Let’s suppose that you do a commercial or consumer transaction in Scotland with a business or individual that is based in Scotland. And that you are based in Scotland too.

In the event of litigation, you would naturally assume the case would go to a Scottish court. Correct? Not necessarily. For hidden away in the ‘standard terms’ of the transaction may be some surprises.

A recent Scottish case illustrates the pitfalls of failing to check the standard terms, and highlights the importance of understanding English law and jurisdiction clauses.

Facts

In Bank of Ireland (UK) PLC v Knight Frank LLP the Bank raised an action in Scotland claiming that a report prepared by the surveyor had substantially overstated the value of a property. The Bank’s case was that the surveyor had been negligent.

The surveyor was based in Scotland, the Bank branch involved was in Scotland, and the property was in Scotland. Everything about the case seemed to be Scottish, and the Bank took the case to a Scottish court.

However, as part of its defence, the surveyor claimed that the Bank could not pursue its claim in a Scottish court. This was because its ‘standard terms’ stated that disputes had to come before an English court.

The surveyor told the court that in a 12-year period leading up to the case, it had contracted with the Bank over 400 times, using the former’s ‘standard terms’. In the transaction in question, the Bank instructed the report but neither read or acknowledged the standard terms that were sent alongside it.

Outcome

The Judge decided that the Bank was not entitled to accept the survey report but to reject what the ‘standard terms’ said. The ‘standard terms’ therefore applied, and the dispute had to be dealt with by an English court. The Scottish court had no jurisdiction and the Bank’s case against the surveyor failed.

Nobody even knows if there was a good case in negligence or not!

Brent Haywood, Partner in our Dispute Resolution & Litigation team, comments: “The issue of whether Scottish or English courts have jurisdiction over a case can turn out to be highly complicated for businesses and individuals – even when the circumstances appear straightforward.

“Scottish courts can sometimes hear cases that are subject to English law, but they cannot hear cases when the ‘standard terms’ say only English courts can rule on disputes. Finding this out too late can cause great angst and wasted expense. So, pay attention to the ‘standard terms’, take advice, and don’t make assumptions about what law will apply.”