1. Applicable Law
1.1.1 Interim measures in Scotland are governed partly by court procedure rules and partly by statutory provisions. The relevant court procedures are determined by:
- the nature of the interim measure sought; and
- the court from which the interim measure is sought.
1.1.2 There are two levels of court which may grant interim measures in civil proceedings, namely:
- the Court of Session, Scotland’s highest civil court of first instance, which has jurisdiction across Scotland – claims are subject to the procedural rules set out principally in the Court of Session Act 1988 and the associated Rules of the Court of Session;1 and
- the sheriff courts, which are local courts with jurisdiction over one of the six sheriffdoms into which Scotland is divided2 – claims are subject to the procedural rules contained principally in the Sheriff Courts (Scotland) Act 1907 and the associated Sheriff Courts (Scotland) Act 1971, and subordinate legislation.
1.1.3 The procedural rules include measures which take into account cases arising in other parts of the United Kingdom and international cases, including compliance with international obligations such as the Hague Convention 1971,3Brussels Convention,4 Brussels I Regulation,5 the Lugano Convention6 and the New York Convention.7
1.1.4 In addition, there are specific statutory provisions which apply in relation to particular types of interim measure, for example:
- the Debtors (Scotland) Act 19878 in relation to diligence on the dependence of an action;
- the Bankruptcy and Diligence etc. (Scotland) Act 20079 in relation to diligence on the dependence;
- the Administration of Justice (Scotland) Act 197210 in relation to the preservation of evidence;
- the Insolvency Act 198611 in relation to the interim appointment of liquidators and administrators; and
- the Judicial Factors (Scotland) Act 1880 and the Judicial Factors (Scotland) Act 1889 in relation to the appointment of judicial factors ad interim.
1.1.5 This text represents the position as at 31 December 2015.
2.1 International and geographical jurisdiction – the venue
2.1.1 Interim measures sought prior to the raising of substantive proceedings can be sought by application to:
- any court that would have jurisdiction over the substantive proceedings;
- the court which has jurisdiction over the party against whom the order is sought; or
- in the case of interim interdict, the court which has jurisdiction over the location of the anticipated wrong.
2.1.2 The rules governing the jurisdiction of the Court of Session and the sheriff courts are contained primarily in the Civil Jurisdiction and Judgments Act 1982. These largely implement the requirements of the UK’s international obligations (in so far as they extend to Scotland) arising from, amongst others, the Brussels, Lugano, Hague (1971) and New York Conventions, and the Brussels I Regulation.
2.2 The effect of jurisdiction clauses
2.2.1 Scottish courts will routinely enforce contractual jurisdiction provisions in Scotland. They will usually entertain an application seeking an interim measure (in particular diligence on the dependence on an action)12 if a jurisdiction provision provides for the court having jurisdiction to hear the underlying claim and the other tests for that interim measure (as set out elsewhere in this chapter) are met.
2.3 Subject-matter jurisdiction
2.3.1 Either the Court of Session or a sheriff court may have exclusive jurisdiction in respect of a certain subject matter and therefore may also have exclusive jurisdiction in respect of an application for interim measures in that matter.
2.3.2 Generally claims can only be raised in the Court of Session where they have a value of GBP 100,000 or more; claims below this limit must be raised in the local sheriff court.13
Preservation of company assets
2.3.3 A petition for the winding up of a Scottish registered company (and therefore an application for the appointment of a provisional liquidator) must be made in the sheriff court of the domicile of the company if it has paid up share capital of less than GBP 120,000;14 the sheriff court local to the company’s domicile has concurrent jurisdiction with the Court of Session above this limit. Applications to wind-up foreign registered entities (which are permissible in certain circumstances) must be made to the Court of Session.
Preservation of assets of individuals/other types of organisations
2.3.4 A petition for the appointment of a judicial factor relating to the estates of solicitors15 or charities must be brought before the Court of Session16; other actions for the appointment of a judicial factor may be made in the local sheriff court or in the Court of Session.
2.3.5 In addition, there are particular types of procedure in both the Court of Session and the sheriff courts which will apply in relation to particular types of claims. For example, both the Court of Session and some of the sheriff courts (e.g. in Aberdeen, Edinburgh and Glasgow) have a separate procedure for commercial actions; separate procedures are also likely to be applied in respect of admiralty claims, personal injury claims and certain insolvency processes.17
2.4 Choice of venue if more than one court has jurisdiction
2.4.1 It is not uncommon for there to be more than one court which could have jurisdiction in respect of a particular matter. For example, where the case does not fall within the exclusive jurisdiction of either the Court of Session or the sheriff courts, then it is likely that there will be concurrent jurisdiction between the Court of Session and the relevant sheriff court in relation to a particular matter. In that event, there are various aspects which may assist in the choice of venue, including the:
- value or complexity of the case;
- likelihood of instructing Counsel or a solicitor-advocate (both of which have exclusive rights of audience in the Court of Session);
- location of the parties and the lawyers involved;
- whether there are any potential arguments regarding jurisdiction (fewer questions as to jurisdiction are likely to arise in respect of a Court of Session action); and
- nature of the substantive claim to which the interim measure may relate, and the preferred procedure for that substantive claim.
3. Types of Interim Measures and their Criteria
3.1 Four categories
3.1.1 In Scotland, interim measures can be divided into four broad categories: measures to secure assets in relation to a money claim; preservation of assets in the event of insolvency; preservation of evidence; and measures to protect a party’s rights against wrongdoing.
Interim measures to secure assets in relation to money claims
3.1.2 A party may apply to either the Court of Session or a sheriff courts for an order to “arrest” (freeze) the assets of a party pending the outcome of a substantive action. Known as diligence on the dependence, such an order may be sought on a ‘without notice’ basis at the outset of, or at any time during, an action seeking a monetary payment (other than a claim for only legal expenses).18 The order may be to arrest moveable assets in the hands of third parties (“arrestment on the dependence”) or to preserve the heritable property (real estate) of the party against which the order is sought (“inhibition on the dependence”). The purpose of the order is to preserve the relevant assets to ensure that there are assets from which the party seeking the order may obtain payment of the claim (or part of it) in the event that the claim is successful. Arrestment on the dependence is most commonly used to arrest funds held in bank accounts, but may also be used to arrest sums owed to the defender by a third party or moveable property owned by the defender but which is in the hands of a third party. Inhibition on the dependence prevents the defender from transferring or otherwise dealing with any heritable property which it may own in Scotland, most commonly to prevent the sale or mortgaging of land.
Preservation of assets in the event of insolvency
3.1.3 Where a risk is apprehended that those in control of a company or other organisation, or an individual, may seek to dissipate assets if they are given advance notice of an application to make the company, organisation or individual insolvent, then an interim order may be sought for the immediate appointment of an insolvency practitioner to preserve those assets pending the completion of the formal appointment process. The order sought depends on the nature of the relevant insolvency process. Where the body concerned is a company, then the application may seek either the appointment of a provisional liquidator, an interim order in an administration or (albeit rarely) an interim receiver. For other types of organisations, the order may seek the appointment of a judicial factor (although this is a rare and short term decision based upon absolute necessity in unusual circumstances to prevent the diminution of the estate prior to a full court-approved appointment). Irrespective which type of insolvency process applies, the interim order may be sought on a “without notice” basis in appropriate circumstances.
