Second edition of the CIC Low Value Disputes Model Adjudication Procedure has been published
The second edition of the Construction Industry Council (CIC) Low Value Disputes Model Adjudication Procedure (LVD MAP) has recently been published following a review of its use since the first edition was published 3 years ago.
As a reminder, adjudication is a statutory dispute resolution mechanism which applies to “construction contracts” as defined in the Housing, Grants Construction and Regeneration Act 1996. It is designed to promote cash flow within the industry and provide a quick and cost-effective method of obtaining an “interim-binding” decision within 28 days. The parties can then decide to refer the dispute on for final determination by the Courts or Arbitration, depending on the terms of the relevant contract.
Many Adjudicator Nominating Bodies, or ANBs, have developed or adopted streamlined adjudication models which the parties can use in order to further reduce the cost of disputes with lower values or simpler issues. These models are designed to sit within the provisions of the Scheme for Construction Contracts. The Scheme rules are implied where a construction contract does not provide a compliant adjudication mechanism or where the Scheme is expressly incorporated.
The LVD MAP is one such streamlined procedure, specifically design for low value disputes, and the second edition brings the following changes:
The consent of both parties, either expressly noted in the contract or agreed after a dispute has arisen, is no longer required where the Scheme applies. Instead, the procedure can be requested by either party or applied at the adjudicator’s discretion.
- Increased Dispute Value
The upper value of disputes to which the LVD MAP can be used has increased from £50,000 to £100,000.
However, where the issues in dispute are so straightforward that they are capable of adjudication under the LVD MAP, the adjudicator has the discretion to apply the procedure. No advice is provided on the higher value disputes that could be adjudicated under the LVD MAP but guidance is given on factors that might make a dispute unsuitable, such as a non-financial remedy being sought or disputes where the Contract terms are not easily discernible.
- Adjudicator Fee Limits
The capped fees which can be charged by the adjudicator based on the dispute value have been amended to the following:
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
Any suitable disputes above £100,000 are subject to a negotiable fee cap. In addition, the hourly rate chargeable by an adjudicator has also been capped at £250.
- ANB Appointment Fee
ANBs charge a fee when an application is made to appoint an adjudicator. Previously, the LVD MAP limited this fee to £250. However, ANBs are now free to set their own appointment fees.
At the time of this article, the CIC listed a charge £300 and the RICS listed £425 (both inclusive of VAT) for an appointment under the LVD MAP.
- Timetable Changes
The timetable for the adjudication for the adjudicator to direct. However, the LVD MAP provides a default position which applies unless the adjudicator directs otherwise.
This default timetable has been amended to increase the time available to the adjudicator to make their Decision by 1 week.
It does this by reducing the time which the Respondent has to serve the Response from 14 days to 7 days after the Referral Notice has been received by the adjudicator. A Reply is then due on day 14 with the Decision to follow by day 28.
The above amendments are the result of efforts by a working group reviewing the issues and hurdles experienced by users of the LVD MAP with the aim of making the second edition easier to use and applicable to a wider range of suitable disputes.
In our experience low value adjudication schemes can be a cost-effective way to resolve lower value disputes. Expanding the LVD MAP to include disputes up to £100,000 is a welcome increase to the scope of the procedure and may assist in making adjudication more accessible for lower value disputes, where parties might otherwise view the potential costs of the process to be a bar to adjudicating.