Ukrainian Supplier Failed to Deliver or Refund the Payment: How a Foreign Business Can Recover Its Money in Ukraine

A foreign company transfers funds to a Ukrainian supplier for goods, manufacturing, or the delivery of a batch of products. The agreed deadline passes, the goods are not shipped, and instead of a concrete result the buyer receives new explanations: production delays, logistics problems, power outages, shortages of raw materials, or requests to wait a few more weeks.

At the initial stage, the buyer is usually interested not in a dispute, but in completing the transaction. If the goods are genuinely needed for the business, it may be reasonable to give the Ukrainian supplier an opportunity to remedy the situation. The problem begins when postponements become systematic, revised deadlines are not supported by any actual progress, and the supplier effectively uses negotiations only to keep the customer waiting.

At that point, the objective changes. It is no longer enough to establish why the delivery did not take place. The buyer must determine whether there is a realistic prospect of receiving the goods and whether continued waiting still makes commercial sense. If not, the focus should shift to recovering the money while simultaneously assessing what assets of the Ukrainian company may actually be available for enforcement.

A strong contract on paper does not by itself guarantee recovery. A creditor may win the dispute, obtain a judgment from a Ukrainian court, and then discover that the supplier has no funds or assets. Effective recovery therefore cannot be built around litigation alone. It begins with an assessment of the transaction, the counterparty’s conduct, and its actual financial position.

At first glance, most such situations look similar: the money has been received, the deadline has been missed, and the supplier continues to promise performance. The underlying reasons, however, may be very different, and the recovery strategy should reflect them.

Ukrainian businesses operate under wartime conditions, and genuine production and logistics disruptions do occur. A company may face damage to its production facilities, power outages, changes in transportation routes, or delays in the supply of raw materials. In such circumstances, a contractual breach does not necessarily indicate bad faith.

The supplier’s conduct usually helps distinguish this scenario. A company facing a genuine temporary difficulty normally remains in contact, demonstrates actual progress, provides documents or photographs from production, gives a specific explanation for the delay, and proposes a realistic revised deadline. If the buyer still needs the goods and the supplier is genuinely capable of completing the order, continuing the transaction may remain commercially reasonable.

Even then, however, another informal promise should not simply be accepted. The revised deadline and the consequences of a further breach should be documented in writing. Otherwise, a month later the parties may find themselves in exactly the same position, while the supplier’s financial condition may have deteriorated further.

Another common scenario arises when the Ukrainian supplier uses the advance payment not exclusively to perform the specific order, but as part of its general business cash flow. The funds may be spent on procurement, salaries, repayment of existing liabilities, or performance of other contracts.

As long as the company continues to receive new cash inflows, this model may appear to work. Once a liquidity gap emerges, however, the buyer’s contractual claim remains outstanding while the supplier no longer has sufficient resources to perform it. The supplier may not formally repudiate the contract and may genuinely intend to complete the order later, but the foreign customer has effectively become dependent on the supplier’s future cash receipts.

This is particularly dangerous for a creditor. If the company is already allocating limited funds among several liabilities, waiting means becoming part of an informal queue. Priority will usually go to creditors who create a greater legal or financial risk for the debtor. Those who simply continue to wait tend to remain at the end of that queue.

A more serious scenario involves a business that systematically assumes new obligations despite lacking the actual capacity to perform existing ones. New advance payments may then be used to cover older debts, while delays become part of the company’s normal operating model.

Warning signs may include repeated debt-recovery litigation, enforcement proceedings, a growing number of creditors, frequent changes of management or registered address, the absence of meaningful assets, or the transfer of business activity to related companies. No single factor proves misconduct. Taken together, however, they may indicate that the problem extends far beyond one failed delivery.

Prolonged negotiations rarely improve the foreign customer’s position in this situation. While the buyer waits, available cash may be paid to other creditors, assets may be disposed of, and business operations may be transferred to another legal entity.

The main mistake usually occurs not when the payment is made, but after the first material delay. The buyer sees the breach but continues to act as if the transaction were progressing normally: it contacts the account manager, accepts a revised deadline, receives another promise, and waits again.

Additional time is not inherently a problem. The problem is granting it without conditions. If the supplier says that the goods will be shipped in two weeks, that deadline should be documented and the consequences of another failure should be clear. Otherwise, negotiations become an indefinite extension of the contract without any corresponding improvement in the buyer’s position.