Preservation of evidence
3.1.4 A party may seek an order for the preservation and recovery of documents or other items in respect of which a question may relevantly arise in existing proceedings or in any civil proceedings which are likely to be brought.19 Such orders may be sought in advance of substantive proceedings being raised, and may be sought on a “without notice” basis (sometimes colloquially referred to as “dawn raids”). Separately, a party may seek to preserve witness evidence by way of a special hearing (a commission) where in particular circumstances it seems that the witness evidence may no longer be available at trial.
Protection against apprehended legal wrongs
3.1.5 A party which apprehends that a legal wrong may be committed against it may seek an order from the court forinterdict, which is an order to prevent another party from acting in a way which would breach the applicant’s legal rights. Immediate protection may be obtained (where appropriate, on a ‘without notice’ basis) by applying for aninterim interdict which is a temporary interdict granted immediately by the court, usually to preserve the status quo, as an interim measure pending conclusion of the substantive court action or further order of the court. The court will only grant such an order if it is persuaded that it is reasonable to believe that a wrong has or will be committed. The order sought must be sufficiently precise and clear so that the person interdicted is left in no doubt as to what they are forbidden to do.20 An interdict may not place a positive obligation on a party to take particular steps, but instead can only prevent the party from taking particular steps.
3.2 Interim measures to secure assets in relation to money claims
3.2.1 As explained above, interim measures to secure money claims fall into two categories – (i) arrestment on the dependence in respect of moveable assets; and (ii) inhibition on the dependence in respect of heritable property. Both the Court of Session and the sheriff court are empowered to grant warrant (i.e. an order) for arrestment or inhibition on the dependence of an action.21 The choice of venue will usually be the court where the underlying claim itself is being brought. Separately, the Court of Session has authority to grant warrant for arrestment or inhibition on the dependence of an arbitration claim in Scotland22 or on the dependence of an overseas action.23
Arrestment on the dependence
3.2.2 The party in whose hands moveable property is arrested is called the arrestee. The arrestee must be subject to the jurisdiction of the Scottish courts24 and must therefore be resident or domiciled in Scotland (in the case of an individual) or have its registered office or place of business in Scotland (in the case of a corporate entity). The arrestee is prohibited by the arrestment from parting with the money or property affected while the substantive action is ongoing. The party seeking the order may not arrest assets in his own hands, except where they are held by him in a separate capacity to that in which the court action has been brought.
What assets can be subject to arrestment on the dependence?
3.2.3 An arrestment on the dependence may be sought over any corporeal or incorporeal moveable property. However, the following cannot be arrested:
- earning or pensions;25
- benefits payable under social security legislation;26
- promissory notes;28
- property which is held jointly cannot be arrested in relation to the debt of one of the joint owners;29
- a personal bank account below, the minimum balance30 – currently GBP 460.06.31
3.2.4 Warrant to arrest operates as valid security for, and attaches to, the sum sued for, the interest sought on that sum and the expenses of the case. The court is permitted32 to decide on the sum to be arrested when it grants warrant to arrest. The maximum of that sum will be the aggregate of the following: (i) the sum sued for; (ii) a sum equal to 20% of the sum sued for or such other percentage prescribed by relevant legislation; (iii) a sum equal to one year’s interest on the sum sued for, calculated at the judicial rate of interest (currently 8%);33 or (iv) any other sum specified by legislation.34 If used wrongfully, a debtor may have grounds to claim damages for wrongful arrestment.
The criteria for arrestment on the dependence
3.2.5 Arrestment on the dependence may only be sought in an action seeking payment of a money sum (except where the only money sum sought is in respect of legal costs).
3.2.6 The court may grant warrant for arrestment on the dependence at its discretion if it is satisfied as to the following:35
- that the party seeking the order has a prima facie case (i.e. a good arguable case) on the merits of the action; and
- that there is a real and substantial risk that enforcement of any judgment in the action in favour of the party seeking the order would be defeated or prejudiced by reason of:
- the debtor being insolvent or verging on insolvency; or
- the likelihood of the debtor removing or disposing of assets prior to any full hearing; and
- that it is reasonable to grant the order in all the circumstances (including the effect the order will have on any person having an interest).
3.2.7 It is insufficient to demonstrate only that the debtor is poor. Instead, it is necessary to demonstrate that there is a real risk of insolvency or of the removal or disposal of assets. It is not necessary to establish actual insolvency, merely the risk of insolvency. For example on the basis of non-fulfilment of promises to pay, suspicion of certain creditors being preferred or a genuine reason for believing that assets may be disposed of or concealed. The court has a very broad discretion in relation to whether or not to grant the order and will often approve alternative forms of security which the parties may propose (for example, funds lodged on joint deposit account) as an alternative. The onus of demonstrating the need for the order lies with the party seeking the order.36
Inhibition on the dependence
3.2.8 In the case of inhibition, the property affected by the proposed inhibition must be situated in Scotland. Usually it will be land or buildings in the ownership of the party against whom the order is sought. An order for inhibition prevents a party from dealing with his property in any way which might prejudice the claim of the applicant. Primarily this means that they will be unable to sell the affected property or dispose of the proceeds (although they may complete the transfer of property which they are already contractually obliged to transfer prior to service of the inhibition).37
3.2.9 Inhibition does not confer any preference in sequestration, insolvency proceedings or other process where there is a ranking of creditors.38
The criteria for inhibition on the dependence
3.2.10 Inhibition on the dependence is only competent where the substantive action in connection with which it is sought includes:
- a claim for payment of money (other than for legal expenses);39 or
- a conclusion for specific implement (i.e. enforcement) of an obligation to grant a right over heritable property, including to convey heritable property or to grant (in a creditor’s favour) a real right in security.40
3.2.11 The criteria which must be met in order to obtain an order for inhibition on the dependence in a specific case are the same as those which apply in an application for arrestment on the dependence as outlined at paragraph 3.2.6 above.
3.3 Preservation of assets in the event of insolvency
3.3.1 The appointment of a provisional liquidator is governed by the Insolvency Act 1986 s138 and the Insolvency (Scotland) Rules 1986. The appointment can only be made by a court on receipt of a petition for winding-up. The application must set out both the basis upon which the petitioner claims that the company in question should be subject to a winding-up order and also the basis upon which it is believed that it is necessary to appoint a provisional liquidator immediately to preserve the assets of the company.
Criteria for appointment of a provisional liquidator
3.3.2 The specific grounds on which a winding-up order may be made by the court41 are as follows:
- the company has resolved by special resolution that it should be wound up by the court;42
- the company has not obtained a trading certificate43 and has not complied with the minimum requirements for statutory capital (currently GBP 50,000) for more than one year since it was registered (public limited companies only);
- the company is unable to pay its debts;
- the court thinks that it is “just and equitable” that it should be wound up. This can include the loss of a substantial part of the company’s business,44 or where the actions of the directors are enough to infer an abuse of power;45
- the company has not commenced business within a year of incorporation, or has suspended business for a year or more;
- where a Moratorium46 for the company has been obtained and has elapsed, the directors of the company have failed to put a company voluntary arrangement47 in place.
