International Debt Recovery: 2025 guide

Legislative updates, legal strategies and tools for businesses and professionals.

In an increasingly globalised world, companies frequently deal with clients and suppliers abroad, handling cross-border transactions.

But what happens when an international client fails to pay?

International debt recovery may appear complex, but with the right strategy and appropriate legal support, it is possible to achieve tangible results within a reasonable timeframe.

Those who regularly engage in trade with foreign partners should protect themselves from the outset by clearly specifying in the contract the competent court, the applicable law, and any arbitration clauses, in case of non-payment or disputes.

This applies both to Italians expecting payment from foreign clients and to foreign parties awaiting payment from Italian companies. When dealing with international debt, the best weapon is prevention—assuming, for example, that the buyer may not pay, and acting accordingly.

Below we outline the key procedures, the most significant legislative developments, and best practices to protect your credit abroad.

What is international debt recovery?

International debt recovery refers to the set of judicial and extrajudicial procedures aimed at collecting outstanding debts from debtors based in another country.

It differs from domestic recovery in that it is generally more complex, due to differing laws, language barriers, higher costs and longer timelines.

However, there are international and European legal instruments that allow for effective enforcement, even without initiating legal proceedings in the debtor’s country.

How to recover an international debt

Debt recovery abroad can follow three main paths, depending on the specific circumstances:

• International commercial arbitration
• Extrajudicial recovery
• Judicial recovery

International Commercial Arbitration

International arbitration is often considered the quickest method for protecting one’s interests when conducting business with non-EU parties.

As mentioned, many businesses protect themselves by including in the contract provisions regarding the competent court, the applicable law, and arbitration clauses in case of disputes.

If a valid arbitration clause is in place, the unpaid creditor can resort to arbitration to claim the amount owed.

The final decision of the arbitration panel, known as the arbitral award, has the same legal effect as a court judgement.

Arbitration is particularly useful where Italy has not entered into bilateral agreements for the mutual recognition of judgements.

Its effectiveness is ensured through the 1958 New York Convention, under which nearly 200 countries have committed to recognising and enforcing arbitral awards on the basis of reciprocity.

How international arbitration works

While details vary depending on the arbitration body chosen, the general steps include:

• Filing of the arbitration request by the creditor
• Formation of the arbitral tribunal (a sole arbitrator or panel of three)
• Establishment of a timeline for submissions and hearings
• Issuance of the arbitral award
• Enforcement of the award in the relevant jurisdictions

Extrajudicial international debt recovery

Aside from arbitration, it is often advisable to attempt an out-of-court resolution before turning to legal action.

In this phase, the debtor may voluntarily pay the amount owed, or the parties may negotiate a settlement, which can include instalment plans.

This approach also helps maintain a working relationship with the debtor, which may be valuable for future dealings.

How extrajudicial debt recovery works

• The process typically begins with a formal demand letter sent to the foreign debtor, drafted by a lawyer.
• If the debtor agrees to pay within a specified timeframe, the parties agree on payment terms.
• If the debtor refuses, disputes the invoice, or fails to respond, legal proceedings become the only remaining option.

Judicial international debt recovery

If legal action becomes necessary, several judicial routes are available.

The appropriate course of action depends on the type of contract, amount of the debt, debtor’s country, jurisdiction and the applicable law.

Initial steps include researching the legal framework in the debtor’s country and conducting an asset check to assess whether the debtor has the means to pay, should enforcement become necessary.

How judicial debt recovery works

Various procedures may be available depending on the case, including:

European order for payment procedure

Since 2006, Regulation (EC) No. 1896/2006 allows claimants to obtain a European order for payment enforceable across EU countries (except Denmark).

This streamlined procedure is designed for uncontested pecuniary claims and significantly reduces time and legal costs.

No court hearing is needed. The debtor, however, has 30 days from notification to object.

The application is filed in the claimant’s home country, but once issued, the order is automatically recognised and enforceable in other EU Member States without the need for an exequatur (declaration of enforceability).

Note: The regulation does not provide for provisional enforcement of the order—a possibility under Italian law.

The European payment order can only be issued for liquid and due claims.

European enforcement order for uncontested claims

Regulation (EC) No. 805/2004 allows for the free circulation of court decisions, court settlements, and authentic instruments within the EU, provided the claims are uncontested.

