Where you sue a foreign customer who does not pay depends first on your contract, then on where the debtor is established. If the debtor is in the European Union and the claim is uncontested, the European order for payment gives you an enforceable title in a few months without a hearing. If the debtor is outside the Union, the choice is between suing in France on a jurisdiction clause or Article 14 of the Civil Code and suing where the assets are. In every case, freezing the assets before judgment matters more than the judgment itself.
A French machine-tool manufacturer delivers three hundred and forty thousand euros of equipment to a buyer in Milan. The invoices fall due, the buyer stops answering. The order confirmation says nothing about jurisdiction, the general terms on the back of the invoice have never been signed, and the Incoterm is EXW Lyon. Six months later the buyer is still trading and the money is still outstanding. Everything that follows turns on questions the manufacturer could have settled in a single clause before the first delivery.
The contract comes first: jurisdiction clause, arbitration clause, general terms
Before asking where you may sue, read what you signed. A jurisdiction clause designating a court of a Member State is valid under Article 25 of the Brussels I bis Regulation (1215/2012) provided it is in writing or evidenced in writing, and it is exclusive unless the parties agreed otherwise. That clause overrides every other rule of jurisdiction, including the ones examined below. An arbitration clause does the same in the opposite direction: it removes the dispute from the courts altogether, and a court seised in breach of it will decline jurisdiction.
General terms are where most claims are lost. A jurisdiction clause printed on the back of an invoice, or in a footer of an order confirmation sent after delivery, is usually unenforceable because the other party never accepted it. The clause has to be in a document the buyer signed, or in terms expressly referred to in the signed document and actually communicated. A clause the buyer can prove he never saw buys nothing at all, and the case then falls back on the default rules.
Debtor inside the European Union: where you may sue
Under Article 4 of Brussels I bis the general rule is the debtor’s domicile, so a buyer established in Milan may always be sued in Milan. Article 7(1) adds an option that is often more useful: in matters relating to a contract, the claimant may also sue in the place of performance of the obligation in question, which for the sale of goods means the place where the goods were or should have been delivered under the contract, and for services the place where the services were or should have been provided.
This is where the Incoterm decides the case. EXW Lyon places delivery in France and opens the French courts to the seller; DDP Milan places delivery in Italy and closes them. A three-letter term chosen for pricing reasons therefore determines, years later, which country hears the dispute. That is the strongest practical argument for choosing Incoterms deliberately rather than copying the last order.
Uncontested claim: the accelerated European procedures
Where the debt is not seriously disputed, three instruments spare you an ordinary trial. Regulation 1896/2006 creates the European order for payment: a standard form, no hearing, and if the debtor does not oppose within thirty days of service the order becomes enforceable throughout the Union without any exequatur. Regulation 861/2007 creates the European small claims procedure for claims up to five thousand euros excluding interest and costs, conducted in writing. Regulation 805/2004 allows a French judgment on an uncontested claim to be certified as a European enforcement order and executed abroad directly.
The practical filter is the word uncontested. If the buyer has written a single letter complaining about the goods, the European order for payment will be opposed and the file converts into ordinary proceedings, having lost several months. These procedures are made for the debtor who does not answer, not for the debtor who disagrees. Reading the correspondence before choosing the procedure is therefore the first real decision.
Debtor outside the European Union: France or abroad
Outside the Union, jurisdiction is governed by French private international law and by any applicable bilateral convention. Article 14 of the Civil Code allows a French claimant to sue a foreign defendant before the French courts for obligations contracted anywhere, a privilege of nationality that is real but blunt: it gives you a French judgment, not a means of enforcing it. That judgment will have to obtain exequatur in the debtor’s country, and several States refuse to recognise a judgment founded on Article 14 precisely because they consider that ground exorbitant.
This is where arbitration changes the arithmetic. An arbitral award benefits from the New York Convention of 1958, in force in more than one hundred and seventy States, under which recognition may be refused only on the narrow grounds of its Article V. Against a debtor in a country with which France has no judgments convention, an arbitration clause agreed at the outset is often worth more than the identity of the court. That calculation belongs at the contract stage, not at the recovery stage.
Secure the debt before you litigate: protective measures
A judgment obtained against an empty company is a piece of paper. Under Article L. 511-1 of the Code of Civil Enforcement Procedures, a creditor whose claim appears well founded in principle and whose recovery is threatened may obtain leave from the judge to take a protective attachment, without prior notice to the debtor, over bank accounts, receivables or goods. Article R. 511-7 then requires the creditor to bring proceedings on the merits within one month, failing which the measure lapses.
Across the Union, Regulation 655/2014 creates the European account preservation order, which freezes a debtor’s bank accounts in other Member States on an ex parte application, with a mechanism allowing the court to obtain information on where those accounts are held. It is the single most effective instrument available against a Union debtor who is organising his insolvency, and it works before any judgment on the merits exists. Using it early, rather than after a year of correspondence, is usually what separates a recovered claim from a written-off one.
What is actually owed: principal, penalties, indemnity, interest
Between businesses, Article L. 441-10 of the Commercial Code makes late payment penalties due automatically, without any reminder, at the rate agreed in the contract or, in the absence of agreement, at the European Central Bank refinancing rate increased by ten points, which may not be lower than three times the statutory rate. The same article adds a fixed indemnity of forty euros for recovery costs per invoice, and the creditor may claim additional compensation on proof of higher costs.