Interim Order in an Administration
3.3.3 The appointment of an administrator is governed by The Enterprise Act 200248 for holders of qualifying floating charges and the IA 1986 in other cases. An administration order is a process by which an administrator can be appointed to run the affairs of a company in lieu of the directors. Appointment can be made by the court, the holder of a qualifying floating charge,49 the company or the directors. Administration lasts for one year (although it may be extended on application to the court) and so all administration orders may be considered to be interim measures. The purpose of the administration is to rescue the company as a viable business and return it to a profitable state, failing which, to achieve a better result for creditors than would be achieved by way of a winding-up procedure.
3.3.4 Where an administration order is granted by the court, it has the effect of dismissing or suspending any pending winding-up petitions, creating a moratorium on insolvency and other legal proceedings, and vacating the office of an administrative receiver or receiver (if one has been appointed previously, and if necessary). The administrator is appointed to manage the company’s affairs, business and property for the benefit of its creditors. The administrator must be a licensed insolvency practitioner and will carry the status of an officer of the court (whether or not the administrator has been appointed by the court).
3.3.5 In an administration process, there will usually be a delay between the date of the presentation of the application for an administration order and the hearing of the application and appointment of the administrator. The court may make an interim order50 which amongst other things can restrict the exercise of power by the directors of the company, or make a provision conferring discretion on the court or on a person qualified to act as an insolvency practitioner in relation to the company for that interim period. This may result in the individual having authority to act in a manner very similar to that of an administrator but it has been held51 that an individual appointed in this way does not have the status of an administrator.
Criteria for an interim order in an administration
3.3.6 The directors of the company can vote to put the company into administration52, by way of special resolution. The holder of a qualifying floating charge can give notice to the directors that it intends to appoint an administrator to run the company’s affairs.53 The court can make an administration order only if it is satisfied that the company is or is likely to become unable to pay its debts and that the administration order is reasonably likely to achieve the purpose of administration.54 It has discretion to make an interim order and is most likely to be asked to do so in cases of urgency.
3.4 Preservation of evidence
3.4.1 The recovery and preservation of documentation and property evidence and the preservation of witness testimony are dealt with separately under Scots law.
Recovery and preservation of documentation and property evidence
3.4.2 Recovery of documentation or other property evidence may be sought under the AJSA 1972 or at common law. Recovery under the provisions of the AJSA 1972 is likely to be more extensive than at common law. In practice the rules of court treat both together for most purposes.
3.4.3 On cause shown, the court may deal with the application on a ‘without notice’ basis. Alternatively, the court may require such intimation or service of the petition as it sees fit prior to granting the application. If the application is granted, the court will grant an order giving authority to a commissioner (in the Court of Session, usually a senior advocate; in the sheriff court, usually an experienced local practitioner) to recover the evidence which is sought to be preserved. This may be done by obtaining it on a voluntary basis from the third party (the haver) from whom it is to be recovered. Alternatively, the order will give authority to the commissioner to attend at the haver’s premises and recover the evidence directly, with the assistance if required of court officers.
Criteria for recovery and preservation of documentation and property evidence
3.4.4 The criteria for an order for recovery and preservation of documents or other evidence under the AJSA 1972 are:
- the property or documentation in question must be that as to which any question may relevantly arise;
- that question must be one which may arise in existing civil proceedings or in civil proceedings which are likely to be brought; and
- the person seeking the order must be a party in those proceedings; or any other person who appears to the court to have an interest to be joined in current proceedings; or will be a party to proceedings which are likely to be brought.55
3.4.5 The AJSA 1972 provides that the court may order recovery “notwithstanding any rule of law or practice to the contrary” and “unless there is special reason why the application should not be granted.” However, despite the implication to the contrary in this phrase, the onus remains with the applicant to satisfy the court.56 The “likelihood of proceedings” must be established and assessed at the time of the application. It is not necessary for the applicant to set out in the application what would amount to a fully pled and relevant case in the subsequent proceedings,57 but the application must disclose more than speculations or hopeful allegations.58
Preservation of witness evidence
3.4.6 Witness evidence is preserved by the taking of oral evidence on commission prior to the commencement of a court hearing, in contrast to having that witness appear during the court hearing. The process is facilitated by the appointment (by the Court) of a commissioner (in the Court of Session, usually a practising advocate (barrister) or, in the sheriff court, an experienced local lawyer, or the sheriff himself) to fix a hearing (a commission) before whom that witness’s evidence is taken. The evidence in question is taken orally, by way of examination and cross-examination of the witness, in the same way as if it was being taken in Court at the hearing itself. The evidence will be recorded during the commission, either by hand by the court clerk or by a shorthand writer. Alternatively, the party seeking the commission can make a motion for the evidence to be video recorded. Once the commission is finished, a report of the commission is prepared and lodged in Court, along with any documents produced by the witness. The evidence can then be used during the court hearing at a later date.
3.4.7 In civil cases there are two circumstances in which such an order can be sought:
- Where for some specific reason there is a danger of evidence being lost. In such circumstances, the Court of Session may appoint a commissioner to take the evidence and report before any legal arguments have been remitted to proof (trial), or even before proceedings have been raised.
- After a proof has been allowed, or issues approved, and a timetable for the court hearing fixed, both the Court of Session and the sheriff court may appoint a commissioner to take the evidence of a witness who will probably not be able to attend the hearing, for example, because they are abroad or unable to attend because of age, infirmity or sickness.
3.4.8 These avenues are different as the first case depends upon an emergency and danger of evidence being lost and the second does not. Evidence taken on commission may also be used in arbitration. An application for commission may be refused if the court does not consider it to be appropriate, for example, if there is a means of compelling a witness to attend court in Scotland or if the credibility of the witness is at issue.
3.5 Protection against apprehended legal wrongs
3.5.1 Interim interdict seeks to prevent someone from acting in a way which would breach another party’s legal rights. It is a temporary order to preserve (where possible) the rights of parties pending a final determination of the claim. It will usually (but not always) be granted to preserve the status quo and will only be granted on evidence of a wrong or on grounds of reasonable apprehension that a wrong is likely to be committed.
3.5.2 Interim interdict will not be granted where there is an alternative legal remedy available or where there is already a separate action ongoing in which the same matter has been raised. Interdict (and interim interdict) cannot be used to impose a positive obligation on a party, but rather only to prevent certain steps being taken.
Criteria for Interim Interdict
3.5.3 The test which will be applied by the court in determining an application for interim interdict is whether (i) the party seeking the order has title and interest to sue; (ii) the application discloses a prima facie case; and (iii) that the granting of the order is justified on the balance of convenience.
