Case Study: Mediation and Debt Recovery in a Tariff Dispute

​When tariffs, shipping delays, or contract disputes threaten your receivables, navigating the complexities of international trade can feel overwhelming. That’s where RMS steps in. With our expertise in International Debt Recovery and Cross-border Mediation, we bridge the gap between disputes and resolution, ensuring your cash doesn’t get trapped in transit. Explore the case study below to see how RMS turned a potential financial loss into a win-win solution for both parties.

Background

​An apparel exporter based in South Asia entered into a $1.2 million supply contract with a U.S. fashion distributor. The agreement involved custom-designed apparel, scheduled for shipment before new U.S. tariff measures came into effect.

The Disruption

• The U.S. buyer repeatedly requested changes to fabric colors, trims, and packaging during production, causing a six-week delay.
• During this delay, the new tariff measures took effect. When the goods finally arrived in the U.S., they were subject to a 20% import duty, significantly increasing the landed cost.
• The buyer refused to pay the tariff, claiming the exporter should bear the cost of the late delivery.
• The exporter, however, argued that the delay was caused by the buyer’s constant changes and insisted the buyer was responsible.

Deadlock and Escalating Costs

​The goods remained uncleared at the U.S. port, incurring mounting storage and demurrage charges.

• Buyer’s position: Willing to pay for the goods, but not the tariff.
• Exporter’s position: Delivered per the buyer’s specifications — the buyer should absorb the tariff costs.

​Result:
A commercial deadlock where both parties risked significant financial losses with each passing day.

Our Role: Mediation + Recovery

The exporter engaged RMS, recognizing that the situation required more than just debt recovery. It demanded neutral mediation to resolve the financial dispute.

Step 1 – Independent Fact Review

• Our team carefully reviewed purchase orders, email correspondence, and records of product changes.
• We established a precise timeline that demonstrated how the buyer-driven changes directly caused the shipment delay.

Step 2 – Engaging Both Parties

• Our U.S. collection specialists communicated directly with the buyer, emphasizing their legal obligation to pay under the terms of the contract.
• Simultaneously, we helped the exporter reframe their claim in commercial, rather than emotional, terms, keeping the possibility of future business intact.

Step 3 – Mediation for a Practical Solution
We facilitated a three-way agreement that satisfied both parties:

• The buyer agreed to pay 80% of the outstanding invoice upfront.
• The exporter agreed to share part of the unexpected tariff cost to preserve the business relationship.
• Storage and demurrage charges were split proportionally to minimize further losses.

Step 4 – Structured Settlement
We drafted a structured payment and release arrangement, ensuring both parties fulfilled their commitments. We monitored the process until full resolution and clearance were achieved.

Outcome

• The goods were successfully released and cleared from U.S. customs.
• The exporter received full receivables, minus a minor concession on the tariff, preserving critical cash flow.
• Both parties avoided costly litigation, protecting the business relationship from permanent damage.

Key Takeaways

• Complex trade disputes can escalate quickly when tariffs, shipping delays, and miscommunication collide.
• A global collection agency with mediation expertise ensures disputes are resolved commercially, recovering receivables while preserving valuable partnerships.
• Our neutral involvement turned a lose-lose scenario into a practical, mutually beneficial solution.