Where the sale falls under the Vienna Convention on Contracts for the International Sale of Goods, Article 78 gives the seller a right to interest on any sum in arrears without prejudice to damages, the rate being determined by the law applicable to the contract. Article 1343-2 of the Civil Code allows interest due for a whole year to be capitalised. On a claim of several hundred thousand euros left unpaid for two years, these accessories are not marginal: they routinely add a double-digit percentage to the sum claimed, and they are lost if they are not pleaded.
The time limit: five years in France, and much shorter elsewhere
Article L. 110-4 of the Commercial Code sets a five-year limitation period for obligations arising between traders, running from the date the claim became due. Five years feels comfortable, which is exactly why claims are lost: the file is passed from sales to finance to management, a partial payment is negotiated, and the period runs out while everyone believes something is being done. A partial payment or a written acknowledgment interrupts the period and starts a fresh one, but only if it is documented.
The comfortable French period is also a trap because the applicable law may not be French. Several legal systems apply much shorter periods to commercial sales, and some treat limitation as a procedural question governed by the law of the forum rather than by the law of the contract. Before assuming there is time, identify the law governing the contract and the period it imposes. The answer sometimes turns a file that looked unhurried into one that must be filed this month.
Prevention: the clauses that make an unpaid invoice recoverable
Four clauses do most of the work. An express choice of law and an exclusive jurisdiction clause, or an arbitration clause with a named institution and seat, remove the first six months of procedural argument. A retention of title clause, notified before delivery and compliant with the law of the place where the goods are located, allows the goods to be recovered rather than proved. A clause fixing the late payment rate and the recovery indemnity avoids arguing about accessories. And a documentary credit or a first demand guarantee moves the credit risk to a bank.
None of these clauses costs anything at the negotiation stage, and each of them costs a great deal to do without once the invoice is unpaid. Reviewing the standard order form and general terms of sale of an exporting company is a few hours of work that changes the recovery rate for years. It is the least expensive legal work a company selling abroad will ever commission.
What the firm does
The firm handles international debt recovery from the first analysis to enforcement. That begins with a jurisdiction and applicable law assessment on the actual documents exchanged, which frequently shows that the contract is not what either party believed. It continues with the choice of instrument: European order for payment, ordinary proceedings in France or abroad, arbitration, or a negotiated settlement backed by a protective attachment already in place.
Where the debtor is organising his insolvency, the firm applies for protective attachments and European account preservation orders, and coordinates local counsel for enforcement abroad. Upstream, it drafts and reviews general terms of sale, jurisdiction and arbitration clauses, retention of title and payment security for companies exporting regularly. A first assessment of a file is usually possible within a few days on the strength of the contract, the invoices and the correspondence.
This page opens the series Exporter disputes: six situations, six answers, which covers the other situations the same exporter faces: the buyer who refuses the goods, the conformity claim raised eight months after delivery, the bank refusing the documentary credit, abrupt termination by a foreign partner and the foreign distributor who stops paying.
A foreign customer has stopped paying and you do not know where you may sue? The firm assesses jurisdiction, applicable law and enforcement prospects on your own documents, and secures the debt before it becomes uncollectable.
Frequently asked questions
Can I sue my foreign customer in France?
Yes, in several situations. If the contract contains a jurisdiction clause designating a French court, that clause governs. If the debtor is in the European Union and the goods were delivered in France under the agreed Incoterm, Article 7(1) of the Brussels I bis Regulation opens the French courts. If the debtor is outside the Union, Article 14 of the Civil Code allows a French claimant to sue here, although the resulting judgment may be difficult to enforce abroad.
How long does a European order for payment take?
Where the debtor does not oppose, an enforceable order is usually obtained within three to five months, including service abroad. The procedure is written, there is no hearing, and the order is enforceable in every Member State without exequatur. If the debtor lodges an opposition within thirty days of service, the case converts into ordinary proceedings and that timetable no longer applies.
Can I freeze my debtor’s bank accounts before obtaining judgment?
Yes. In France, Article L. 511-1 of the Code of Civil Enforcement Procedures allows a protective attachment on leave of the judge where the claim appears well founded in principle and its recovery is threatened, without prior notice to the debtor. Across the Union, Regulation 655/2014 provides a European account preservation order with an information mechanism to locate the accounts. Proceedings on the merits must then be brought within the prescribed time.
What interest and indemnities can I claim on an unpaid invoice?
Between businesses, Article L. 441-10 of the Commercial Code makes late payment penalties due automatically at the contractual rate or, failing agreement, at the European Central Bank refinancing rate plus ten points, with a floor of three times the statutory rate, together with a fixed recovery indemnity of forty euros per invoice and additional compensation on proof. Where the Vienna Convention applies, Article 78 gives an independent right to interest on arrears.
How long do I have to act?
If French law governs, Article L. 110-4 of the Commercial Code gives five years from the due date for obligations between traders. A partial payment or a written acknowledgment of the debt interrupts that period. If another law governs the contract, the period may be considerably shorter, so the applicable law should be identified before assuming the file is not urgent.
Further reading: enforcing a US or English judgment in France, exequatur of an arbitral award in France, the firm’s international practice.
Written by Hervé Guyader, avocat at the Paris Bar, doctor of law. This content is general information and is no substitute for advice on your own matter.