3.5.4 Title and interest to sue: A party seeking to raise an action of interdict must show some legal relationship (arising either at law or under contract) which gives them a right which the other party has either infringed or threatens to infringe.59 For example, the proprietor of a land or building has a general legal right to prevent damage to his property.60 Similarly, a party entitled to possession of moveable property may seek interdict to prevent another party from removing that property or wrongfully using or interfering with it.61
3.5.5 Prima facie case: A party must show that they have reasonable prospects of success.62 The court will not seek to reach final conclusions on the legal issues. Where no harm has yet been committed, the court will consider whether a serious harm will be, or is likely to be, committed against the party who seeks an interim measure.63
3.5.6 Balance of convenience: A party seeking an interim interdict must show that the inconvenience to them in not obtaining the interim interdict is greater than the inconvenience to the other party in being subject to an interim interdict. The court may take into consideration factors such as:
- whether the apprehended wrong is capable of remedy;64
- whether the party against whom the order is sought has offered any security or undertaking;65
- how likely it is that the party seeking the order will succeed with the substantive claim;66
- the financial effect of interim interdict on the party against whom the order is sought;67
- whether anticipated damages could be easily quantified;
- whether damages would be an adequate remedy;68
- any safety implications;69
- public interest;70 and
- delay in making the application.
3.5.7 This interim measure may be refused where an alternative legal process is available to remedy the alleged wrong;71 or where an action in connection with the same matter has already been raised.72
4. Procedural and Evidential Requirements for Interim Measures
4.1 Procedural and evidential requirements for interim measures to secure assets in relation to money claims
Form of the request
4.1.1 The procedural requirements for securing an order for diligence on the dependence73 are now contained in the DSA 1987 (in to which new provisions were inserted by BAD 2007 which largely came into force on 1 April 2008).
4.1.2 An application for the order may be made at any stage of the court procedure before final decree (judgment).74The application may be sought before or after service of the court writ initiating the substantive court action. In practice, to obtain the order the applicant’s agents must prepare the relevant court application in the prescribed form.75 If the order is to be sought prior to service of the underlying claim, then the court clerk should be contacted to request a hearing in chambers before the sheriff (for the sheriff court) or the judge (for the Court of Session) as appropriate, in order to present and discuss the merits of the application. The application may in certain procedures be transmitted to the court electronically, although that remains relatively uncommon for orders of this nature.
Content of the request
4.1.3 The application should include an:76
- explanation of the basis upon which it is claimed that the court has jurisdiction to grant the order sought;
- explanation of the underlying claim, sufficient to satisfy the court that the applicant has a prima facie case;
- explanation of the basis upon which the applicant believes there is either a real risk of insolvency or of the defender hiding assets; and
- explanation of why it is reasonable in all the circumstances to grant the order sought.
Documentation in support of the request
4.1.4 The applicant should include with the application a copy of the substantive claim in relation to which the order is sought (if that is not already before the court) together with any documents (for example, reports or other documentary evidence) on which it seeks to rely in persuading the court that the tests referred to at paragraph 4.1.3 above are met and that therefore an interim order should be granted.
Implementation of the procedure
4.1.5 If the application is refused and the creditor continues to insist on his application, a hearing must be fixed and intimated to the debtor and any other person having an interest.77 In this instance, the same factors as apply in respect of the initial application (see paragraph 4.1.3 above) are taken into account in deciding whether or not to grant the application.78
4.1.6 If the order is granted, a further hearing is automatically fixed79 where the defender has the opportunity to seek a recall of the order.
4.1.7 Where the order is granted prior to service of the underlying claim, then the writ or summons in relation to the underlying claim must be served within 21 days or the warrant for diligence on the dependence will fall.80 This period may be extended in certain circumstances, on application to the court.81
4.1.8 To take effect, the order for arrestment on the dependence must be served on the party which holds or controls the moveable assets which are to be frozen e.g. on the bank where the bank account is held. It is effective on the date of service in respect of any amount or amounts that the third party owes to the debtor on that date.
4.1.9 For inhibition on the dependence to be effective, the inhibition must also be registered in the Register of Inhibitions and Adjudications82 (which forms part of the Land Register of Scotland regime for heritable property).
4.1.10 Once granted, the order will remain in place (provided proceedings are served in the required timeframe, as referred to above) until recalled by the court. Either party to the action may seek recall of the order at any time on cause shown. In practice, it is common for an alternative form of security (for example, funds lodged on joint deposit account) to be agreed between the parties in place of any orders that are granted.
4.1.11 The requirements for obtaining an order for diligence on the dependence are set out in s15E of the 1987 Act and referred to at paragraph 4.1.3 above. The evidence which will be considered by the court will be limited to such documentary evidence as is placed before the court. Commonly, this will include the pleadings and financial reports (for example, for company debtors), which will be considered alongside the parties’ oral submissions.
4.2 Procedural and evidential requirements for preservation of assets in the event of insolvency
Form of the request
4.2.1 The request for court appointment of a provisional liquidator83 or an interim order in an administration84 is made to the court as part of the petition seeking the substantive order for the appointment of a liquidator or administrator, as the case may be. In each case, the petition must comply with the usual court rules regarding the format and content of a petition.
Content of the request
4.2.2 Provisional Liquidator: The petition sets out the grounds on which the petitioner believes the company should be subject to a compulsory winding-up order. The reasons given must fall within the criteria listed at paragraph 3.3.2 above. It should also set out the reasons why the appointment of a provisional liquidator should be made. The circumstances where a provisional liquidator will be appointed are not prescribed but may include where there is a risk of jeopardy to the company’s assets pending the hearing of the petition, or where it is in the public interest.85
4.2.3 Interim order in an administration: The petition should set out the basis upon which the applicant believes the relevant business either is, or is likely to become, unable to meet its financial obligations in the near future, the nature of the interim order sought and the reasons for it.
Documentation in support of the request
4.2.4 Provisional Liquidator: An application to appoint a provisional liquidator needs to include averments of the grounds for appointment of the provisional liquidator, and the name and address of the person proposed to be appointed, and that person’s qualifications to act as provisional liquidator. The petition must also include any knowledge the petitioner has in relation to the appointment of an administrator or receiver, or if a liquidator has been appointed pursuant to a voluntary winding up and should include his consent to act. Documentation may also be included to demonstrate or support the reasons for requesting the appointment of a provisional liquidator.
4.2.5 Interim order in an administration: The petition should be lodged with a Statement of the Proposed Administrator. Where the proposed appointment is to be made by the holder of a qualifying floating charge,86 a notice of intention to appoint should be lodged in court, accompanied by evidence that the person making the appointment is entitled to do so, and should include copies of the written consent from all those required to give it.
Implementation of the procedure
4.2.6 In each instance the Court will consider the content of the petition and determine if it meets the mandatory grounds for the type of order sought, and for the appointment of a provisional liquidator or administrator, as the case may be. If the grounds for winding-up or administration are met, the Court will grant ‘First Orders’ which permits service of the petition on the debtor and advertisement of the petition (in the local press and, in the case of a company, also in the Edinburgh Gazette). Where applicable, this order will also include the appointment of a provisional liquidator or an interim order in an administration and the court order gives the appointee authority to take the necessary steps to preserve assets and take other necessary steps immediately.
4.2.7 Provisional Liquidator: The appointment of the provisional liquidator lasts for a maximum of 28 days. At the end of this period, if the provisional liquidator has failed to obtain consensus on the appointment of a liquidator, the court will make the appointment. After the liquidator has been appointed, the provisional liquidator is relieved of his duties (unless he is appointed as the liquidator).
