Author: Sarah Lock

Published: Institute of Directors Magazine – Autumn 2010

Date: September 2010

As a business it may be necessary from time to time to issue court proceedings to recover an unpaid invoice. This can be done by instructing a solicitor, using a debt collection agency or issuing proceedings directly with the County Court.

In England and Wales, the County Court system is used to issue court proceedings. If you have an outstanding invoice and your debtor (customer) lives or is based in Scotland, different rules will apply.

This often raises practical difficulties for a business, as in order to protect your company’s cash flow, it is vital that you recover your invoices. It can be frustrating to incur further time and expense to recover a debt across the border in Scotland, yet there are various options available to you. Each case must be considered on its own facts and any terms and conditions which apply to the contract. Consideration must also be given to whether the invoice is likely to be disputed and if so, where any trial may ultimately take place.

Some important changes to the court rules came into place in September 2008 and go some way into simplifying this procedure for issuing straightforward, undisputed debt proceedings against debtors residing in Scotland and Northern Ireland.

Claim forms can now be sent or “served” in accordance with the usual court rules of England and Wales.   A special form is attached to the claim form, containing a statement of the grounds on which the creditor is entitled to serve the claim form out of jurisdiction without permission.  This form must be filed at court and sent to the debtor with the claim form. In addition, the debtor has an extra seven days to respond.

If no response is received to the claim form within the time limit specified, an application can be made to the court for judgment.  Once a County Court judgment has been obtained, it is then possible to consider issuing enforcement proceedings if no payment is made.

If your debtor is a resident in Scotland, it is possible to register the English judgment in the Scottish courts under the reciprocal arrangements between the countries of the United Kingdom. Enforcement proceedings can then be issued, which may include:

• Arrestment – any assets, usually money, belonging to the debtor owed or belonging to the debtor and in the hands of a third party, are frozen in the hands of that third party
• Arrestment of Earning – where a fixed proportion of the debtor’s pay is deducted by their employers and sent to the creditor direct
• Attachment – the inventorying of the assets of a debtor with a view to these goods being sold in satisfaction of the debt.  Money, including cash, foreign currency, cheques, can also be attached

As with any debt recovery action it is vital to ensure that the action remains cost-effective and that the debtor has the means to pay before commencing legal action.

The whereabouts of the debtor’s assets may also be a major deciding factor when considering where to issue proceedings.

For further information please contact: Sarah Lock


This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.