How to deal with a breach of contract when the breaching party lives in another country?
I’ve seen this a number of times when an American company contracts with a foreign company for services in the cryptocurrency industry — and then the foreign company fails to follow through on the contract.
When this happens, the recourse options are fairly limited, as foreign litigation is costly. While some countries are more cooperative than others, the United States has no bilateral treaties where other countries will recognize and enforce the US judgement.
Typically, the first step to recovering your money is to write a threatening demand letter from your lawyer. Give them a 2-week or 30-day window to make things right. Threaten everything you will do to make their life miserable or harm their business, such as reporting them to various regulators in America or their home country. If they are involved in cryptocurrency, there’s a decent chance they are breaking America’s money transmission rules, so you could report them to FinCEN. If they are dealing with any New York customers, you could report them to the New York Attorney General. If they are selling a token, you could report them to the SEC. Additionally, you could report them to the Better Business Bureau, and the Federal Trade Commission. The American regulators are unlikely to respond, but the threat may elicit enough fear to persuade payment. The BBB complaint will hurt their SEO. Make sure you list all the things that could happen to them with an American default judgement, including, challenges if they ever want to travel, work, or own property in America.
If they don’t respond to your letter, you can sue them in America, either in the state where your company is registered, or in the state where the contract was formed. If you don’t have a contract, that’s ok too, just take screenshots of your communications, and the terms that were agreed upon can be extracted from there.
If you decide to sue, the serving process is very important, each country has a different method for effective service, and if it fails, they can claim they were never notified of the lawsuit, and all of your effort will be wasted. Once that part is done, it’s likely they won’t show up for court in America, and you will win everything you asked for, so long as you had a reasonable claim to it, through a default judgment.
With your default judgement in hand, you can then take it to the defendant’s home country’s court system and ask them to enforce it. It really depends on the country whether they will enforce it or not, they may need you to try the case again using their laws. If they do enforce it, they can seize the defendant’s assets, garnish wages, put a lien on their property, etc., and there is a chance you will get your money back.
If the defendant’s home country ignores the default judgement, there are still a few things you can do. If another American company owes, or will soon owe, the defendant foreign company money, you can go after that money.
It’s a tough situation to be in, and you will likely not get your money back easily. The time, energy, and money spent trying to recover the bad debt may be better spent focusing on new money-making opportunities.