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Caveats - Low cost protection
What are they?
Caveats are a simple means of avoiding having interim court orders made against you before you are given any notice that a court action has been raised.
The two main situations where they are normally used is where there is a risk of someone raising an action for interdict against you or seeking to appoint a provisional liquidator.
Caveats are competent in respect of most interim orders but unfortunately not against arrestments.
How do they work?
The caveat setting out the types of interim order which concern you is lodged with the sheriff court or the Court of Session where an interim order is likely to be granted. Once the court has that, if any application for an interim order is made, the court cannot grant that order until we have been notified and given a reasonable opportunity to attend court and oppose the granting of the order.
It is important to remember that the court may still grant the order if it thinks it is justified.
Do I need one?
If you are engaged in any business where someone may try to interdict you from doing something which is essential to your business, yes.
If for example, you are using material over which someone else may claim copyright or patent rights; or if you have employed a salesman who previously worked for a competitor, there is a possibility that an interdict might be sought to prevent you using the material which someone claims is theirs.
How much does it cost?
It normally costs around £50 + VAT, including the court dues, for each sheriff court in which a caveat is lodged. (It may be more than one court, especially if your registered office and your trading premises are in different Sheriff Court districts.) Caveats in the Court of Session normally cost a little more.
A caveat lasts for a year and can be renewed as many times, as you think necessary. As businesses become increasingly likely to resort to court action, under £100 per year is a small price to pay for what may become important protection for your business.
Robin Millar, April 1999
See ‘Caveats against liquidators’, January 2000
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