06/08/2026 by David Farnell of Dynamic UK law firm for businesses and individuals | Keystone Law
When transferring significant sums of money overseas, there is a risk of mistakenly directing money to the wrong recipient. If your business has a contract with a counterparty overseas, who insists on receiving payment up front, there is a risk that the counterparty will fail to perform its obligations.
If such risks materialise, how can you get your money back?
The United Nations Commission on International Trade Law created the UNCITRAL Model Law on International Credit Transfers (1992) to introduce a single international convention to govern the recovery of funds transferred by mistake, but it lacks global adoption as a binding enforcement mechanism.
Cross-border recovery therefore relies on a combination of interbank messaging networks, regional financial frameworks and private international litigation. The first two consist of administrative rules that affect banks and may mean that you recover your money, but only in circumstances where there has been a processing error, a transfer to an unintended recipient, or a fraud committed. Without dwelling on the rules, the key point to note is that your bank may not be able to help you recover the money and in some cases may be thwarted by the recipient withholding consent to the reversal of the transaction.
In a contractual dispute (assuming there has not been a processing error), it is unlikely that you will be able to reverse the transaction. You may therefore need to consider private international litigation, which involves bringing a civil court action against your counterparty (alternatively, arbitration may be available).
It is important to seek legal advice as soon as you realise that you may have lost money, because the movement of money happens instantaneously and this phenomenon means that the financial status of your counterparty (or the recipient of the funds, if different) may change overnight.
The first thing to consider before taking any action is how well you know the counterparty, where it is based around the world, and what assets it has. Is the counterparty worth suing, and, if so, does it have assets in England and Wales that you could potentially enforce a judgment against? If so, then suing “at home” may be the best option, assuming there are no dispute resolution clauses in the relevant contract(s) that affect your decision, for example, requiring you to sue the counterparty in its own jurisdiction. It is always important to check for such clauses and, sometimes, to make sure that your claim has a sufficient connection to England and Wales, so that the court has legal standing to hear it.
An action in England and Wales is likely to be quicker and easier to start and progress. Despite well-documented underfunding and administrative delays affecting the courts system in the UK generally, the civil courts remain effective, particularly the High Court. They are renowned internationally for their objectivity and the consistency and commerciality of their decision-making. In an appropriate case, and as an important preliminary step, you may be able to obtain a worldwide freezing order to prevent the counterparty from dissipating assets (and placing them beyond your reach) until the court has given its judgment.
If you obtain an English judgment, but need to enforce it overseas, it is always a good idea to engage with lawyers in the appropriate jurisdiction(s) at an early stage and find out, long before you obtain a judgment, precisely how and where you might enforce it.
The most effective way of enforcing an English judgment against property in England and Wales is to obtain a charging order, which may be registered against the counterparty’s real property and, if the judgment debt remains undischarged, provide you with the opportunity to apply for an order compelling the counterparty to sell the property, so that you can be paid. Some foreign jurisdictions have similar enforcement processes, while others do not.
Before enforcing an English judgment in a foreign jurisdiction, you may need to obtain recognition of the judgment according to the law of the jurisdiction in question. This process invariably involves starting fresh court proceedings there and can take time. As a general rule of thumb, the process tends to be quicker in other common law jurisdictions, where the legal system and its rules derive from England and Wales, such as in Commonwealth countries and the USA. Having said this, bear in mind that federations consist of independent states each with their own legal systems and rules, for example, gaining recognition in Florida involves a different process to that in New York.
You may of course need to sue your counterparty in a foreign jurisdiction, because the underlying contract requires you to do so, or because the counterparty has no assets in the UK. It can be more efficient to start legal action in the foreign jurisdiction than to obtain an English judgment first and then try to enforce it over there. In such a case, you will need your solicitor to identify suitable local lawyers as soon as possible and obtain appropriate advice. Many solicitors have foreign lawyers within their networks, whether as colleagues in the same firm, or as contacts they have worked with before and know well.
Taking private international litigation to recover money requires the legal expertise of at least one or potentially several lawyers. It is likely to be expensive and may last a long time. There are no readily available statistics about the success of such action, and it is always important to look at each case on its own merits. In general, legal action is only likely to be worthwhile if you are trying to recover a substantial sum of money (say ÂŁ100,000 or ÂŁ200,000 upwards) and can move quickly to explore your options.
David Farnell, Financial Services partner at Keystone Law. David often helps recoveries managers or in-house counsel to formulate an early strategy for avoiding litigation. When litigation is required, David pursues the process best suited to achieving the client’s desired outcome quickly and cost-effectively.
This post provides a general overview and should not be relied on as legal advice in a specific case.
This is a highly topical issue for Tony and his colleagues at Cosmos Currency Exchange. Cosmos offers a very practical solution to this very issue. When a client asks Cosmos to send funds for the first time to a new beneficiary, Cosmos always asks the client for written instructions and then calls the client on their confirmed contact number to cross reference the beneficiary bank details to ensure they have not been intercepted on their way through to Cosmos. It’s a simple and quick phone call but ensures no Cosmos client ever has to worry about funds going to an unintended account. Sadly, the demise of traditional relationship banking and its replacement with transactional, tech only systems have allowed the problem to scale across the banking and finance industry.