Cross-border debt recovery

Cross-border debt recovery: how to recover a debt due by a person or a business in Scotland

While it is commonplace for English businesses to trade with Scottish businesses, difficulties often arise when their customers in Scotland don’t pay them for their goods and/or services. There is often an unwillingness to venture north of the border and try and recover the sums due to them. I have never understood why that is. Part of the difficulty lies because whilst both jurisdictions sit within the UK, they operate under separate legal systems, with different Court procedures and enforcement mechanisms. For creditor businesses, this distinction is important.

Legal differences

Although our countries have close economic ties, they remain from a legal point of view very distinct. For English creditors, this means that their English Court Judgments are not automatically enforceable in Scotland. However, the Scottish Courts apply different procedural rules, and enforcement of their English Court Judgments is often expensive and can take some time. That is because, in my opinion, the wrong decision is taken at the start of the process; the decision to raise Court proceedings in England. In doing so, whilst obtaining a County Court Judgment might be relatively quick, it takes time and expense to convert that into a form that can be enforced north of the border. There is then inexplicably, trepidation in instructing Scottish agents to try and recover the sums due to them.

The benefits of raising proceedings in Scotland

In my opinion, English creditors should consider instructing Scottish agents to raise proceedings to recover the sums due to them in Scotland, not England. There are several benefits to this.

Firstly, the Scottish Court procedures are significantly quicker than those faced in England and can be significantly cheaper. Further, once a Court Decree/Judgment is obtained in Scotland is obtained in Scotland there is no need for it to be converted before enforcement. This can often mean that the recovery process is months quicker than in England, and cheaper. And obviously the quicker the action taken by a creditor, the higher the chances are that the creditor will be paid.

Final thoughts

So, if you are an English business with creditors based north of the border, don’t automatically raise proceedings in England. Give some thought to passing this to a trusted Scottish debt recovery specialist to raise proceedings in Scotland. It may well save you time, quite a bit of cash and lead to a full recovery of the sums due to your business. 

David Alexander
Partner, Head of Debt Recovery
Phone: 0131 516 5362
Email: Dalexander@gilsongray.co.uk 

The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.