A caveat protects you or your business from being served with certain court orders without warning. Having your legal advisors lodge a caveat at the Court of Session and Sheriff Courts means that you will have the opportunity to defend some applications against you before any interim orders are granted without your knowledge.

Caveats can be lodged on behalf of individuals, companies, firms and partnerships.

All businesses with interests in Scotland should consider lodging caveats. In certain circumstances, individuals would also be well advised to have caveats in place.

What are caveats?

Caveats are, in effect, an early warning mechanism. Caveats are only available in Scotland and offer protection against certain court orders which could otherwise be granted against you without any prior notice.

Proceedings for interdicts are applications made to the court to stop the infringement of legal rights. They can cover a wide range of issues. Applications for interim orders can also be made in insolvency proceedings. If such an application is raised against you, having a caveat in place ensures you will be notified of it before an order is granted. It allows time to oppose the order and the opportunity to negotiate a resolution without having to take the matter to court.

A caveat could be the last line of defence against the advertising of a petition for sequestration (i.e. bankruptcy) of an individual or the winding-up of a company following failure to deal with a payment demand, including: a statutory demand; short form demand (which could lead to a winding-up petition in a matter of days) or Charge For Payment.

The damage that a winding up petition appearing in the press could cause – even if the petition is entirely misconceived, malicious or unjustified – is so great that many companies based in Scotland maintain caveats as a matter of course. It will ensure they are provided advance notice of an attempt by a third party to commence winding-up proceedings against them.

Why lodge a caveat?

In summary, the benefits of having a caveat in place include

your lawyers receiving notification of any attempt by a third party to obtain an interim order against you
your lawyer having the opportunity to contact the solicitors for the other party, before a court grants a relevant order (such as an order for interim interdict) and, if appropriate, make representations to the court on why the order should not be granted
providing protection where a party claims to have served court papers on the caveator but service did not, in fact, take place (whether innocently or otherwise).

What does it cost to lodge a caveat?

The cost of lodging a caveat includes court lodging dues and a modest legal fee. Lodging dues are currently £58 per caveat in the Sheriff Court and in the Court of Session it costs £53.

Caveats need to be renewed on an annual basis and if we have lodged a caveat on your behalf, we will advise you when it is due for renewal.

We generally recommend all companies registered in, or trading in Scotland have caveats lodged at the relevant Sheriff Court(s) as an effective way to manage your business risk. It may also be appropriate to register a caveat at the Court of Session depending on the size of your business and any anticipated dispute.