A second mistake is simultaneously demanding both delivery and a refund without deciding which outcome takes priority. Commercially, this is understandable: the buyer wants to obtain at least some result. Legally, however, inconsistent correspondence creates uncertainty. One day the company demands repayment, the next it agrees to wait for delivery, and a week later it requests a refund again. The supplier may later rely on this correspondence to dispute when the monetary obligation actually arose and which deadline was intended to be final.

A third mistake is checking the debtor too late. In many cases, the company’s financial position is investigated only after several months of non-performance. By then, other creditors may already be pursuing the Ukrainian counterparty’s assets, bank accounts may be empty, and property may have been transferred. The supplier’s financial condition should therefore be assessed in parallel with settlement efforts, not only after negotiations have finally failed.

This is the key question because it determines the entire strategy that follows. If the goods exist, are identifiable, remain commercially necessary, and the supplier is genuinely capable of delivering them, seeking contractual performance may still make commercial sense. In some cases, receiving the products is faster and more valuable to the foreign buyer than recovering the payment and sourcing a new manufacturer.
If the agreed deadlines have lost their commercial relevance, production is not actually progressing, the supplier cannot confirm that the goods exist, or trust in the counterparty has been lost, the more appropriate strategy may be to demand repayment of the advance payment.
Under Ukrainian law, where a buyer has made an advance payment and the seller fails to deliver the goods within the agreed period, the buyer may, depending on the applicable contractual and legal framework, demand delivery of the prepaid goods or repayment of the advance. In practical terms, once a breach has occurred, the buyer should select the intended outcome and consistently reflect that position in its documents and correspondence.
If the buyer decides to seek repayment, the demand should be unequivocal. It should identify the amount due, the legal and contractual basis for repayment, the payment deadline, and the relevant bank details. Subsequent communications should remain consistent with that position rather than reverting to an open-ended discussion of a future delivery.

Before taking active legal steps, the complete transaction history should be reconstructed. The review should cover the contract, annexes and specifications, invoices, bank transfers, SWIFT confirmations, correspondence, agreed deadlines, documents concerning readiness of the goods, notices of postponement, acknowledgements of debt, and promises to refund. It is important to establish not only that payment was made, but also precisely who received it.

International transactions sometimes involve a contract with one company, an invoice issued by another entity, and payment made to a third company or even an individual. While the transaction is proceeding normally, the parties may pay little attention to such discrepancies. In a recovery case, they become critical: the creditor must identify the proper debtor and the legal basis on which that debtor received the funds.

The Ukrainian counterparty should be investigated at the same time. The relevant questions go beyond its formal registration status. It is necessary to understand whether the company is genuinely operating, who controls the business, whether it is involved in debt-recovery litigation, whether enforcement proceedings are pending, and whether it owns assets against which a future judgment could realistically be enforced.

This assessment does not guarantee recovery, but it materially changes the strategy. If the supplier has operating accounts, real estate, vehicles, equipment, equity interests, or other identifiable assets, litigation may have a clear enforcement objective. If the company is effectively assetless, the creditor needs to understand that risk before spending additional time and money on proceedings.

A properly structured demand is not merely a warning that court proceedings may follow. Its primary purpose is to formalise the creditor’s monetary claim, clearly record the legal basis for repayment, and eliminate ambiguity about the amount and deadline for payment.

The demand should state what contractual obligation was breached, what amount is to be repaid, why the buyer is entitled to repayment, and by what date payment must be made. Where appropriate, it should also address interest, contractual penalties, or other recoverable amounts, but such claims must be assessed against the governing law and the specific terms of the contract rather than added mechanically.

For a foreign creditor, local legal communication can also change the commercial dynamics. A Ukrainian company that has been responding to foreign emails with general explanations may treat a structured demand from Ukrainian counsel much more seriously. The purpose is not to exert pressure for its own sake. It is to demonstrate that the creditor has moved from informal negotiation to a legally defined recovery process in the debtor’s own jurisdiction.

If the supplier has a genuine ability to pay, this stage may produce a settlement, a repayment schedule, or immediate payment. If it does not, the correspondence will help establish the creditor’s position for the next stage.

