Caveats - vital early warning protection for businesses

Caveats - vital early warning protection for businesses

Caveats are a straightforward and inexpensive way in which we can protect clients form being served with a Court order without any warning – be that an interim liquidation, administration or interdict.

A Caveat is a document that we can lodge in any Scottish Court on behalf of an individual or company (the Caveator), which obliges the Court to provide an early warning if someone asks the Court to grant an immediate order against them.

A Caveat will not stop court proceedings from being raised, or require notice to be given of applications for arrestment or inhibition but, where a Caveat has been lodged, certain types of order cannot be granted without the Caveator (usually through their solicitor) having first been given the opportunity to address the court. If no Caveat has been lodged, a party raising a Court action can ask the Court to grant various interim orders before proceedings have even been served and without their opponent having any opportunity to object. Such orders in include interim interdicts, interim liquidation and bankruptcy orders.

It is more difficult to attempt to have a Court order recalled than try to prevent it being granted in the first place.

How do Caveats work?

Caveats are most frequently triggered by applications for interim interdict (injunction), which Courts are often asked to grant where a breach of a restrictive covenant is alleged, or to prevent work commencing pending a challenge to a contract or decision of a public body. If Harper Macleod lodges a Caveat, one of our team of solicitors will be notified immediately (even out of hours) and given the opportunity to make representations to the Court before any interim orders can be granted. Caveats can also be triggered when an application is made for the winding up of a company, but only in relation to companies registered in Scotland. If no Caveat has been lodged, there is a risk that such interim orders may be granted by a Court against a company or individual, who would not be aware of this until the Court order is served on them. They would then have to comply with the Court order. It is more difficult to attempt to have a Court order recalled than try to prevent it being granted in the first place.

Where should Caveats be lodged?

There are 39 Sheriff Courts in Scotland. We recommend that Caveats are lodged in the Sheriff Court(s) where you live/where your company has its registered office, any trading address and also in the Court of Session (which has geographical jurisdiction over the whole of Scotland). Businesses with any link to Scotland should consider having Caveats lodged as protection from unexpected interim orders – waiting until litigation is likely may be too late.

What is involved?

A Caveat is valid for one year. We will prepare the Court document and lodge it for you for a low-cost fixed fee (enquire for current rates). We will provide the Court with contact details for our specialist litigation solicitors (including out of hours contacts) and maintain emergency contact details for you so that we can contact you straight away should the Caveat be triggered. We maintain a list of all Caveats lodged and will seek annual renewal instructions or renew automatically, depending on your wishes.

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