinely move adjudications outside of the LVD MAP procedure by reference to the suitability criteria."
For further information please contact Philip Eyre.