4.2.8 Interim order in an administration: The interim order will remain effective unless otherwise ordered by the court until the full administration order is made so that an administrator is appointed or the petition is otherwise dealt with.
4.2.9 The Court’s decision on the appointment of a provisional liquidator or interim order in an administration will be based on the content of the petition, any supporting documents and any oral submissions made by the agents seeking the order.
4.3 Procedural and evidential requirements for preservation of evidence
Form of the request
4.3.1 Recovery and preservation of documentary/property evidence: In applications made before proceedings are raised, the application is made by petition in the Court of Session or by summary application in the sheriff court. It should, therefore, comply with the normal requirements regarding the format and content of a petition or summary application, as the case may be. It should contain, and be supported by, sufficient information to enable the court to know what the intended action will be about and what assistance the documents or other evidence sought would give in deciding it. The court will not allow a ‘fishing exercise’.87
4.3.2 Preservation of witness evidence: An emergency justifying an application for evidence to be taken on commission may arise before substantive proceedings have been raised. Such application should be made by way of a petition to the Court of Session. After an action has been raised an application to take evidence on commission is made by motion in the substantive action.
Content of the request
4.3.3 Recovery and preservation of documentary/property evidence:88 The Petition to the court may seek authority to: (i) ordain the respondents to produce the documents or property intact and unaltered; (ii) appoint the commissioner to take possession of these; (iii) authorise the commissioner to remove documents or property and deliver them to the Clerk of Court; and/or (iv) authorise the commissioner to employ such persons as he considers appropriate to assist in the inspection and removal of documents.
4.3.4 The Petition may seek authority to: (i) carry out the recovery at a specified time and place; (ii) search for items, including power to break open shut and lock fast premises; (iii) take photographs of items; (iv) permit the petitioner and/or his agents to accompany the appointed commissioner in order to identify property; and/or (v) prevent the respondents from removing or interfering with items.
4.3.5 Preservation of witness evidence: The reason for seeking a commission is usually stated generally to be the risk of the loss of the evidence. However, the risk must be one peculiar to the witness and the risks normally identified include that the witness is so old, infirm or unwell as to be in danger of early death. The reasons are limited to these grounds in the Court of Session.
4.3.6 In the sheriff court reasons have included that the witness is obliged to go abroad permanently or for a prolonged period. It has usually been assumed in civil cases that in trials involving a witness aged 70 or over, commission should be allowed automatically.89
4.3.7 Nevertheless, the grant of commission to take evidence is a matter of discretion, and a commission to examine two aged witnesses has been refused when plenty of younger witnesses were available to prove the relevant legal statements outlined in the pleadings instead.90
Documentation in support of the request
4.3.8 The application for commission should include a statement of facts which sets out a list of documents and any other property which the party wishes to be made the subject of the order; the address of the premises within which he believes the listed items are to be found and the facts which give rise to his belief that, were the order not to be granted, the listed items or any of the documents would cease to be available.
4.3.9 Along with the application, the following documents should also be lodged: (i) a sworn statement supporting the facts in the applications; and (ii) an undertaking that the party seeking commission will:
- comply with any order of the court as to payment of compensation if it is subsequently discovered that the order, or the implementation of the order, has caused loss to the respondent or, where the haver is not the respondent, to the haver;
- bring within a reasonable time of the execution of the order any proceedings which he decides to bring; and
- will not, without leave of the court, use any information, documents or other property obtained as a result of the order, except for the purpose of any proceedings which he decides to bring and to which the order relates.
Implementation of the procedure
4.3.10 Recovery and preservation of documentary/property evidence: Once appointed, the commissioner acts as an independent court appointee and should therefore travel to the site of the haver’s premises or other location of the evidence to be recovered independently of the petitioner or his agents. The commissioner will be accompanied by a short hand writer to record the events and by court officers (messengers at arms or sheriff officers) to serve the court order. He may also be assisted, where necessary, by a photographer, locksmith or other expert. The commissioner is required to take possession of and preserve all evidence falling within the scope of the court’s order. He will prepare a report of the commission, including an inventory of the items recovered and noting any items that were not recovered and this will be lodged with the court.
4.3.11 The haver is entitled to refuse to answer or to produce any items sought, either on the basis of confidentiality or legal privilege, or because to do so will expose the haver to criminal prosecution. If the haver does so, the commissioner will seal the documents in question in an envelope and lodge the sealed envelope in court. The party seeking the order for recovery and preservation of the items is not automatically entitled to have access to the commissioners’ report and must make a separate application to the court in order to obtain access where the haver has refused to answer or produce the specified documents/property, or where the order has been obtained on a “without notice” basis.
4.3.12 Preservation of witness evidence: The commission takes the form of a hearing (commission), at which the witness will be examined and cross-examined orally by agents for the parties to the dispute. The commission is chaired by the commissioner acting in the place of the court. The commission will be recorded or noted by a short hand writer, and following the hearing a full transcript of the commission will be prepared.
4.3.13 The evidence taken from the witness may be used at the full hearing of the case unless the witness becomes available to attend, but the court must hear and determine any objection to its use.91 The party who obtained the commission is responsible for lodging the evidence in court. If the party who obtained the commission does not use it, his opponent is entitled to do so. In any event, evidence taken on commission cannot be used unless it is expressly made part of the evidence at the hearing. If the witness is examined at the hearing, the evidence taken on commission should not be used for any purpose, and in particular it should not be used to contradict evidence given in court.
4.3.14 If requested, the commissioner may prepare a short note on the witness’s credibility and demeanour, which will be lodged in a sealed envelope along with the commissioner’s report of the examination of the witness. If the commissioner has any doubt as to the admissibility, relevancy or competency of a question, it is thought that he should allow the question under reservation, so that the evidence can be preserved, and the Judge or sheriff hearing the trial can determine the issue.
4.4 Procedural and evidential requirements for protection against apprehended legal wrongs
Form of the request
4.4.1 To seek an order for interim interdict in the Court of Session, a petition or summons92 containing “a crave”93 or conclusion for interdict must be submitted.94 This should comply with the normal court rules as to content and format. A party to an ongoing action may seek an interim interdict by making a motion at any time after the presentation of the petition or signeting of the summons.95 Similarly, an initial writ in the Sheriff Court must contain a specific crave for interdict. The crave for interdict may stand alone or may be combined with others, such as craves for damages. The terms of the crave for interdict should be directed to the illegal acts complained of and the method or methods required to prevent their recurrence.
Content of the request
4.4.2 The request should set out the nature of the actions constituting the wrong or the apprehended wrong in respect of which interdict is sought; the basis upon which the applicant claims that his legal rights are being or will be infringed by that action; and the reasons why the applicant considers that the balance of convenience test is met. If the summons contains a crave or conclusion for interdict, there is no requirement to also include a separate crave or conclusion for interim interdict. However, it is usual practice to do so.96
Documentation in support of the request
4.4.3 There are no formal requirements to submit any additional documents along with the application for interim interdict, although documentary evidence and affidavits may be submitted to support the application.