A court judgment is a legal instrument, not money in the creditor’s account. That distinction should shape the recovery strategy from the outset.
Before filing a claim, it is therefore important to assess the debtor’s known assets, ongoing business activity, existing creditors, litigation exposure, and enforcement history. The objective is to understand whether the future judgment can be converted into actual recovery.

Where there is a risk that assets may be disposed of before the case is resolved, interim measures may need to be considered. Under Ukrainian procedural law, courts may apply measures designed to preserve the possibility of enforcing a future judgment, provided the statutory requirements are met and the requested measure is proportionate to the claim. Such applications require evidence and cannot be based solely on a creditor’s general concern that the debtor may become insolvent.

The earlier the financial position is assessed, the more options remain available. If the creditor waits until the supplier has stopped operating, transferred assets, or accumulated multiple enforcement cases, even a legally strong claim may become commercially difficult to recover.

If voluntary repayment cannot be achieved, the claim may have to be pursued before a Ukrainian court, provided Ukrainian courts have jurisdiction over the dispute. For a foreign company, the procedure requires more than translating the contract and filing a statement of claim. The claimant must submit proper evidence of its corporate existence and of the authority of the person acting on its behalf. Depending on the country of incorporation and the applicable international arrangements, corporate documents may require an apostille or legalisation and a certified Ukrainian translation.

The substantive case normally requires evidence of the contractual relationship, payment, the supplier’s breach, the creditor’s chosen remedy, and the amount claimed. Electronic correspondence, invoices, bank records, SWIFT messages, specifications, delivery documents, and acknowledgements by the supplier may all become relevant.

The supplier may dispute the amount received, argue that the buyer itself failed to perform certain obligations, rely on force majeure, challenge the termination or repayment mechanism, or contest the calculation of additional claims. This is why even an apparently straightforward non-delivery case should be prepared around the actual evidentiary record rather than around the assumption that the breach is self-evident.

After a judgment becomes enforceable, recovery proceeds through the Ukrainian enforcement system. Depending on the debtor’s assets, enforcement may be directed against funds in bank accounts, movable and immovable property, vehicles, equity interests, and other assets belonging to the debtor in accordance with Ukrainian law.

The effectiveness of this stage largely depends on the work done before the claim was filed. If the creditor already understands the debtor’s asset structure, enforcement begins with a clear objective. If asset searches start only after the judgment has been obtained, valuable time may already have been lost.

This is also why the practical value of a case cannot be assessed solely by asking whether the creditor is legally right. The more important question is whether the legal claim can be converted into actual payment.

In one of our cases, the client was a German entrepreneur involved in purchasing timber products from a Ukrainian supplier. The contract was concluded in April 2022. The foreign buyer made an advance payment, and the Ukrainian supplier undertook to prepare and deliver the goods.

The delivery did not take place within the agreed period or afterwards. The advance payment was not returned either. Importantly, the supplier did not immediately cease all communication or expressly refuse to perform. Instead, the deadlines were repeatedly postponed and the buyer continued to receive assurances that the order would eventually be completed.

This type of conduct creates a particularly difficult situation for a foreign buyer. As long as the supplier remains in contact and continues to promise performance, there is a natural tendency to wait rather than escalate the matter. Over time, however, the commercial transaction turns into a debt-recovery problem, while the creditor loses time that could have been used to formalise the monetary claim and assess the debtor’s assets.

When the matter proceeded to court, one of the issues was establishing the precise amount received by the supplier under the disputed contract. The evidence included the contractual documentation and bank records. The court also obtained information directly from the Ukrainian bank. This made it possible to establish that EUR 9,276.80 had been received by the supplier specifically under the contract in dispute and to substantiate the claim for repayment of that amount.

The supplier contested the claim and challenged aspects of the contractual performance. Nevertheless, on 20 February 2025, the court ordered the supplier to repay the confirmed amount. The supplier attempted to appeal, but the appeal was returned by the appellate court without substantive consideration. The judgment therefore became final and enforceable on 28 April 2025.

The case illustrates an important point: repeated promises and several years of waiting do not necessarily mean that recovery is no longer possible. But the legal strategy must eventually be converted from waiting for performance into a clearly documented monetary claim supported by evidence of payment, breach, and the amount due.