Wed 02 Mar 2016

Early warning system - caveats

In Scotland, in certain circumstances, it is possible to get an interim order against a person or company before they are made aware of a court action being raised against them.  This could take the form of an interdict preventing them from doing something or even a winding up order (company) or sequestration petition (individual).

The first time you or your business becomes aware that an interim order has been granted against you could be after the event. 

There is however an early warning system available in the form of a caveat. Any person or company can lodge a caveat with the court.  The effect of a caveat is that, where an action is raised seeking interim orders against you lodges papers with the court, if a caveat is in place, the court will telephone the solicitors listed on the caveat to allow an opportunity to appear or be represented at any initial hearing.  Caveats do not prevent or provide an early warning system for orders seeking arrestment or inhibition on the dependence but in the event these orders were sought (and granted) a hearing for recall would automatically be fixed under the relevant legislation.  Interim interdicts and winding up orders do not have the same recall procedure. 

A caveat is in effect an early warning system and can result in matters resolving themselves through negotiation, interim orders being held off unless and until a substantive hearing can take place or in certain circumstances actions being disposed of at an early stage. 

Once an interim order is granted it can be difficult to have it recalled and the old adage that prevention is often better than cure stands true. 

We would recommend that businesses operating in Scotland lodge caveats with the Court of Session and any sheriff courts in the local area where they have an interest.  The cost associated with lodging a caveat is reasonably modest and they last for a full year after which they can be renewed. 

Caveats do not prevent court actions being raised but they can give parties an early warning of any claim for interim orders, allowing an appropriate response in a cost effective and efficient manner.  Closing the door while the horse is firmly in the stable is of course preferable to careering around a field playing catch up. 

If you wish to discuss the operation of caveats please get in touch with your usual contact at Morton Fraser failing which Maggie Moodie who leads our debt recovery practice. 

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