Implementation of the procedure
4.4.4 Interim interdict will only be granted upon evidence of a wrong or on grounds of reasonable apprehension of a wrong.97 The Court will hear oral submissions from the parties and consider these together with the application and related documents to consider whether, in all the circumstances, the order sought should be granted.
4.4.5 After the summons is signeted but before it is served, a party can enrol a motion for interim interdict which may or may not be granted by the court. If the other party has a caveat in place, they will be notified of the motion and have an opportunity to address the court before the granting of the interim order.98
4.4.6 The tests to be met are set out at paragraphs 3.5.3-3.5.6 above. The court’s decision will be based on the formal written pleadings, documentary evidence and oral submissions made by the applicant.
5. Legal Safeguards for the Respondent
5.1 The need for consideration by the court
5.1.1 Previously in Scotland it was possible to obtain certain interim measures (for example, warrant for arrestment or inhibition on the dependence) automatically. That is no longer the case, as this approach was held to be incompatible with the First Protocol to the European Convention on Human Rights and Fundamental Freedoms.99 In all cases, interim measures may only be put in place by order of the court. There is no automatic right to an interim measure and the onus of proof will lie with the applicant to establish that the necessary criteria are met and that, in all the circumstances, the court should exercise its discretion to order the interim measure(s) sought.
5.2 Right to present counter-arguments and evidence
5.2.1 Where interim measures are granted100 then it is open to the affected party to seek to have the order recalled at any time thereafter on cause shown, by application to the court. In the case of arrestment or inhibition on the dependence, there is a statutory requirement that a hearing be fixed shortly after the initial granting of the warrant for diligence on the dependence, specifically for the purpose of allowing the affected party to seek to have the orders modified or recalled. On each such occasion it is for the party which obtained the order to demonstrate that the criteria justifying the measure continue to be met.
5.3 Damages for unjustified interim measures
5.3.1 Where an order is sought in terms of s1 AJSA the applicant is required to provide an undertaking that he will comply with any court order to pay compensation to the other party if the order is granted and carried out and its implementation is subsequently shown to have caused loss to the party against whom the order is executed.
5.3.2 Similar undertakings may, in appropriate circumstances, also be sought in connection with an application for interim interdict.
5.4.1 A party may lodge with the court a request (called a caveat)101 that asks the court not to grant certain types of interim orders against it on a ‘without notice’ basis. This includes, for example, orders for interim interdict and orders in respect of winding up or administration or for interim interdict. Where a caveat is triggered, then the party against whom the order is sought should be given the opportunity to address the court before a decision is taken in respect of the order. A hearing to allow this to happen will usually be fixed within a few days of the caveat being triggered, or more quickly where circumstances require or permit. Many banks and other finance providers routinely lodge caveats in the sheriff courts and the Court of Session against certain debtors, particularly if they are experiencing difficulty in obtaining repayments. When a caveat is triggered, the court will notify (usually by telephone) the caveat holder (or its legal representative) that a caveat has been triggered – i.e. that an application for an interim order has been received against the individual or company debtor. The caveat holder can then consider whether it wishes to enforce its rights in respect of any prior ranking securities it may hold over the debtor.
5.4.2 Caveats will not operate to give advance warning of an application for arrestment or inhibition on the dependence of an action, or an order under section 1 of the Administration of Justice (Scotland) Act 1972 (for inspection or recovery of documents or other evidence).
5.5.1 An arrestment on the dependence which is not insisted upon prescribes (is extinguished) three years from the date on which the final interlocutor (court order) for payment is obtained by the creditor.102 All inhibitions now cease to have effect five years from the date they come into effect (i.e. their date of registration).103
5.6 Further process required
5.6.1 All interim measures are intended only to preserve the position pending the final outcome of a substantive court action. Further process is therefore required in order to make such an order permanent, if that is required.
5.6.2 With regard to diligence on the dependence, a party which is successful in the underlying action will need to bring additional proceedings (either an action of furthcoming in the case of arrestment or an action of adjudication in the case of inhibition) to have the property ‘adjudged’ (transferred) to him in satisfaction of his claim. In practice, the need for a further court action is often avoided by the debtor granting the necessary mandate or other documents in order to transfer the property in question to the creditor. In the case of arrested funds, there is an exception to this rule. Where the creditor has obtained final judgment in his favour, then the relevant sum104 will be released automatically to him from the arrested funds 14 weeks after the date of decree.
5.7 Documents recovered only to be used for purpose of action
5.7.1 An order from the court for recovery of documents under the AJSA 1972 or at common law carries with it an implied obligation or undertaking that the party who obtains it will not use what is recovered, or allow its use, for any purpose other than the action or proceedings in respect of which recovery was ordered. When recovery is granted, the documents come under the protection of the court which granted the order.105 The court may also attach express conditions106 to regulation access to all or parts of the documents to be recovered or require an undertaking from the party to that effect.107
5.8 Third party possession
5.8.1 When the documents are in the possession of a third party, that third party, having had no opportunity of raising any objection on grounds of confidentiality when the diligence is asked for, is not compelled to produce those documents at the commission if the third party is able to establish confidentiality or that it would suffer substantial prejudice if so compelled.
5.9.1 One particular speciality of the rules relating to recovery of evidence, in a broad sense, relates to the privilege against self-incrimination. Evidence which might be recovered or lead to demonstrate infringement of certain intellectual property rights may also potentially lead to criminal charges being brought against the person who has the documents in his possession. It is specifically provided that the normal privilege against self-incrimination cannot be claimed in proceedings (including related proceedings under the AJSA 1972 section 1) where the proceedings brought or likely to be brought relate to infringement of rights in any intellectual property or to passing off, to obtain disclosure of information relating thereto or to prevent any apprehended infringement or passing off.
5.10.1 The court is well accustomed to making appropriate arrangements to preserve, so far as practicable, the confidentiality of documents or other evidence recovered under commission and diligence. This is often done by requiring suitable undertakings or confidentiality agreements from parties seeking to view the documents or other material and by restricting the persons to whom they may be made available.108
6. Timing of Interim Measures
6.1 Similarities and differences when filing a request before or after the case on the substantive matter is pending
6.1.1 An application for interim measures can usually be made at any stage of the court procedure before the final decree (judgment) of the court. It can also be sought before service of the initiating writ or summons on the defender. The differences between the two procedures depend upon the nature of the interim measure sought and the nature of the underlying substantive claim in connection with which it is sought. Generally, the content of the application will be similar whether made before or after the substantive proceedings have commenced, although the format in which the application is presented may differ depending on whether or not there are underlying substantive proceedings.
6.2 Duration of an interim measure procedure
6.2.1 As a rule, procedures regarding interim measures are determined quickly. Initial hearings often take place in chambers rather than in the court room, particularly where they are made on a without notice basis and privacy is required. The sheriff or judge will usually have read the application and considered the papers in advance, and will question the solicitor or advocate seeking the order regarding any issues that he or she considers relevant to the decision. The court will often make its decision immediately after hearing submissions and the formal order can be prepared by the clerk and signed by the sheriff or judge (as appropriate) within a short period after the hearing if required. If the matter is sufficiently urgent, the court may hear the application outside usual court times. If time is of the essence, then it is advisable to liaise with the court clerk as soon as a party becomes aware that it might seek an order, even before the necessary papers have been prepared, in order to secure the availability of a judge or sheriff and clerk and to ensure that the application will be dealt with immediately.
