Time for a change: New Scottish time bar law in force 28 February 2025

Significant changes to the Scottish law of time bar are in force on 28 February 2025.

The changes are relevant across sectors, for those entering into and operating contracts and beyond. They affect when time bar periods stop and start, as well as the meaning of key legal terms.  

Prescription in Scotland 

The law of time bar in Scotland is known as prescription. It is a substantive law, about when different rights and obligations are extinguished after a certain period of time and cease to exist as legal rights. This means claims in respect of those rights and obligations can no longer be pursued. (Limitation is another aspect of Scottish time bar. It is a procedural law, under which different rights and obligations still exist after a certain period of time but become unenforceable.)

The key legislation is the Prescription and Limitation (Scotland) Act 1973 (the “1973 Act”). Major amendments have been made to the 1973 Act, by the Prescription Scotland Act 2018 (the “2018 Act”). The 2018 Act has been brought into force in stages, given the significance of its amendments. 

The 2022 changes

On 1 June 2022, two fundamental changes from the 2018 Act were brought into force. This was a new “discoverability test” and a new provision on contracting out of prescription. 

In short, for claims which have not already prescribed by 1 June 2022, a new discoverability test applies. This can postpone the five-year negative prescriptive period, which applies to many claims including breach of contract, from running. The new test introduces factors which a creditor (i.e. a person who can bring a claim in relation to an obligation or right) needs to be aware of (or with reasonable diligence could have been aware of), before the five-year starts running. This is set out at amended sections 11(3), (3A) and (3B) of the 1973 Act. The new discoverability could extend the potential life of many claims, although it is yet to be properly tested before the courts.  

Separately, attempts to contract out of prescription were confirmed as having no effect, except where agreement under a new section 13 is entered into. In that case parties can agree to extend the prescriptive period once, by up to one year, in respect of the prescriptive periods of two or five years under the 1973 Act. (The two-year period applies to claims for contributions between wrongdoers in respect of damages or expenses, under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940.) A parallel is sometimes drawn with standstill agreements under English law, however those are substantially different from section 13 agreements. To date section 13 agreements are not commonly used in Scotland, but that may change over time. 

The 2025 changes

The remainder of the 2018 Act is in force on 28 February 2025. Below are the key changes to be aware of.

Five year negative prescription

The 2018 Act will make changes in relation to the five-year prescription provided for in section 6 of the 1973 Act.

• The 2018 Act clarifies some of the obligations to which the five-year prescription applies, by making changes to Schedule 1 to the 1973 Act. It is now made clear that any obligation to pay damages will fall within the scope of the five-year prescription regardless of their source. The same prescriptive period will also extend to any obligation arising from delict (not being an obligation falling within any other sub-paragraph of paragraph 1 of Schedule 1).
• Also to be brought within the five-year prescription period is any obligation relating to the validity of a contract and any obligation to reimburse expenditure incurred in reliance on a representation about the existence of a contract.
• The changes also mean that all statutory obligations to make a payment will fall within the five-year prescriptive period (in so far as they neither fall within any other sub paragraph of paragraph 1 of Schedule 1, nor are excluded).  The explanatory notes to the 2018 Act state that a statutory obligation to make a payment should be interpreted broadly. It is important to note however, that obligations to make payment deriving from statutes with their own provisions on prescription or limitation will continue to be subject to those provisions, to the exclusion of the five-year prescription. (This sits with a new section 7A, confirming neither the five-year nor twenty-year prescriptive periods under sections 6 and 7 respectively of the 1973 Act will apply, if another enactment provides for another specific limitation or prescriptive period.) 
• There are also changes to one of the grounds for discounting time as being part of the five-year period. Under section 6(4)(a) of the 1973 Act, time may be discounted on the basis of certain actions on the part of the debtor i.e. the person owing an obligation, or any person acting on their behalf. These actions are (i) fraud; or (ii) error induced by words or conduct of the debtor; so that the creditor is “induced to refrain from making” a relevant claim. That language is now being simplified to where the creditor “failed to make” a relevant claim. This clarifies that what matters is the debtor’s actions causing the failure, not the creditor’s intention.
• Separately a new section 6(4A) is added, which clarifies that for this ground of discounting time, the debtor’s own state of knowledge is irrelevant. It will be a matter of fact (rather than intention), that the cause of the creditor’s failure to make a claim was the fraud, words or conduct of the debtor.

Twenty year negative prescription 

The 2018 Act will also make changes in relation to the twenty-year prescription provided for in sections 7 and 8 of the 1973 Act.

• Prior to the changes, one could interrupt the twenty-year negative prescriptive period by making a “relevant claim” or a “relevant acknowledgement”, which would start the full twenty-year period running again. That will no longer be possible, so that the twenty-year period will function as a true longstop. (There are however limited provisions for extension, where a relevant claim is already in progress.)
• In addition, there is a new separate start date for the running of the twenty-year period, in relation to claims involving recovery of damages, per sections 7 and 11(4) of the 1973 Act. Instead of running from the date when loss, injury or damage occurred, the twenty-year period for obligations to pay damages will run from the date of the act or omission giving rise to the claim. (Or where there was more than one, from the date of the last act or omission; and where the act or omission was continuing, from the date it ceased.) For all other claims, the start date for the twenty-year prescription will remain the date on which the obligation giving rise to the claim became enforceable. The thinking behind this change is to avoid a long period passing without the prescriptive period even beginning to run. Otherwise, this could undermine one of the principal rationales of prescription, that after a certain defined period a debtor should be able to assume any risk of litigation has passed.

Relevant Claim

• The 2018 Act clarifies that making a relevant claim for the implement (or part implement) of an obligation will interrupt the running of the five-year and twenty-year prescription until the claim is finally disposed of.  
• The definition of a “relevant claim” will now include the submission of a claim in an administration or receivership; and the acts that trigger administration or receivership.

Burden of Proof

• The 2018 Act confirms that where questions of prescription are raised in terms of the two, five, year, and twenty-year prescriptive periods under the 1973 Act, the burden of proof is on the creditor to prove that the obligation or right has not prescribed.

• Therefore, whilst a creditor does not need not address prescription in court pleadings, if the opposing party claims that the obligation or right has prescribed, the burden of proof is on the creditor to show that is not the case.

Conclusion

These changes significantly reform the law of prescription in Scotland. They follow years of uncertainty, after case law effectively changed previous understandings of the 1973 Act. In particular the interpretation of “loss” and therefore when key prescriptive periods started to run, arguably created harsh consequences for those pursuing claims. Whilst those consequences are in theory addressed by the 2018 Act, guidance from the courts on its application is much anticipated. In addition the 2018 Act brings other, wide ranging changes. These were touted as being “designed to increase clarity, certainty and fairness as well as promote a more efficient use of resources, such as pursuers being less likely to have to raise court proceedings to preserve a right and reduce costs for those involved in litigation and insurance” [1]. Those intentions will be tested over time, as the changes are put into practice.   

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If you operate in Scotland or have contracts governed by Scots law, now is the time to review how these changes could affect your rights, obligations and risk exposure.

Our market-leading Disputes Group is ready to help you navigate these updates. Get in touch with our team to understand the implications for your business and ensure you’re prepared.

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