How to Recover Payment From an Overseas Buyer

Can you get paid by a foreign buyer who has stopped paying?

Yes. More often than exporters expect, in fact. But rarely by the route they first think of. Most people picture suing the buyer in his own country. In practice, money from overseas buyers usually comes back one of four ways: through banking documents that were never released, through a settlement that follows a demand the buyer takes seriously, through credit insurance, or through an arbitral award or decree you can enforce where the buyer actually has assets. Suing abroad is the last of these. Not the first.

You can usually work out the right route this week by answering three questions. First, what were the payment terms? LC, collection, open account, or advance. Second, what do your papers say about governing law and disputes? That means the contract, or if there isn't one, the purchase order and the emails that between them form it. Third, where does the buyer keep money or goods: only in its home country, or in India as well, or somewhere else it banks or trades?

There's a regulatory side too, and it's what makes an export debt different from a domestic one. Foreign exchange rules say export proceeds have to come back to India within a fixed period, and your bank must keep track. So when an export payment doesn't arrive, you've got two problems running together. Getting the money. And keeping your bank and the regulator satisfied that you're genuinely trying.

Start here: how were you supposed to be paid?

With a letter of credit, it was the buyer's bank that undertook to pay, provided your documents matched the credit. A refusal by that bank is usually about document discrepancies. The goods rarely come into it. LCs normally run under the ICC's Uniform Customs and Practice for Documentary Credits (UCP 600). Ask your negotiating bank which discrepancy was cited. Many of them can be fixed, or the buyer can waive them, if you act inside the bank's time limit.

With a documentary collection, your bank posted the shipping papers to a bank in the buyer's country, along with instructions. If the terms were documents against payment (D/P), the buyer was never supposed to see the bill of lading until he paid. Make sure that's what happened. Papers still lying with the collecting bank mean the goods are still yours to control. You can call the documents back, find someone else to sell to, or ship the goods elsewhere. Documents against acceptance (D/A) work differently. There the buyer got the papers by signing a bill of exchange for payment at a later date. That signed bill is now about the best written proof of the debt you'll have. Guard it.

On open account, the goods and documents went straight to the buyer, and you trusted him to pay. It's the usual arrangement with repeat buyers and the hardest to recover from, because all you hold are your invoices, the shipping record and the buyer's emails. With an advance, there shouldn't be a debt at all, unless only part was paid upfront. Service exports sit close to open account. What you've got is a statement of work, invoices, and proof the work was delivered and accepted.

Export payment not received: keep an eye on the FEMA clock

Every export has to be declared under the foreign exchange rules. The whole value must then come home to India inside a fixed window, and your authorised dealer (AD) bank watches each shipping bill on the RBI's export monitoring system till the money lands. That window keeps moving. Nine months, then fifteen months from late 2025, then back to nine months in 2026. As we understand it, the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, which came into force on 1 October 2026, keep it at nine months counted from the date of export, or twelve months if you invoiced in rupees. Please confirm the period with your bank before you rely on any number. Ours too.

If the period is close to running out, talk to the AD bank before it does. Banks can generally extend time, accept write-offs within limits, or report the matter. What they want to see is that you've taken real steps to recover: a demand, a lawyer's notice, an insurance claim, a complaint, a case filed. An exporter who's sat on it for a year has a far tougher conversation at the bank than one with a file of dated recovery steps. And if unrealised exports keep piling up, you can end up on a caution list. Every shipment after that moves slower.

That's one more reason not to wait on the buyer's promises. The FEMA period runs from the date of export. It doesn't care when the buyer last promised to pay.

If you're covered by ECGC or other export credit insurance

ECGC Ltd, the government-owned export credit insurer, and some private insurers cover exporters against a buyer who doesn't pay. If you have a policy, read it today. Your claim usually turns on what you do in the first few weeks after the due date. Policies make you report the default within a set time. They bar you from giving a defaulting buyer extensions or fresh credit without the insurer's consent, and they expect recovery steps to be taken in consultation with the insurer.

The commonest way an insured exporter loses cover? He kept shipping to a buyer who was already late, or agreed a long payment plan without telling the insurer. Another is that the buyer was never approved under the policy, or the shipment went over the credit limit fixed for that buyer. Your bank may also hold its own ECGC cover on the export credit it gave you. That's separate from your policy.

