Avoiding Pitfalls in International Trade and Payments: Lessons from a Dispute Over Luxury Watches

At Lisa’s Law, we recently assisted a client involved in a contractual dispute over the importation of antique luxury watches. The case underscored the complexities of cross-border transactions, especially when dealing with high-value goods, cryptocurrency payments, and overseas counterparties.

The Dispute: Contracting for Limited-Edition Watches

Our client is a luxury watch dealer specialising in rare limited-edition timepieces. Given the nature of the timepieces – many of which were not available on the open market – it was necessary to collaborate with individual specialist middlemen and international sellers. The seller in this instance was an overseas company, and the intermediary handling the transactions was based locally.

The initial few transactions between our client and the middleman proceeded smoothly, with payments being made via bank transfer. It was during the heyday of cryptocurrency’s rise, and the parties mutually agreed to switch to cryptocurrency to lower the international wiring costs. Cryptocurrency was also chosen for its speed. For a while, this arrangement worked without issue, and they successfully completed several subsequent transactions.

However, problems arose after the first few deals. This time, after our client paid a large sum in cryptocurrency, the contracted watches were not delivered. It also appeared that the overseas seller had no knowledge of the trade. To complicate matters further, it was discovered that our client had contracted an intermediary that switched to using an overseas entity, registered in the Cayman Islands, which bore a similar name to the local intermediary. Although this was stated in the contract definitions, it had been overlooked.

The overseas seller denied any knowledge of this latest contract and refused to recognise it. Further complicating matters was the usage of cryptocurrency. While cryptocurrency can be beneficial for cost savings, proved difficult to trace and verify in this dispute. The lack of documentation and the challenge of tracking digital payments added extra complexity to the case.

Our client was understandably in a tough spot, facing growing pressure from their own buyers while still waiting for the delivery of these high-value watches. The overseas seller and intermediary seemed to be embroiled in internal conflicts. The delay in delivery stretched on for months, with no clear resolution in sight. Our client had also contracted for onward selling of these pieces and was facing great pressure from their own clients.

Resolution and Settlement of Contractual Dispute

Based on our extensive experience in handling cross-border disputes, we carefully assessed the legal hurdles our client would likely face if the case went to court. Also, they required the actual watch pieces for their business rather than just compensation. Recognising the complexity of the situation, we proposed to our client to first attempt at negotiating a resolution with both the intermediary and seller, while ensuring that we preserved our client’s right to legal recourse for breach of contract and unjust enrichment, should the negotiations fail.

Our team’s commitment to open communication and pragmatic problem-solving enabled us to bridge the gap between the parties and secure a favourable outcome for our client. The intermediary was eager to preserve its business relationship with our client and to protect their own reputation. Our client had to agree to pay a higher sum to the seller, but eventually, the contracted antique watches were delivered.

Key Points to Note for Businesses in International Trade

Although the case was ultimately settled, the ordeal highlighted several critical risks for businesses engaged in cross-border trade, particularly when dealing with high-value items and modern payment methods like cryptocurrency. While cryptocurrencies offer significant cost savings and efficiency in international transactions, they carry considerable risk when disputes arise. Businesses should weigh the benefits of using cryptocurrency against the difficulty of proving transactions and recovering funds in the event of a dispute.

The unnoticed change in the contracting party from a local intermediary to an overseas company with a similar name created significant confusion in the process. Businesses must carefully track the parties involved in contracts, especially when overseas entities are introduced. Cross-border agreements can introduce jurisdictional challenges, making it essential to ensure clarity about who the actual contracting party is and to verify their status regularly.

Lastly, for businesses dealing in high-value goods, it is crucial to have clear terms around delivery, payment methods and dispute resolution. In this instance, the rare and irreplaceable nature of the luxury watches made it critical to secure specific performance of the contract. Without detailed contract terms addressing these issues, disputes can quickly spiral out of control, particularly when the goods in question are both rare and expensive.

Conclusion

Ultimately, this case served as a powerful reminder of how modern payment methods, while convenient, can introduce unexpected complexities. For businesses dealing in high-value goods across borders, it’s crucial to stay vigilant, ensuring that each transaction is well-documented and secure. Businesses in international trade, especially with high-value goods, must stay alert when dealing with overseas entities. It is important to track any changes in contracting parties and ensure all transactions are properly documented and enforceable. As this case highlights, cross-border disputes are complex and can cause serious disruption if not managed properly.

(The details of this case, including the names of the companies and the nature of the goods, have been altered to protect confidentiality.)

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/