Trading Overseas? How To Avoid Problems With Debtors.
If youre thinking of trading internationally its worth remembering that you face
exactly the same problems with debtors as you do on home soil and with the added headache of defining whose laws govern the agreement.
Before you enter into any contracts overseas you need to establish who it is youre dealing with; be confident that its a legitimate request and be aware of the companys status. It also helps to understand the legal process of the country and its potential political issues which may cause you problems.
Generally, you would want to do business subject to your own standard terms, ideally prepared for you by an expert who has a thorough knowledge of what you do. If the other company has its own terms the rule of thumb is that the final one sent before the contract is formed becomes the terms of the agreement. Well take it as read that they have been properly incorporated into the contract.
Lets assume that your own terms apply to the contract and examine how they can assist you in recovering monies.
Jurisdiction clause
This is the daddy of all clauses if youre trading overseas. It needs to be specified that the contract is governed by English law and that the English courts have exclusive jurisdictions to hear and determine any dispute. In essence this means you get a home game if the matter is disputed and wont have the hassle of finding an advisor in another country or try to understand the finer points of their commercial law system.
Other clauses
Your terms could well specify that you can recover all your legal costs and disbursements in the event that your invoices arent paid within your terms.
If youre doing a lot of international trading you may want to use Incoterms laid down by the International Chamber of Commerce to define where risk and liability take place and pass from one party to another. You should always seek specialist advice, though.
You could also consider arbitration under the New York Convention - or to give it its proper title the convention on the recognition and enforcement of foreign arbitral awards. Its an attractive option where enforcing a judgment* in the jurisdiction of your debtor maybe difficult.