This avoids the need for any further recognition procedures in the destination country.

European account preservation order

Regulation (EU) No. 655/2014 enables creditors to freeze funds in the debtor’s bank account to secure cross-border claims.

This may be done before or during legal proceedings, but only when there is clear urgency (e.g. risk of asset dissipation, “periculum in mora”).

The debtor is not informed before the order is issued, so as to prevent asset relocation.

European small claims procedure

Regulation (EC) No. 861/2007 (as amended) applies to cross-border claims not exceeding €5,000.

Judgements are enforceable across the EU and not subject to opposition, except in limited cases.

Choosing the right Court

Each legal system works differently. In some countries (e.g. the Netherlands), creditors enjoy stronger protections; in others (e.g. Germany), debtors are better shielded.

Generally, Regulation 1215/2012 applies within the EU and EFTA countries (Denmark, Switzerland, Iceland and Norway), and facilitates the recognition and enforcement of judgements between Member States through the Lugano Convention (2007).

Applicable Law

Italy is party to the 1955 Hague Convention on the law applicable to the international sale of goods, which allows parties to choose the law governing their contract.

The Rome Convention (1980) and the Rome I Regulation (EC No. 593/2008) further regulate the applicable law in cross-border contracts.

Parties can agree in advance on the applicable law and the competent court.

Delays in payments, by both public authorities and private parties, prompted the European Parliament to legislate specifically in this area.

Reforms: Cartabia reform (2023) and 2024 Amendment

The Cartabia Reform (Legislative Decree 149/2022) and its amendment Legislative Decree 164/2024 streamlined civil procedures, with key effects on debt recovery:

• Abolition of the enforceable formula requirement for enforcement titles
• Electronic invoices are now valid as written proof for payment orders
• Wider use of digital tools, enabling most procedures to be carried out online, reducing costs and time

These changes make it easier to pursue legal action, especially for documented commercial debts.

Mediation

Directive 2008/52/EC encouraged Member States to promote mediation in cross-border civil and commercial disputes.

Italy implemented the directive through Legislative Decree No. 28/2010, allowing mediation between private and public entities alike.

Directive 2011/7/EU, adopted in Italy via Legislative Decree No. 192/2012, mandates that debtors pay within 30 days of invoice receipt.

Creditors can claim interest on unpaid amounts without issuing a prior reminder, from day 31 onwards.

If no specific agreement exists, the interest rate is the European Central Bank rate plus at least 8%.

Legislative Decree 216/2024: new mediation rules (effective January 2025)

This latest reform provides that:

• Mediation sessions may be held entirely online, even with foreign parties.
• Procedural deadlines are not suspended during court holidays.

This makes mediation more flexible and suitable for international contexts, improving chances of quick and amicable settlements.

Receiving what is rightfully owed is essential for a company’s survival and growth.

When facing non-payment from international clients, turning to experienced professionals increases the likelihood of a swift and successful recovery.

One in four businesses fails due to payment delays.

Italy has even received formal warnings due to systemic violations in this area.

International debt recovery can be smooth if entrusted to seasoned experts.

The Litigation Department of Boccadutri International Law Firm has the legal and linguistic expertise to assist you in recovering outstanding debts. Do not hesitate to contact us.

Comparison Table: Arbitration vs. Litigation vs. Mediation

Feature	International Arbitration	Ordinary Litigation	Mediation (including online)
Average duration	6–18 months	1–3 years (varies)	1–3 months
Costs	High (arbitrators, venues, legal fees)	Variable (fees, taxes, translations)	Low (especially in extrajudicial phase)
Procedural flexibility	High (parties define rules and venue)	Low (rigid legal procedure)	High (parties manage process)
Confidentiality	Confidential	Public	Confidential
International enforceability	High (New York Convention)	Depends on bilateral agreements / Brussels I bis	No automatic enforcement, but fosters lasting agreements
Enforceability of decision	Award is enforceable title	Judgment enforceable (often needs translation and exequatur)	No binding decision automatically
Best for	Contracts with arbitration clause	All justiciable disputes	Liquid debts, civil/commercial claims
Ideal when	Large amounts or non-EU parties	EU debtors or complex claims	For quick resolutions or settlements

FAQ – International Debt Recovery

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