Important Questions to Ask Before Taking on International Collections

Outsourcing has moved businesses into a global arena but along with the perks of this comes a very real downside – collecting on unpaid international debts.  In the wake of an economic downturn that has forced many businesses to cut costs by using overseas labor or products, international collections as a viable collections activity has increased.  But is the hassle of dealing with international laws worth the money gained?  

The simple answer is “yes” but that answer comes with a caveat: you have to ask the right questions to determine if international collections will be worth the time and effort you put into these accounts.  And since the laws relating to international debt collection vary from country to country and can often be affected by international treaties, it’s important to be as specific and up-to-date as possible when obtaining the answers to these questions. 

1. What does the original contract say about jurisdiction? Specifically, will courts uphold your contractual jurisdiction clause?
2. Will the court in your home country have jurisdiction over the company in another country?
3. If the court in your home country has jurisdiction over the foreign company, what is the process of serving your complaint on that foreign company, how difficult will the process be, and how long will the process take?
4. If you are able to achieve a judgment in your favor in your home country, how will you collect from the foreign company?  Will the home-based judgment stand in the country of the foreign company or do you need to bring a new lawsuit in that particular country?
5. Would it be easier to just file the lawsuit in the country of the foreign company?
6. Will you be able to seize assets of a company in a foreign country?  What is the process for doing so and will the courts require a bond?  Also, is there a way that the company can claim false seizure and how successful would that claim be if it did?