When a business is on the receiving end of a claim, it is faced with the prospect of having to incur significant costs to defend the action.

A defendant in that situation will usually be protected by the general rule that 'the loser pays the winner's costs'.

This means that if the defendant successfully defends the claim, the defendant can expect to recover a percentage of its costs from the claimant as ordered by the court if not agreed.

But what if happens if the claimant is unable to pay the defendant's costs?

A recent Court of Session case has made clear that a Scottish court cannot wind up or make an administration order in respect of an English registered company, and the same applies to English courts and Scottish companies.