7.1 Court costs, fees and compensation for professional representation
7.1.1 Court fees109 in Scotland are fixed by the Court for each of the various types and stages of proceedings that may be brought before the courts. The fees are payable in respect of most steps of the procedure in each case.110
7.1.2 Solicitors’ fees and, perhaps, also Counsels’ or experts’ fees, will be incurred in the preparation of the necessary application.
7.1.3 In addition, costs may be incurred in relation to service of court orders or other documents. Some court documents require to be served by court officials (sheriff officer for sheriff court orders or messengers-at-arms for Court of Session orders). These agents will charge a fee depending on the nature of the documents to be served and the location at which they are to be served. Some orders must be advertised in local or national papers (for example in the Edinburgh Gazette, in the case of liquidation or administration).111
7.1.4 Where appointed, a commissioner is entitled to a fee, as is any short hand writer or other assistant he appoints. The execution of a commission may be expensive and the party instructing the commissioner will be personally liable for the commissioner’s fee.
7.2 Recovery of Costs112
7.2.1 Generally speaking, the court fees and other costs incurred in connection with litigation in Scotland, including in connection with an application for interim measures, must be met by the applicant in the first instance. However, if successful, that party is likely to obtain an award of expenses in its favour, although the award of expenses remains at all times within the court’s discretion and the court may make such order as to expenses as it considers appropriate in all the circumstances. There is therefore no guarantee that a successful party will recover any or all of its costs. Due to the level of recovery permitted by the Scottish courts in connection with professional fees, it is likely that an award of expenses will only allow a party to recover a proportion of the costs it has actually incurred in the litigation, although it is possible to obtain an award of expenses which comes close to full recovery of costs incurred in certain circumstances. For example, a party may claim an additional fee in conjunction with an award of expenses under Rule of Court 42.14. In granting an application, the court will consider factors such as the complexity of the issues in dispute, the important of the litigation to the parties, the value of the case and the steps taken in resolving the dispute. It is also possible to seek a higher level of recovery on an ‘agent and client, client paying’ basis if there has been improper conduct by the other party.113
7.2.2 An award of expenses may be made by the court at any stage in the process. In some cases, therefore, an award of expenses may be made on an interim basis in respect of particular interim steps, or the expenses related to the interim measure may be reserved pending a determination of the underlying substantive claim and dealt with only following conclusion of that underlying process.
7.2.3 A party against whom an order for an interim measure is sought is likely to be entitled to recover its expenses in relation to opposing such an application, where the court is satisfied that the party seeking the order acted unreasonably in making such an application.
7.3.1 Where an order for recovery of documents or other property is granted before the commencement of substantive proceedings, the court may order the applicant to provide security for costs as it sees fit.114
8. Remedies Against the Decision on Interim Measures
8.1. Interim measures to secure assets in relation to money claims
8.1.1 As outlined above, where the court makes an order granting warrant for diligence on the dependence in the absence of the debtor, a section 15K hearing will be fixed at which the debtor or any person having an interest may apply to the court for an order to either recall or restrict the order. The hearing will take place usually within about a week of the initial order being granted. If the court is satisfied that the warrant is invalid,115 or where it is no longer satisfied as to the requirements for obtaining a warrant116 (as outlined above), it may recall that warrant and make any ancillary order so required. Concurrently, where the court is satisfied that the warrant is valid, but that an arrestment or inhibition executed in pursuance thereof is irregular or ineffective and it is reasonable in all circumstances to do so, it may also make an order recalling or restricting the warrant.117
8.1.2 The onus remains on the creditor to show that the necessary tests regarding an order for diligence on the dependence are met, rather than on the debtor to demonstrate that any order should be amended. The court has a broad discretion here and it may impose any conditions on the debtor that it considers fit to order.
8.1.3 Where an order is made restricting warrant for diligence on the dependence or the court imposes a discretionary condition on the warrant, the debtor has the right to appeal and apply for variation of the order or variation or removal of the condition, as the case may be.118 The requirements for intimation and a subsequent hearing, along with the court’s powers of variation are in equivalent terms to those for the original s15K hearing for recall/restriction. Again, it is for the creditor to show that the necessary tests regarding an order for diligence on the dependence are met.
8.1.4 If a decision is made at a section 15K or 15L hearing which a party considers to be incorrect, they may be entitled to reclaim (i.e. appeal) in the normal way (i.e. outside of the procedure specifically included for diligence on the dependence). However, they would need the permission of the court to proceed with a further appeal. If it can be shown that there has been a change of circumstances, the court will consider the application based on the new facts at the point of the second application.
8.2 Preservation of assets in the event of insolvency
8.2.1 Provisional Liquidator: The company can appeal the compulsory winding-up decision which triggers the appointment of a provisional liquidator. The court has the power to alter or revoke a winding-up order on successful appeal.
8.2.2 A provisional liquidator has only 28 days to convene meetings between the creditors and contributors, with the sole purpose of appointing a liquidator. As such, no direct remedies against the appointment of a provisional liquidator are available; however the creditors can decide to appoint a different liquidator rather than to continue with the person appointed as the provisional liquidator.
8.2.3 Interim order in administration: A creditor can apply to the court to end the administration where he believes that the person who applied for the court appointment of the administrator or appointed the administrator himself, did so for an improper motive.119
8.3 Preservation of evidence
8.3.1 A haver may seek legal or other professional advice of their choice. Where the purpose of seeking legal advice is to help the haver to decide whether to ask the court to vary or discharge the order, the haver may ask the Commissioner to delay starting the search for up to two hours or such other longer period as the Commissioner may permit.120 Where a haver is seeking advice, they must:
- inform the Commissioner and the petitioner’s agent of that fact;
- not disturb or remove any listed items; and
- permit the Commissioner to enter the premises, but not to start the search.121
8.3.2 Thereafter, if the order is varied by the court, the varied order will replace the terms of the order originally granted.
8.4 Protection against apprehended legal wrongs
8.4.1 Generally, a decision of the court granting or refusing interim interdict may be appealed “without leave” to the sheriff principal, that is without obtaining prior permission from the court to do so. Appeal from the sheriff principal to the Court of Session can only be made with the court’s permission (“with leave”).122 If the original order is granted by a single judge in the Court of Session then a decision granting or refusing interim interdict may be appealed (with leave) to the Inner House of the Court of Session.123
9. Enforcement of an Interim Measure
9.1 Enforcement of interim measures issued by national courts
Interim measures to secure assets in relation to money claims
9.1.1 If the arrestee, in breach of the arrestment, pays the debt or delivers the goods arrested to the defender or a third party he will be liable to the extent of the asset attached or sum secured by the arrestment.124 However, this does not permit the arrestee to pay or deliver the asset or sum that has been attached. If the pursuer receives such asset or sum knowing that it is without the defender’s knowledge and in breach of the arrestee’s duty to retain the asset or sum, and where the amount of the debt owed is disputed, the pursuer may be ordered by the court to return such asset or sum to the arrestee; and may also risk recall of the underlying arrestment.125
Preservation of assets in the event of insolvency
9.1.2 Provisional Liquidator: The Court has the power to arrest a contributory126 that it thinks is about to abscond from the United Kingdom and to seize the contributory’s property, books or papers,127 if the court is concerned that the contributory would attempt to conceal the same.
