by Martin Kingman head of debt recovery and insolvency at Furley Page

If you are thinking of trading internationally it’s 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 you’re dealing with; be confident that it’s a legitimate request and be aware of the company’s 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. We’ll take it as read that they have been properly incorporated into the contract.

Let’s assume your own terms apply to the contract and examine how they can assist you in recovering monies.

Jurisdictionclause

This is the daddy of all clauses if you’re 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 won’t have the hassle of finding an adviser in another country or try to understand the finer points of their commercial law system.

Otherclauses

Your terms could well specify you can recover your legal costs and disbursements in the event that your invoices aren’t paid within your terms.

If you’re 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. 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’.

It’s an attractive option where enforcing a judgment in the jurisdiction of your debtor maybe difficult.