A Foreign Company Paid a Ukrainian Company, but Received No Goods or Services: How to Recover the Money

A foreign company made an advance payment to a Ukrainian supplier or contractor. The funds were credited to an account in Ukraine, but the goods were not delivered, the services were not provided, and the recipient stopped responding. For the purposes of this article, the foreign company will be referred to as the foreign customer, and the Ukrainian recipient of the funds as the Ukrainian counterparty.

For a foreign customer, the situation is complicated by the fact that the counterparty and its assets are located in another country, the agreement may be governed by foreign law or contain an arbitration clause, and the documents may require translation. The Ukrainian counterparty’s silence does not in itself prove fraud, but waiting for weeks may be dangerous: the company could dispose of its assets or initiate bankruptcy proceedings. It is therefore necessary to establish the legal basis for recovering the advance payment, assess the counterparty’s position, and determine how the debt can be enforced against its assets.

There may be a genuine inability to deliver the goods or provide the services, such as a production shutdown, damage to a warehouse, or logistical difficulties. However, merely invoking martial law does not release the Ukrainian counterparty from its contractual obligations. It must demonstrate which specific circumstances prevented it from fulfilling the particular order. Even where force majeure is established, it may affect liability for delay but will not entitle the counterparty to retain the advance payment indefinitely.

Another possible reason is a cash-flow shortfall: advance payments received from customers are often used to cover current expenses or pre-existing debts. When new receipts are insufficient, a Ukrainian company may begin responding to its creditors selectively. A formal demand specifying the exact amount and payment deadline may prompt the company to repay the money before litigation. However, delay reduces the prospects of recovery because other creditors may be pursuing the same assets.

There may also be a dispute as to whether the agreement has been performed. A supplier may claim that the goods have been manufactured and are awaiting further instructions, while a contractor may assert that the deliverables have already been provided. In such circumstances, bank confirmation of the payment alone will not be sufficient. The agreement, specifications, correspondence, acceptance procedure, and conduct of both companies must be examined.

The Ukrainian company may never have intended to deliver the goods or provide the services. Warning signs may include substituted payment details, a recently registered domain, no operations at the registered address, numerous claims for the recovery of advance payments, and frequent changes of ownership. Nevertheless, a breach of contract remains a commercial dispute unless fraud can be established. To prove fraud, it is necessary to demonstrate that the intention to obtain the money without providing anything in return existed when the transaction was entered into or the payment was received.

The first mistake is making a payment without a precise description of the goods or services, the performance deadline, the conditions for repayment, the governing law, and the dispute resolution procedure. An invoice, purchase order, and correspondence may establish that a transaction existed, but the foreign company will still need to prove what the Ukrainian counterparty promised to provide and when it fell into default.

The second mistake is demanding both delivery and repayment at the same time. If prepaid goods have not been delivered, the buyer must choose one remedy: delivery of the goods or repayment of the advance. If the foreign company initially demands repayment but subsequently agrees to continue waiting for the goods, the Ukrainian supplier may argue that a new delivery deadline was agreed.

The third mistake is communicating only with the account manager. The demand should be addressed to the Ukrainian company itself and sent through the channels specified in the agreement and recorded in the state register. The contents of the document and evidence of dispatch should be retained. A screenshot of an email will not always prove what was attached or whether it was delivered.

The fourth mistake is immediately threatening criminal proceedings. A report to the police may be justified if there is evidence of forged documents, fraudulent payment details, false representations, or an intention by the Ukrainian company, from the outset, to obtain the money without delivering the goods or providing the services. If the available facts show only a delay or other breach of contract, the foreign company’s primary remedy is a contractual claim for repayment. A criminal investigation may proceed in parallel, but it does not replace a commercial claim seeking the return of the advance payment.

The first step is to identify the recipient. The details stated in the invoice, agreement, and payment instruction should be compared with the Ukrainian company’s official name and registration code. Its status, registered address, director, authorised signatory, changes in ownership, court and enforcement proceedings, bankruptcy status, and assets should then be reviewed. State registers do not establish solvency, but they can provide a preliminary indication of the Ukrainian counterparty’s overall position.

The foreign customer should collect the agreement, specifications, invoice, payment confirmation, SWIFT confirmation, correspondence, and any promises to deliver the goods or repay the money. Emails should be preserved together with their technical headers, while messages should be retained with the relevant telephone number, profile details, dates, and complete context.

Proceedings before a Ukrainian court may require a corporate registry extract for the foreign company, evidence of the representative’s authority, an apostille or legalisation, and a certified Ukrainian translation. The specific requirements depend on the company’s country of registration and the applicable international treaties. If the claim or supporting documents do not comply with the procedural requirements, the Ukrainian court may leave the claim without movement and grant the foreign company a period in which to remedy the deficiencies.