Once a claim is paid, the insurer will usually expect you to keep after the buyer and share whatever you recover. The steps below still apply with insurance in place. You just take them in step with the insurer.

Getting paid by a foreign buyer, one step at a time

This is the order that usually works for an exporter in Delhi NCR. A few of these run side by side.

1. Stop further credit and call your bank

   Hold any shipment that's still pending, or move it to advance or letter of credit terms. Ask your AD bank where each shipping bill stands, where the collection or LC documents are, and whether any messages have come in from the buyer's bank. If D/P documents haven't been released yet, tell the bank in writing what to do with them.

2. Make one statement of account

   List each invoice, shipping bill, bill of lading or airway bill, with due date, amount, payments received and balance. Don't convert anything. Keep the invoice currency. The buyer, the insurer, a mediator and any tribunal will all ask for this one clean sheet.

3. Tell your insurer, if you have one

   Notify ECGC or your insurer within the time the policy allows. Send the statement of account and a short note of the excuses the buyer has given so far. Ask in writing if they want anything done before your legal demand goes out.

4. Send a firm, dated demand

   Email it and send it by international courier to the buyer's registered address and to the people you actually dealt with. Give a short deadline, usually 15 to 21 days, state the interest you're claiming, and say what you'll do next. Keep proof of delivery.

5. Look into the buyer and its assets

   Get a credit report through an agency or your bank. Check its company registry entry. Find out where it banks, which ports it uses, and whether it buys from other Indian exporters or has an office or agent here. That's what decides where you sue or enforce.

6. Open a line for negotiation

   A lot of buyers in trouble will pay in instalments if the plan's in writing and secured, say by post-dated payments, a bank guarantee, or a letter of credit for future orders. Get it signed by someone authorised. Hold on to the acknowledgment of debt inside it.

7. Pick the forum

   If there's an arbitration clause, start arbitration under it. If the contract picks Indian courts, or says nothing and part of the deal took place in India, think about a commercial suit here, but only if the buyer has assets you can reach. Assets only abroad? Take local advice on suing there.

8. File, and enforce where the money is

   An award, a decree, a settlement: each is worth only what you can enforce. Plan enforcement before you file. Which country, which bank, which goods, and what papers that country's court will want to see.

What your demand to the overseas buyer should say

Write it as though a foreign judge or arbitrator will be reading it in a year. One might be. Say who you are and name the contract or purchase orders. Then each invoice and shipment, the amount due in the invoice currency, the due dates, payments received, and the balance. Attach the statement of account. Quote the buyer's own earlier admissions, like an email saying "we will clear the balance after our season". If the contract has an interest rate, claim it. If it doesn't, say you'll claim interest at a commercially reasonable rate from the due date.

Then spell out what happens next. You'll refer it to arbitration under the clause, or file in the courts the contract names, and you've reported the default to your bank and insurer. Don't threaten what you can't do, like a criminal complaint in a country where non-payment is purely civil. Once a buyer spots one empty threat, he stops taking the rest of the letter seriously.

Advocate B.K. Singh's tip on foreign demands: send the notice in the language of the contract, and where the buyer's courts work in another language, get a local lawyer to prepare a short translated covering letter. It's cheap. It tells the buyer you've already found someone on his side of the border. And in our experience, that's often what brings the first serious reply. Our guide on drafting a legal notice for recovery of money goes through the structure of a demand in more detail.

Which law and which forum? Read the contract first

Most export files are thinner than the exporter remembers. You'll typically find a proforma invoice, a PO, a handful of emails fixing price and shipment dates, and the buyer's standard terms in small print on the back of the order. Read every page looking for three clauses. Governing law: which country's law runs the contract. Dispute resolution: whether disputes go to arbitration, and if so, where and under which institution. Jurisdiction: which country's courts. If two documents say different things, the one accepted later may prevail, but expect the buyer to argue the point.