9.1.3 Interim order in administration: The administrator, as an officer of the court (whether or not appointed through the court process) has wide ranging powers at his disposal. For example, the administrator can remove any director and can veto decisions of any directors which impact on the administrator’s ability to perform his role. The court may confer such powers on an individual insolvency practitioner by way of an interim order for the period between the making and granting of the application for preservation of assets.
Preservation of evidence
9.1.4 Recovery and preservation of documentary/property evidence: Documents which are needed to assist in progressing actions in other jurisdictions may be situated in Scotland. In certain circumstances, documents recovered under the AJSA 1972 in Scotland for use in Scottish proceedings can be made available for use in foreign proceedings.128
9.1.5 Further to this, in terms of section 28 of the Civil Jurisdiction and Judgments Act 1982 (the “1982 Act”), when any proceedings have been brought, or are likely to be brought, in another Contracting State129 or England and Wales or Northern Ireland in respect of any matter within the scope of the 1968 Convention,130 the Court of Session will have the power to make an order as if the proceedings had been brought, or were likely to be brought, in that court. A foreign court may also submit a letter of request to the Court of Session seeking the recovery of property within Scotland for the use in foreign proceedings.131
9.1.6 Preservation of witness evidence: If the witness fails to attend a commission in response to a citation the commissioner will report accordingly and the court may, on application by the party seeking the evidence, order that the witness be apprehended for a subsequent commission hearing.
9.1.7 If a witness is abroad, it does not mean that his evidence is necessarily lost, since facilities exist in certain circumstances for evidence to be taken before a court abroad, or by video link or by affidavit.
Protection against apprehended legal wrongs
9.1.8 A party against whom interim interdict has been granted, is bound to comply with it so long as it remains in force. If one party fails to observe the terms of the interdict order, the other party may take proceedings against him for breach of interdict.
9.1.9 Breach of interdict constitutes a “contempt of court”, that is, a conduct which undermines the course of justice. It is punishable by admonition, censure, fine or imprisonment. The specific penalty for the breach remains within the court’s discretion.132 In the sheriff court, the maximum penalty is three months imprisonment or a fine of level 4 on the standard scale, or both.
9.2 Enforcement of interim measures issued by foreign courts
9.2.1 The Brussels Regulation and Lugano Convention both apply to judgments within the European Union, along with those in Iceland, Norway and Switzerland. These permit the enforcement in Scotland of interim orders issued by a foreign court upon application to the Court of Session for recognition (registration and enforcement) of an interim order.
9.2.2 The Civil Jurisdiction and Judgments Act 1982 also specifically gives the Court of Session the power to grant, in relation to ongoing actions in other Brussels or Lugano contracting States or in other parts of the United Kingdom a warrant for arrestment or inhibition over assets or property situated in Scotland. However, a requirement of this is that the Court of Session would be competent to grant such a warrant in equivalent proceedings before a Scottish court.
9.2.3 With regard to orders under s1 of the AJSA 1972, an order to assist with the recovery of evidence may be made in response to letters of request under the Evidence (Proceedings in Other Jurisdictions) Act 1975 (the “1975 Act”). The court will not grant an order under either enactment unless it is necessary, having regard to orders for recovery granted in any other court. In granting an order, the court will apply the law and practice of the Scottish courts to the application.
9.2.4 If the proceedings are to be in Scotland but the documents are outside Scotland, the court will consider the application in the normal way, and, if granted, the order will be for commission to take place in Scotland.133 The order will not be enforceable against a third party outside Scotland unless a court in the relevant country grants an order for enforcement.134
9.2.5 The rules under the 1975 Act make particular provision for the recovery of evidence to be used before the European Patent Office. Where the court makes an order under the 1975 Act, an officer of the European Patent Office may apply by motion to examine any witness or to request the court or any commissioner appointed by the court, as the case may be, to put specified questions to any witness.135
9.2.6 Similarly the court may grant commission to take evidence of a witness who is outside Scotland if, in addition to the other criteria above, the witness is willing to attend and an appropriate commissioner is identified. However, a warrant to take evidence on commission alone will not enable a party to enforce the attendance of the witness outside Scotland.
9.2.7 The process by which a witness can be ordered to submit to examination outside Scotland is by application to the court for letters of request. If granted, the court issues letters of request to an appropriate court in the country where the witness is, and requests the court there to examine the witness or to appoint some person to examine him. Letters of request may be addressed to any foreign court having the appropriate jurisdiction.
9.2.8 The 1975 Act enabled the UK to ratify the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, 1970.136 Around twenty countries have signed the Hague Convention, two of which are the United Kingdom and the United States of America.
10. Interim Measures in International Commercial Arbitration
10.1 Interim measures by state courts
10.1.1 The Arbitration (Scotland) Act 2010 provides a clear statutory regime for arbitration in Scotland. Under the Act, the Outer House of the Court of Session and the sheriff court have the power to make various orders in relation to arbitration similar to those they would make in ordinary civil proceedings. Under Rule 46 of the Scottish Arbitration Rules, this includes the granting of warrant for arrestment or inhibition and of interim interdict.137 The court may take such action on the application of a party to the arbitration. If the arbitration has already commenced, then the application may precede either with the consent of the arbitral tribunal or where the court is satisfied that it is necessary as a matter of urgency. If arbitration has not yet commenced, then the court may grant such an order where it is satisfied that: (i) a dispute has arisen or might arise; and (ii) an arbitration agreement between the parties exists and stipulates that such a dispute is to be determined by arbitration.
10.2 Interim measures by arbitral tribunal with seat in Scotland
10.2.1 An arbitral tribunal with its seat in Scotland has limited powers under the default rules of the Arbitration (Scotland) Act 2010 to protect property which is the subject of the arbitration.138 The tribunal can direct a party to allow an expert or a third party to inspect, photograph, preserve or take custody of any property which that party either owns or possesses which is the subject of the arbitration. The tribunal can also direct a party to take samples, carry out experiments or preserve any document or other evidence which any party controls. This is a default rule so it is open to parties to modify it, agree something different or disapply it completely.
10.3 Interim measures by arbitral tribunal with seat abroad
10.3.1 The Arbitration (Scotland) Act 2010 does not expressly provide for whether a Scottish court has the power to enforce interim measures granted by an arbitral tribunal with a seat abroad. There is no guidance on this point in the Arbitration (Scotland) Act 2010 or the Explanatory Notes to it.
10.3.2 Scottish courts have the power to enforce an award of a tribunal with a foreign seat in certain circumstances.139However, these provisions arguably would not apply to interim measures on the basis that interim measures are not awards in the sense of awards being final.