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Why architects should take a closer look at the Low Value Disputes procedure

Words:
Neal Morris

Learn more about an adjudication process that can potentially save time and money

The Low Value Disputes process features a third-party adjudicator brought in to decide disputes as an alternative to more costly arbitration.
The Low Value Disputes process features a third-party adjudicator brought in to decide disputes as an alternative to more costly arbitration. Credit: iStock Photo

Low Value Disputes (LVD) is a relatively quick and inexpensive adjudication process for architects that has long been regarded as successful in keeping contract disputes out of the courts.

Three years ago the Construction Industry Council (CIC) launched a low-value procedure amid concerns that costs were creeping upwards and threatening to put the process out of reach of some smaller companies. Now it has produced an updated adjudication procedure where the value is less than £100,000 (previously £50,000 was the upper limit).

What has changed about LVD adjudication?

Now the CIC has made available a second edition of its (free to download) Low Value Disputes Model Adjudication Procedure (LVD MAP) with changes informed by three years of use. Key changes include:

  • The dispute value limit has been raised from £50,000 to £100,000.
  • Both parties no longer have to consent to the low-value procedure being followed where the scheme applies.
  • Adjudicator’s fees are now capped according to a sliding scale ranging from £2,000 to £5,000 depending on dispute value; hourly rates for adjudicators are capped at £250 per hour.
  • The adjudicator nominating body such as RIBA, which maintains a panel of around 70 expert adjudicators, can now set its own appointment fee (previously prescribed at £250).
  • A revised timetable has increased the time available to the adjudicator to make a decision by one week.

The adjudication process, which sees a third-party adjudicator brought in to decide disputes as an alternative to more costly arbitration or litigation, has been available to parties to all ‘construction contracts’ since 1998, following the passing of the Construction Act.

If parties cannot agree to an adjudication procedure that complies with the Act, then the Act imposes a set of rules set out in the Scheme for Construction Contracts.

What are the benefits of the LVD procedure?

Adjudication decisions are temporarily binding. Although adjudication decisions can be subsequently revised by arbitration or litigation, providing the adjudicator answers the right question and acts in a procedurally fair way, courts will enforce adjudication decisions.

Matt Malloy, Director at dispute resolution specialist MCMS and an adjudicator on the RIBA panel of adjudicators, says the attraction of the CIC’s Low Value procedure is that the adjudicator’s fee is capped, according to the value of the dispute. Parties to a dispute are usually responsible for the costs of their own advisers, but there is certainty over the adjudicator’s fee.

The Low Value scheme also imposes a timetable and seeks to limit the amount of documentation and material that parties can submit.

The LVD MAP can be used where it is directly referenced in the construction contract, or when parties agree to use it when a dispute arises, or where the scheme applies and the adjudicator decides it is appropriate following a request by one of the parties.

‘What we’ve done in the second edition is to allow either party to say they would like the Low Value adjudication procedure rules to apply, although the adjudicator has discretion as to whether it’s appropriate,’ say Molloy.

‘So, we’ve removed the requirement for both parties to agree, and the reason for doing that is it is not unusual for one party not to want to be in adjudication, typically the party who is defending.’

What feedback has been received so far?

The removal of the need for both parties to consent to the low value procedure, and the raising of the dispute value limit to £100,000, brings the CIC’s LVD MAP into line with another low value adjudication procedure promoted by the Technology and Construction Solicitors Association (TeCSA).

The CIC’s new LVD MAP first appeared in May this year. Molloy says that while it’s still early days for the second edition, discussions he has had with adjudicators dealing with low value disputes suggest that it is easier for them to keep the show on the road: ‘there is less room for one party to turn around and say “I’m not agreeing to this”, whereas the adjudicator can say “I do consider this to be an appropriate set of rules and I’m going to adopt this timetable and this procedure”.’

For questions on how the RIBA can help in appointing an Adjudicator in your dispute, contact the Professional Standards Team.

Thanks to Matt Malloy, Director, MCMS Limited.

RIBA Core Curriculum topic: Legal, regulatory and statutory compliance.

As part of the flexible RIBA CPD programme, professional features count as microlearning. See further information on the updated RIBA CPD core curriculum and on fulfilling your CPD requirements as an RIBA Chartered Member.

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