As a trusted CPA financial advisor, you probably counsel your clients or your
employer to make the most of their assets. You’re usually among the first to be
consulted when a business problem appears, and your advice often dictates how a
problem is solved. For this reason, it’s important that you get to know at least
a few basic facts about resolving business disputes with foreign nationals. The
“foreign” dimension significantly changes the character of business disputes,
and requires special strategies for: (1) assessing risks and benefits and, if
warranted, (2) cleverly seeking recovery.
It’s a Whole Different Ball Game
Generally speaking, in a litigation, it’s more difficult to recover from a
foreign defendant than a domestic one. Consider these issues:
- Where can you sue?
- If you sue and prevail in the United States, can you enforce your
- Do you need foreign enforcement, or are there sufficient assets
stateside to satisfy the judgment?
- If there are sufficient assets, how do you ensure that those assets will
still be here if and when you get your judgment?
As a CPA, you need to know these issues exist and be able to
either respond to them or at least know where to direct your client or employer to
Evaluate and Leverage Settlement Scenarios
As with all business disputes, a middling settlement is often preferable to
a full-blown lawsuit; in a foreign context, this is even more critical.
Indeed, in settlement discussions, the foreign national will certainly
emphasize the difficulties of collection as a reason to settle the dispute,
even for a fraction of its value. If the amount at stake is significant, you
should talk to an attorney experienced in international asset recovery to
assess the difficulties. If the foreign national has assets in this country,
for example, the dispute will likely proceed as if it were a domestic
problem; the foreign aspect should not force an extraordinary discount. On
the other hand, if your company’s preference is to enforce the judgment
abroad, the difficulties multiply; the United States is not a party to any
bilateral treaties or any international conventions concerning the
recognition and enforcement of foreign legal judgments. For this reason,
your company’s ability to recover will be based on the laws of each
particular foreign country. Unless you understand how easy or difficult it
will be to recover, you won’t be able to optimize settlement negotiations.
Enlist the Services of a Private Investigator
Most international recovery attorneys work closely with private
investigators to find assets that may be available to satisfy any
judgment. If you know where the assets are, you can change the playing
field. For example, in certain cases, it’s possible to freeze assets while
litigation continues. If you’re able to do so, not only do you ensure that
any eventual judgment will be satisfied; in most cases, freezing the assets
can lead to a quick, advantageous settlement.
Once assets are discovered, the attorney can work with other investigative
professionals to develop strategies for reaching the missing funds. The
attorney also can provide a general cost benefit analysis so that your
client will be able to determine if his or her recovery effort is financially
Consider Arbitration Clauses For Future Transactions
Arbitration clauses in contracts can make recovery easier. Unlike court
judgments, there are several treaties that govern international recognition
of arbitration awards, and enforcement of such awards may be substantially
easier than enforcement of judgments. It will be important for your client
to assess the pros and cons of the arbitration clauses with his or her attorney
to provide the surest access to future recovery.
Many sophisticated companies are surprised by the novel problems they face
in seeking to pursue recovery against foreign nations. When you become aware
that your company has a business dispute involving a foreign national, you
should advise legal counsel to address the issue head on. The attorney will
be able to help accurately assess the risks and benefits of different
methods of dispute resolution, and intelligently craft the best strategy for a
cost-effective, business-sustaining outcome.
About the Authors
Robert Nachman, Esq. and Roberto Anguizola, Esq. are lawyers with law
firm Schwartz Cooper Chartered located in Chicago, Ill. Mr. Nachman focuses
his practice on the areas of bankruptcy and litigation, while Mr. Anguizola
primarily concentrates his practice in commercial litigation and
cross-border disputes. They can be reached at