Risk management in foreign contracts
Signing contracts with contractors outside of Poland often takes place in an atmosphere of optimism. Unfortunately, the lack of analysis of the stability of local law can cost the company the loss of financial liquidity within just a few months.
Why standard provisions are not enough?
Most small companies use template agreements that work well in the country but fail with exports. From our experience with the last 12 audits, 8 of them did not contain clauses regarding changes in customs rates during the term of the contract. This is a cardinal mistake.
We build the company's operational peace by analyzing jurisdiction provisions. If a dispute is settled in a foreign court, the costs of lawyers can exceed the profit from the transaction in 3-4 months. It is worth checking if the provisions allow for mediation before entering the court path.
Analysis of political factors before signing
Conflict is a cost that can be eliminated. Before you send an offer, check the political stability of the region. Last year, we analyzed the case of a company that invested in raw materials in an unstable region without a force majeure clause regarding administrative blockades.
Our work is discretion and fact-based analysis. We do not look for sensations, but real threats. Do local tax regulations change every quarter? Is there a risk of sudden expropriation of property by the government? You must know the answers to these questions before the first payment.
Conflict is a cost that can be eliminated – prepare before you sign.
When is it worth asking for mediation?
We know how to talk in stalemate situations where one party stops making payments due to so-called 'objective difficulties'. Often this is just an excuse, but sometimes a real legal problem in their country. Then mediation is cheaper than arbitration.
At Diplomat Consulting Solutions, we see that 67% of disputes can be extinguished in 2 meetings if we introduce a mediator on time. Do not wait for your foreign partner to disappear from the radar. React as soon as the first invoice is delayed by 14 days.
How to minimize risk in the next quarter?
Start by reviewing your agreements with a lawyer specializing in the commercial law of a given region. We can supplement this audit with a political dimension and business stability risk. This combination provides real capital protection.
You do not have to change everything at once. Choose 3 key markets in which you operate and analyze them for legal stability in 2025. We will help you prepare a list of questions that should be asked to partners before extending the contract.
We build the company's operational peace through analysis of facts, not conjectures.
