diff --git a/apps/remix-ide/src/app/files/workspaceFileProvider.js b/apps/remix-ide/src/app/files/workspaceFileProvider.js
index fe4e6825cb..70854929d9 100644
--- a/apps/remix-ide/src/app/files/workspaceFileProvider.js
+++ b/apps/remix-ide/src/app/files/workspaceFileProvider.js
@@ -1,6 +1,7 @@
 'use strict'
 
 const FileProvider = require('./fileProvider')
+const pathModule = require('path')
 
 class WorkspaceFileProvider extends FileProvider {
   constructor () {
@@ -32,8 +33,19 @@ class WorkspaceFileProvider extends FileProvider {
     if (path.startsWith(this.workspacesPath + '/' + this.workspace)) return path
     if (path.startsWith(this.workspace)) return this.workspacesPath + '/' + this.workspace
     path = super.removePrefix(path)
-    const ret = this.workspacesPath + '/' + this.workspace + '/' + (path === '/' ? '' : path)
-    return ret.replace(/^\/|\/$/g, '')
+    let ret = this.workspacesPath + '/' + this.workspace + '/' + (path === '/' ? '' : path)
+
+    ret = ret.replace(/^\/|\/$/g, '')
+    if (!this.isSubDirectory(this.workspacesPath + '/' + this.workspace, ret)) throw new Error('Cannot read/write to path outside workspace')
+    return ret
+  }
+
+  isSubDirectory (parent, child) {
+    if (!parent) return false
+    if (parent === child) return true
+    const relative = pathModule.relative(parent, child)
+
+    return !!relative && relative.split(pathModule.sep)[0] !== '..'
   }
 
   resolveDirectory (path, callback) {
diff --git a/libs/remix-ui/file-explorer/src/lib/file-explorer.tsx b/libs/remix-ui/file-explorer/src/lib/file-explorer.tsx
index 60176dcd2d..2edab4d76c 100644
--- a/libs/remix-ui/file-explorer/src/lib/file-explorer.tsx
+++ b/libs/remix-ui/file-explorer/src/lib/file-explorer.tsx
@@ -314,25 +314,32 @@ export const FileExplorer = (props: FileExplorerProps) => {
   const createNewFile = (newFilePath: string) => {
     const fileManager = state.fileManager
 
-    helper.createNonClashingName(newFilePath, filesProvider, async (error, newName) => {
-      if (error) {
-        modal('Create File Failed', error, {
-          label: 'Close',
-          fn: async () => {}
-        }, null)
-      } else {
-        const createFile = await fileManager.writeFile(newName, '')
-
-        if (!createFile) {
-          return toast('Failed to create file ' + newName)
+    try {
+      helper.createNonClashingName(newFilePath, filesProvider, async (error, newName) => {
+        if (error) {
+          modal('Create File Failed', error, {
+            label: 'Close',
+            fn: async () => {}
+          }, null)
         } else {
-          await fileManager.open(newName)
-          setState(prevState => {
-            return { ...prevState, focusElement: [{ key: newName, type: 'file' }] }
-          })
+          const createFile = await fileManager.writeFile(newName, '')
+
+          if (!createFile) {
+            return toast('Failed to create file ' + newName)
+          } else {
+            await fileManager.open(newName)
+            setState(prevState => {
+              return { ...prevState, focusElement: [{ key: newName, type: 'file' }] }
+            })
+          }
         }
-      }
-    })
+      })
+    } catch (error) {
+      return modal('File Creation Failed', error.message, {
+        label: 'Close',
+        fn: async () => {}
+      }, null)
+    }
   }
 
   const createNewFolder = async (newFolderPath: string) => {
@@ -353,8 +360,10 @@ export const FileExplorer = (props: FileExplorerProps) => {
         return { ...prevState, focusElement: [{ key: newFolderPath, type: 'folder' }] }
       })
     } catch (e) {
-      console.log('error: ', e)
-      toast('Failed to create folder: ' + newFolderPath)
+      return modal('Folder Creation Failed', e.message, {
+        label: 'Close',
+        fn: async () => {}
+      }, null)
     }
   }
 
diff --git a/libs/remixd/src/utils.ts b/libs/remixd/src/utils.ts
index aa8cd28a70..067e5f4113 100644
--- a/libs/remixd/src/utils.ts
+++ b/libs/remixd/src/utils.ts
@@ -12,9 +12,25 @@ import * as pathModule from 'path'
 function absolutePath (path: string, sharedFolder:string): string {
   path = normalizePath(path)
   path = pathModule.resolve(sharedFolder, path)
+  if (!isSubDirectory(pathModule.resolve(process.cwd(), sharedFolder), path)) throw new Error('Cannot read/write to path outside shared folder.')
   return path
 }
 
+/**
+ * returns a true if child is sub-directory of parent.
+ *
+ * @param {String} parent - path to parent directory
+ * @param {String} child - child path
+ * @return {Boolean}
+ */
+function isSubDirectory (parent: string, child: string) {
+  if (!parent) return false
+  if (parent === child) return true
+  const relative = pathModule.relative(parent, child)
+
+  return !!relative && relative.split(pathModule.sep)[0] !== '..'
+}
+
 /**
  * return the relative path of the given @arg path
  *
diff --git a/package.json b/package.json
index 1ebb5e8243..a3414a0862 100644
--- a/package.json
+++ b/package.json
@@ -67,7 +67,7 @@
     "nightwatch_local_signingMessage": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/signingMessage.test.js --env=chrome",
     "nightwatch_local_specialFunctions": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/specialFunctions.test.js --env=chrome",
     "nightwatch_local_solidityUnitTests": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/solidityUnittests.test.js --env=chrome",
-    "nightwatch_local_remixd": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/remixd.test.js --env=chrome",
+    "nightwatch_local_remixd": "npm run build:e2e && nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/remixd.test.js --env=chrome",
     "nightwatch_local_terminal": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/terminal.test.js --env=chrome",
     "nightwatch_local_gist": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/gist.test.js --env=chrome",
     "nightwatch_local_workspace": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/workspace.test.js --env=chrome",
@@ -85,7 +85,7 @@
     "nightwatch_local_url": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/url.test.js --env=chrome",
     "nightwatch_local_verticalIconscontextmenu": "npm run build:e2e & nightwatch --config dist/apps/remix-ide-e2e/nightwatch.js dist/apps/remix-ide-e2e/src/tests/verticalIconsPanel.test.js --env=chrome",
     "onchange": "onchange apps/remix-ide/build/app.js -- npm-run-all lint",
-    "remixd": "nx build remixd & nx serve remixd --folder=./apps/remix-ide/contracts --remixide=http://127.0.0.1:8080",
+    "remixd": "nx build remixd && nx serve remixd --folder=./apps/remix-ide/contracts --remixide=http://127.0.0.1:8080",
     "selenium": "selenium-standalone start",
     "selenium-install": "selenium-standalone install",
     "sourcemap": "exorcist --root ../ apps/remix-ide/build/app.js.map > apps/remix-ide/build/app.js",