11 July 2019

New low value construction disputes adjudication service launched

Good news for low value claimants and would-be adjudicators in construction claims; a scheme capping adjudicator’s fees has been introduced for low value claims.

On 21 June 2019, the Technology and Construction Solicitors’ Association (TeCSA) launched a low value disputes (LVD) adjudication service which will run on a pilot basis until November 2019. The scheme is aimed at giving parties who wish to refer disputes to adjudication certainty as to the costs of the adjudicator.

The upside is that the adjudicator’s fees are capped, so for a claim of up to £10,000 (excluding VAT and interest) the fees are capped at £2,000 and for a claim of between £75,000 and £100,000, the fees are capped at £5,000. Ordinarily you would expect adjudicator’s fees to be nearer to double this figure.

The downside is that it is limited to adjudications run under the TeCSA scheme and procedure. Many standard forms of contract allow a variety of nominating procedures, which does not always include TeCSA.

By way of example, NEC requires the adjudicator and the nominating body to be named in the Contract Data Part 1 and the procedure used is the NEC procedure in the adjudicator’s contract, so it is difficult to see how the TeCSA fees could apply.

The JCT contract also allows parties to name the adjudicator and to select a nominating body in the Contract Particulars. Where no adjudicator nominating body is specified then parties will have to choose one of the bodies listed in the JCT - the list does not include TeCSA. 

To ensure that the mechanism is included in your contract you need to ensure that the adjudicator is to be nominated by TeCSA.

Adjudicators appointed under the fee cap scheme will be nominated from a specific panel of TeCSA’s adjudicators. This represents good news for would-be adjudicators, as this may be a way to get some adjudication experience in circumstances where more experienced adjudicators perhaps do not want to be part of the scheme. Adjudicators that want to get involved should therefore ensure that they put their names on the list.

In the future, we may see that other nominating bodies introduce a similar scheme. Indeed, CIC (Constructing Industry Council) are looking into a low value adjudication procedure and are proposing to liaise with other construction bodies about it. The intention is that it will cover adjudications valued at £50,000 or less. The consultation can be found here.