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Prescription: Have you made your Scottish claim in time

  • United Kingdom
  • Litigation and dispute management

06-12-2018

The law of prescription (time-bar) differs to the rest of the UK and more changes  are on the way. This briefing provides a brief overview of the current position and the changes that are contained in the Prescription (Scotland) Bill which passed its final stage in the Scottish Parliament on 8 November 2018.

The current law

The general rule in Scotland is that delictual claims, and most actions arising from a contractual relationship - for example, breach of contract or professional negligence - must be raised within five years after the date on which you became, or could with reasonable diligence have become, aware that loss, injury or damage has occurred. This is set out in the Prescription and Limitation (Scotland) Act 1973 and means that the right to enforce the obligation expires after five years. This Act also sets out separate prescriptive periods for personal injury, defamation and harassment (3 years) and product liability claims (10 years). In addition, there is a “long stop” period of 20 years which has the effect of extinguishing the obligation. This applies to all obligations including the right to enforce court decrees and rights over land and applies irrespective of the state of awareness.

In Scotland, unlike in England and Wales, “standstill agreements” are not generally used to extend these deadlines due to doubts over their competency. This means that the only way to  preserve the right is to raise and serve a court action. If this is not done, the right to enforce the obligation expires.

Following the Supreme Court case of Morrison v ICL Plastics Ltd there has been a significant amount of discussion as to the starting point for the five year period. This case interpreted the Act in a different way to the interpretation applied by most practitioners up until that date. The Supreme Court ruled that the five year period began on the date on which the potential pursuer became aware, or could with reasonable diligence have become aware, that it had suffered a loss, irrespective of whether it knew, or should have known, that that loss was as a result of a breach of contract or negligence by another party.

Since this case was decided, there have been moves to reform the Act as the decision was perceived as leading to unfair results and the Prescription (Scotland) Bill (following a Scottish Law Commission Report) seeks to remedy this.

Upcoming changes

Under the Prescription (Scotland) Bill, most claims in Scotland will continue to prescribe after five years (but note the obligations covered by this have been changed slightly). Once the new law comes into force (at which point we will provide a further update), the five year period will only begin to run when a party became, or could with reasonable diligence have become, aware:

1)    that loss, injury or damage has occurred;

2)    that the loss, injury or damage was caused by another person’s act or omission; and

3)    of the identity of that person.

In addition, the new law will allow parties to enter into a “standstill agreement” to extend the five year prescription period for up to one year in certain circumstances. This will replace the current practice of raising claims and thereafter putting them on hold while further investigations are carried out.

If you, or your client, have suffered a loss and may have a claim in the Scottish Courts, we recommend seeking advice, specific to the Scottish jurisdiction as soon as possible to ensure that the right to redress is not lost by the passage of time.

Contact

For further information, please contact your usual

Eversheds Sutherland (International) LLP contact or:

For more information contact

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