Moveable Transactions (Scotland) Act - Assignation of Claims Summary

Morton Fraser Partner Bev Wood
Bev Wood
04 September 2023

This is one of a series of articles we at Morton Fraser are producing to guide finance companies through the wholesale change proposed in Scots law via the Moveable Transactions (Scotland) Bill which was passed by the Scottish Parliament on 4 May 2023 and is expected to be implemented in later part of 2024. This article is concerned with the new process for assigning debts, referred to in the Bill as "Assignation of Claims".


Summary of the Points discussed in this Article

  • Who will benefit from the major reform of Scots law which is on its way
  • The Bill introduces a formal process for assigning debts, referred to as "claims" (but basically this covers the right to performance of an obligation, hence a debt, a sub-hire agreement or a bank account will all be captured).
  • It is easy to create the assignation but there must be a document signed or, in electronic cases authenticated which identifies the claim.
  • The assignation can be over existing claims as well as future claims, provided they are adequately described so they can be identified as falling within the relevant description given in the Bill. Therefore, it is competent to assign a claim which at the time the assignation is given is not held by the assignor (and indeed the claim may not exist at that time). That's an important clarification of an area of doubt in Scots law.
  • The claim (or debt) is transferred either by the intimation of the claim (giving of notice) to the debtor, as in current practice, or, under the new regime, registration of the assignation document with the new Register of Assignations ("ROA"). In respect of future claims, the assignment comes into effect on the later of the claim coming into existence and registration with the ROA.
  • If and when notice is given to the debtor, there is no formality required for the giving of that notice- as long as it is clear in its description of the situation, then it will be treated as being valid notice.
  • Where the assignation in question is a security assignation, it is treated as being a fixed security on registration at the ROA and there is no time limit for registration albeit if the assignation is granted by an LLP or company it still needs to be registered at Companies House within 21 days of its date, irrespective of when it is registered in the ROA.
  • If notice hasn't been given to the debtor, then such debtor paying the assignor in good faith is protected by the Bill and is discharged of his obligation to pay the assignee.
  • Provided the claim is appropriately identified in the assignation and the claim is in existence at the point of insolvency, then registration in the ROA gives the creditor priority over an insolvency practitioner appointed to the assignor without the need for intimation or notice, which is a big divergence from the current law.

Read the full Assignation of Claims article.


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