Where the papers pick arbitration, you'll almost always end up there. An Indian court will send you off to arbitrate if the buyer raises the clause in time, and most foreign courts behave the same way. A clause choosing one country's courts is normally respected as well. Silence is where it gets interesting. You can often sue in India if some part of the cause of action arose here. Maybe your acceptance in Delhi concluded the contract. Maybe the goods were handed over at Nhava Sheva or Mundra, or the money was to be paid into your account with an Indian bank. Section 20 of the Code of Civil Procedure, 1908 allows a suit wherever the cause of action arises, wholly or in part.

A claim arising out of the export of goods or services is a "commercial dispute" under Section 2(1)(c)(ii) of the Commercial Courts Act, 2015. At Rs 3 lakh or more, it goes to a commercial court, with tighter timelines and stricter procedure. Our service page on export, import and shipping disputes shows the kinds of cases those courts hear.

When does suing the foreign buyer in India actually pay off?

Only if there's something of the buyer's in India to go after. It might have a branch or liaison office here, or a subsidiary that owes it money. There might be goods stuck at an Indian port or warehouse, Indian customers or suppliers who owe it, or a bank account in India. In any of those cases, a Delhi commercial court decree can be executed against what's here. If the buyer is busy moving those assets out, you may also be able to seek attachment before judgment under Order XXXVIII Rule 5 CPC. Our page on attachment before judgment sets out the procedure.

Serving summons abroad is slow. Order V Rule 25 CPC lets the court send summons to a defendant living outside India by post, approved courier, fax or email. Courts also use the Hague Service Convention channel through the Ministry of Law and Justice, or bilateral arrangements. Formal service through official channels can take several months. Ask the court to allow every permitted mode at once, including email to the addresses the buyer really used during the deal.

Before you file, the suit generally has to go through pre-institution mediation under Section 12A of the Commercial Courts Act, unless you're asking for urgent interim relief. Mediation with a foreign party can happen online. And a foreign buyer who wants to keep trading in India sometimes engages properly at this stage. If the buyer has no assets or business here and doesn't plan to, an Indian decree is mostly useful only if its own country will enforce it. That's the big weakness of this route.

Enforcing an Indian decree abroad, and why an award often travels better

A decree from a Delhi court has no automatic force abroad. It's for the foreign court, applying its own law, to decide whether to enforce it. India has reciprocal arrangements for money judgments with some countries, and those usually make registration or enforcement easier. People tend to mention the United Kingdom, Singapore and the United Arab Emirates. Each arrangement works a little differently, though, so get local advice on the present position. Elsewhere, and that includes some of India's largest export markets, you may need to bring a fresh suit on the Indian judgment, and the buyer may be allowed to reargue parts of the case.

Awards are a different story. India signed the New York Convention of 1958, and so have most countries you're likely to export to. Under it, an award from an arbitration seated in India is a foreign award over there, and the local court can refuse to enforce it only on narrow grounds. Nobody reopens the merits. So for an exporter whose buyer keeps all its assets abroad, an arbitration clause frequently does more work than any court clause could. Our sister site has a piece on how the seat of arbitration decides which court supervises it.

No arbitration clause in your contract? The buyer can still agree to arbitrate after the dispute starts. Some prefer it to a court case in India, particularly if you offer a sensible venue and an online hearing. Put the offer in the demand, or raise it at mediation.

Suing in the buyer's country, and other pressure you can apply there

When the buyer's assets are only at home and the amount justifies it, local proceedings may be the most direct way in. Many countries have quick procedures for undisputed commercial debts, such as payment orders based on invoices and proof of delivery. A local lawyer can tell you whether your file qualifies. Local limitation periods can be shorter than India's three years. Don't assume you have time. Budget for translation, local court fees and lawyer fees, and the chance that you'll have to travel to give evidence.

Then there are levers outside court. The DGFT runs an online facility for trade disputes and quality complaints involving foreign buyers, and it forwards complaints to the Indian Mission in the buyer's country. It can't order anyone to pay. But a letter from the Mission's commercial wing sometimes gets a reply out of a buyer who's been ignoring you for months. Export promotion councils and chambers of commerce on both sides can occasionally set up a conversation. International collection agencies work on commission and are handy for small, undisputed debts. Check carefully who they are and what they'll do in your name.

In the export recovery files that come to Advocate B.K. Singh, the step most often missing is the asset check. Exporters spend months deciding where to sue without ever finding out where the buyer banks and trades. A credit report and a look at the buyer's shipping history, which trade databases show, frequently settle the forum by themselves.