A formal legal demand should not merely request an abstract “response to the email.” It should require the Ukrainian company to take a specific action. The document should state the amount paid by the foreign customer and the date of payment, identify the goods or services for which the payment was made, specify the deadline breached by the Ukrainian counterparty, and clearly set out the remedy now sought by the foreign company: performance of the agreement or repayment of the advance.

Where repayment is selected, the demand should specify the amount, currency, bank details, and final payment date. If the agreement does not establish a deadline for a monetary obligation and the obligation is payable on demand, Article 530 of the Civil Code of Ukraine provides, as a general rule, a seven-day period for performance.

In addition to the principal debt, interest at three per cent per annum may accrue unless a different rate is established by the agreement or by law. Inflation adjustments may also apply to obligations denominated in Ukrainian hryvnia. Any contractual penalty must have a legal basis and may be reduced by the court.

The foreign company must substantiate both the amount of any damages and the causal link between those damages and the Ukrainian counterparty’s breach.
A pre-litigation demand is mandatory where required by the agreement or a specific provision of law. In other cases, it records the demand, establishes the repayment deadline, and documents an attempt to resolve the matter. If the Ukrainian company is disposing of its assets or ceasing operations, waiting for a response should not delay court proceedings.

Negotiations are appropriate where the Ukrainian company acknowledges the debt and proposes a realistic schedule for performing its obligations or repaying the advance. A written settlement agreement should specify the amount, currency, payment dates, and consequences of default. If the counterparty asks for more time but does not acknowledge its obligation to repay the money, relying on assurances from its manager is risky.

If the agreement submits disputes to the Ukrainian courts, a claim against a Ukrainian legal entity will generally be heard by a commercial court. The governing law and dispute resolution provisions must be reviewed carefully. An arbitration clause or the choice of a foreign court will change the applicable procedure. Any foreign judgment or arbitral award will still need to be recognised and enforced in Ukraine. It is therefore important to determine in advance how the awarded amount can be recovered from the advance payment recipient’s bank accounts and other assets.

If the Ukrainian company is selling its assets, transferring its business activities to a related entity, or is subject to numerous pending enforcement proceedings, the foreign company may apply to a Ukrainian court for interim relief. Possible measures include the attachment of property or the freezing of funds in bank accounts up to the amount claimed. A court will not grant such relief merely because the counterparty has stopped responding. The applicant must demonstrate a genuine risk that future enforcement will be obstructed, establish a connection between the requested measure and the claim, and show that the measure is proportionate. The court may also require counter-security.

If bankruptcy proceedings have already been opened against the Ukrainian company, filing an ordinary claim or continuing pre-litigation correspondence may be insufficient. A foreign creditor whose claim arose before the bankruptcy proceedings were opened must lodge its monetary claim in those proceedings. Missing the applicable deadline will not necessarily extinguish the debt, but the foreign company may lose its voting rights at creditors’ meetings and be placed in a less favourable procedural position.

A court judgment confirms the Ukrainian company’s obligation to repay the advance, but the money is actually recovered during enforcement proceedings. Once the judgment becomes final, the enforcement document is submitted to a state enforcement officer or, where permitted by law, a private enforcement officer. The enforcement officer may locate the Ukrainian company’s bank accounts, attach its funds and other property, debit available funds, and arrange for the sale of its assets.

The time required for recovery depends less on the amount of the debt than on whether the Ukrainian counterparty has assets. If funds are located in an active bank account, enforcement may be relatively swift. If the accounts are empty, the property is already subject to attachment, and other creditors have commenced enforcement, recovery will take longer and may not result in full repayment of the advance. Asset tracing should therefore begin before a court judgment is obtained, not afterwards.

The applicable limitation period must also be monitored. As a general rule, the limitation period in Ukraine is three years, although special periods may apply to certain claims.

On 4 September 2025, the running of limitation periods that had previously been suspended for the duration of martial law resumed. A foreign company should not assume that correspondence with the Ukrainian counterparty automatically preserves its right to bring a claim. The commencement of the limitation period, any potential interruption of that period, and the effect of a written acknowledgement of the debt must be assessed by reference to the documents governing the particular transaction.

The prospects of recovering an advance payment from a Ukrainian counterparty depend on three principal factors. First, it is necessary to substantiate the amount paid, the scope of the obligations, and the date on which the counterparty fell into default. Second, the competent court must be identified correctly and the foreign company’s documents must be properly prepared. Third, it is essential to establish whether the Ukrainian counterparty has funds or other assets against which a judgment can actually be enforced.

If the transaction documents do not clearly establish the agreed terms, the evidentiary record will need to be supplemented. An error in selecting the competent court or preparing the documents may prolong the proceedings. Finally, the availability of accessible assets belonging to the Ukrainian company will directly affect how quickly the awarded amount can be recovered.

The process should therefore begin with a preliminary assessment of the documents, the applicable jurisdiction, the anticipated costs, and the Ukrainian counterparty’s financial and asset position. This analysis helps identify a well-founded strategy, avoid unnecessary expenditure, and establish realistic expectations regarding the likely timeframe and outcome.