Arrestment is a Scottish debt recovery remedy. It is frequently used by commercial landlords to recover arrears due under a registered lease.

Arrestment involves messengers at arms or sheriff officers (similar to bailiffs) serving an arrestment on a third party that owes a debt or a liability to account to the tenant. If the arrestment is successful, it obliges the third party to account to the landlord instead of the tenant, up to either the value of the third party's liability or the arrears (whichever is lower).

The most common third party arrested by a landlord is the tenant's bank. Under a banking contract, the bank is normally obliged to pay the tenant any money it holds on its behalf if the tenant asks for it. That is a liability to account that is arrestable.

Traditionally, the banking contract only obliged a bank to pay its customer at the place where the account was kept.

Accounts have changed over the years. Terms and conditions have evolved, and banks are often now obliged to pay their customers at any of their branches.

The consequence of this is that tenants who have bank accounts outside of Scotland are no longer safe from arrestment.

If they have agreed terms with their bank that require the bank to pay them on demand at a Scottish branch, an arrestment served on that branch will arrest all money held by the bank, wherever that account is located.

That makes arrestment a powerful tool for a landlord. Tenants may need to review their banking contracts as a result. And banks should beware that if they get the arrestment wrong, they may have to pay the debt themselves.


Matt Farrell