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On 21 June 2019, the Technology and Construction Solicitors Association (TeCSA) launched a pilot scheme of its new low-value dispute adjudication service (the LVD Service), which seeks to cap adjudicators’ fees for claims worth up to £100,000. According to Simon Tolson, honorary president of TeCSA,
“The LVD Service is intended as a more agile and cost-effective way to enable small businesses to attain fair, inexpensive and transparent decisions on their quarrels“.
The LVD Service will apply to adjudications (or equivalent procedures) under the Construction Act and caps the adjudicator’s fee according to the value of the claim. To use the LVD Service, the claim must be for a specific liquidated sum; this may include disputes over interim or final payments, loss and expense, damages or variations.
Applicants for the LVD Service will self-certify the value of the claim when applying to TeCSA for an adjudicator. TeCSA will appoint an adjudicator on the basis of the claim value. The parties will then proceed with the adjudication. Other than the caps on adjudicator’s fees, the usual TeCSA adjudication rules will apply under the pilot.
Importantly, as only the adjudicator’s fees are capped, there is no need to obtain the consent of the other party to use the LVD Service.
The following fee caps are provided in the pilot:
- For a claim valued at up to £10,000 plus VAT, the adjudicator’s fees are capped at £2,000;
- For a claim valued between £10,001 and £25,000 plus VAT, the adjudicator’s fees are capped at £2,500;
- For a claim valued between £25,001 and £50,000 plus VAT, the adjudicator’s fees are capped at £3,500;
- For a claim valued between £50,001 and £75,000 plus VAT, the adjudicator’s fees are capped at £4,500; and
- For a claim valued between £75,001 and £100,000 plus VAT, the adjudicator’s fees are capped at £5,000.
TeCSA hopes the LVD Service will answer the construction industry’s concerns about the increasing complexity and cost of the adjudication process, which is influenced by the level of fees charged by adjudicators and advisors. In this regard, the LVD Service seems a worthwhile alternative to a ‘traditional’ adjudication and may be a more appropriate form of adjudication in relation to smaller contracts or sub-contracts where a ‘traditional’ adjudication may not be cost-effective.
The LVD Service pilot will run until November 2019, at which time, TeCSA will review the experiences of adjudicators and those who have used it.
If you require advice in connection with adjudication proceedings, or indeed any construction related query, please contact chris.hoar@michelmores.com or michael.bonning@michelmores.com or any other member of the Construction and Engineering Team.
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