Export contract repair for a furniture factory
The client had a problem enforcing payments from a recipient in France. We analyzed the contract and introduced an arbitration clause. The next 3 invoices were paid on time thanks to the new provisions.
A local furniture factory was sending goods to a developer in France, but regularly waited weeks for transfers. We introduced hard arbitration mechanisms into the contract that forced financial discipline on the foreign partner without spoiling business relations.
The challenge
Dąb-Styl Meble employs 42 qualified carpenters and fitters near Lublin. The problem started with a large contract for furnishing an office building in Lyon. The contractor from France was in arrears with payments for a total amount of 23,400 euros, and the average delay in settling invoices was 52 days. This caused payment bottlenecks, due to which the factory had difficulties with the timely purchase of chipboards and fittings from suppliers. The management feared that entering the court path abroad would take at least 3 years and consume the company's savings on fees for law firms.
Our approach
Work started on January 12, 2025, with a thorough audit of the last three export contracts. Our arbitrator, Grzegorz Malewicz, noticed that the current provisions indicated common courts in France as the place of dispute resolution. This paralyzed the factory's actions. We proposed introducing the Lublin Union Arbitrage clause, which transfers the burden of proof and the place of adjudication to Poland. We conducted two online talks with the financial director of the French side. We explained to him that arbitration is clear rules of the game that protect both sides from lawyer costs in state courts.
The solution
We prepared an annex to the framework agreement, which contained precise provisions about the LUA arbitration court. We introduced a mechanism according to which 32% of the value of each order must be paid before the transport leaves the warehouse in Lublin. The rest of the payment was secured by the rigors of simplified arbitration, which shortens the time of issuing a verdict to a maximum of 6 weeks. Additionally, we established that the costs of any proceedings are entirely covered by the party that is late with the transfer for more than 14 days. We closed the entire implementation of new documentation in 19 business days.
Results
Thanks to the new provisions, the foreign partner began to treat payment terms as a priority, and the factory's financial liquidity returned to normal.
Timeline
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01/12/2025Documentation audit and analysis of 52-day delays.
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01/15/2025Preparation of the arbitration clause in a bilingual version.
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01/20/2025Negotiations with the management of the contractor from Lyon.
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01/31/2025Signing of the annex and settlement of outstanding invoices.
"Due to delays from France, we didn't have money for payouts for 12 fitters. LUA helped us agree without burning bridges with the client. Now the money is in the account at most 3 days after the deadline."