Time and money, route by route

Papers to collect before you do anything else

When the buyer suddenly says the goods were defective

It's the commonest defence in export recoveries. And it usually turns up right after the payment demand. Take it seriously, but test it. Ask when the buyer inspected the goods, and ask for the survey or inspection report, the photographs and the quantity affected. Check what the contract or the applicable law says about the time for complaints. Under most sale contracts, a buyer who took delivery, used or resold the goods, and complains only months later will find it hard to reject the whole consignment.

Your Incoterm matters a lot here. On FOB or CIF terms, risk generally passes to the buyer once the goods are loaded on board, so transit damage is usually for the buyer's cargo insurer to deal with. It isn't a reason to hold back the price. A pre-shipment inspection certificate from an independent agency is strong evidence the goods left India in good order. Where the complaint does have something to it, a negotiated discount on the affected part, with the rest paid straight away, often brings in more than two years of fighting over the full amount. We'd usually suggest it.

Proving these exchanges later takes care. Emails and chats are electronic records, and in Indian proceedings you prove them with a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam, 2023. Our guide on proving emails and WhatsApp chats in a commercial court explains how to preserve them now, before phones get changed.

Where exporters go wrong chasing an overseas buyer

• Shipping again to someone already late. The new consignment almost never brings the old account up to date. It doubles what you're owed and can void your credit insurance.
• Letting the documents go too soon. Sending original bills of lading straight to the buyer, or allowing release under D/P without payment, hands over the one thing that was protecting you.
• Saying yes to extensions casually. Each "OK, pay next month" email can be read as changing the due date. It may also break your insurance policy terms.
• Keeping the bank in the dark. If the realisation period runs out without a word to your AD bank, you've added a regulatory problem to a commercial one.
• Suing where the buyer has nothing. A Delhi decree against a buyer with no Indian assets, in a country that won't enforce it, is a framed certificate. It isn't a recovery.
• Missing limitation. Most money claims in India have to be filed within three years from the due date. Our guide on the limitation period for recovering money explains how an acknowledgment restarts it. Foreign periods can be shorter.
• Skipping the asset check. People pick a forum before they know where the buyer banks, ships and trades.

How this differs for MSMEs, service exporters and bigger exporters

Small and medium exporters mostly sell on open account to a few repeat buyers, and don't have much bargaining power. What actually helps them is tighter payment terms (some advance, the balance under D/P or LC), credit insurance for each buyer, and quick action the first time a payment is missed. The MSME Facilitation Council route helps registered micro and small suppliers against buyers in India. Against a foreign buyer it's of limited use, because jurisdiction over the buyer and enforcing any award abroad are both uncertain.

Service exporters have no bill of lading to hold on to. Picture a Gurugram IT company invoicing a client in the United States, or a small Noida design studio doing work for an agency in Europe. Their evidence is the master services agreement, the statements of work, timesheets, the emails delivering and signing off the work, access logs, and the invoices themselves. A lot of these agreements send disputes to the client's home courts or to a foreign arbitral institution. Look at that clause on day one. The payment platform and the receiving bank will also have records of what came in and when.

Larger exporters often have trade finance, factoring or forfaiting in place, where a bank or factor has already paid them against the receivable. If that's you, check who owns the claim now. It may be the factor that should go after the buyer, with you just backing it up with documents. For any exporter, a properly drafted dispute clause in the next contract costs far less than a recovery. Our guide on picking between a commercial suit and arbitration walks through that decision.

What to get done this week

Ask your AD bank where each shipping bill stands and when the realisation deadline falls. If you have credit insurance, read the policy and report the default inside its time. Put the contract, shipping, bank and correspondence papers in one file, with a statement of account on top. Send a dated demand naming the next step you really will take. Find out where the buyer banks and trades. Only then decide where to sue. If the buyer has assets or business in India, our page on export and import disputes in Indian commercial courts and our guide on filing a money recovery suit explain what happens next.

Want your contract, shipping papers and emails looked over before you choose a forum? Or need to know whether the export rules have changed yet again? Send them to Advocate B.K. Singh's team through the contact page.