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Trade corridor ·

Getting paid for exports from Chile to India: contracts, arbitration and collections

A practical guide for Chilean exporters on buyer checks, payment terms, governing law, arbitration seats, evidence and overdue invoices in India.

Founder & Commercial Director · Santiago, Chile

An unpaid export invoice is rarely only an accounting problem. The Indian buyer may dispute quality, deny that its employee had authority to sign, claim that payment depended on another document, or have no assets in the jurisdiction named by the contract. Once the goods have been delivered, each gap in the file becomes more expensive to fix. One disputed shipment can tie up working capital, legal fees, and management time across two jurisdictions.

Verify the buyer before granting credit

The contract, purchase order, invoice, importer registration, and bank payment should point to the same legal entity. Before accepting open-account terms, record:

  • Legal name, registered office, company or LLP number, tax details, and Importer Exporter Code where applicable
  • Current company status, directors, and the authority of the person signing
  • Bank account in the buyer’s name, with a written explanation for any third-party payer
  • Trade references, payment history, credit information, disputes, and visible insolvency proceedings
  • Where the buyer’s operating assets, inventory, receivables, and bank relationships are located

India’s Ministry of Corporate Affairs provides Company and LLP Master Data, and the Directorate General of Foreign Trade provides a View Any IEC service. These records help identify the counterparty. They do not prove solvency, signing authority, or willingness to pay.

Make the payment obligation hard to dispute

State the price, currency, due date, bank charges, permitted deductions, and exact document or event that starts the payment clock. “Thirty days after delivery” is weak if the contract does not define delivery or the record that proves it.

The contract should also cover:

  • Deposit, balance, credit limit, and the point at which further production or shipment stops
  • Inspection, acceptance, rejection, and a short process for notifying defects with evidence
  • Payment of the undisputed portion while a specific claim is reviewed
  • Late interest, recovery costs, exchange-rate treatment, and credit notes
  • Any letter of credit, guarantee, insurance, security, or retention-of-title arrangement
  • Notice addresses, authorized email domains, and when a notice is treated as received

Ask counsel in India whether the security and remedies work under the applicable law. A strong-looking clause is of little use if the chosen remedy cannot reach the buyer or its assets.

Choose governing law and the dispute forum together

A contract should identify its governing law and one clear way to resolve disputes. Avoid clauses that give one court exclusive jurisdiction while sending the same dispute to arbitration.

The UNCITRAL CISG status table lists Chile as a Contracting State, while India is not listed. A Chile–India sale therefore does not fall under the Convention through the two-Contracting-State rule. Counsel should state whether the CISG can apply through the chosen law and whether the contract includes or excludes it.

For court litigation, a clause choosing Chilean courts does not by itself explain how a judgment will reach assets in India. Section 44A of India’s Code of Civil Procedure provides a direct execution route for judgments from superior courts in territories notified by India’s central government as reciprocating territories. Indian counsel should confirm whether the selected court route qualifies and what recognition proceedings may still be required.

The seat or legal place of arbitration is not the room where the hearing happens. It connects the arbitration to a procedural law and its supervisory courts. Chile’s Law 19.971 on International Commercial Arbitration applies most of its provisions when the place of arbitration is in Chile. Its Article 20 also allows hearings, witness examination, and document or goods inspection elsewhere unless the parties agree otherwise.

Write an arbitration clause that names:

  • The institution and exact rules, or a workable ad hoc procedure
  • The seat as a city and country
  • One or three arbitrators
  • The language
  • The law governing the contract
  • The scope of disputes covered and the notice method

The ICC standard clause guidance warns that unclear wording creates delay and recommends considering the place, language, governing law, mandatory requirements, and expected places of enforcement. The likely claim must also justify the filing, arbitrator, counsel, travel, translation, and enforcement costs.

Plan enforcement where the assets are

Chile and India are parties to the New York Convention, which supplies a framework for recognizing arbitration agreements and enforcing foreign awards. It does not make collection automatic.

India made reciprocity and commercial reservations. Section 44 of India’s Arbitration and Conciliation Act defines the foreign awards covered by its New York Convention chapter by reference to commercial disputes and territories notified by the central government. Before signing, counsel in India should confirm that the selected seat supports the intended enforcement route and identify the court and assets that would matter after an award.

Arbitration also does not turn an unsecured invoice into secured debt. If the buyer enters insolvency, local deadlines and the insolvency process may change what can be pursued and where.

Build the collection file before a payment problem

Keep a single dated file containing the signed contract and amendments, authority documents, purchase orders, invoices, packing lists, transport records, proof of delivery, inspection and acceptance evidence, defect claims, credit notes, payment ledger, and relevant correspondence.

Do not let calls replace the record. After a call, confirm the agreed amount, dispute, promise, and next date in writing. A repayment plan or acknowledgment should identify the debt, schedule, default consequence, and effect on existing rights.

Time limits matter. The Schedule to India’s Limitation Act 1963 sets three years for common suits for the price of goods: from delivery where no fixed credit period was agreed, or from expiry of the agreed credit period where one was fixed. Sections 18 and 19 address when a signed acknowledgment or qualifying payment can start a fresh period. Facts, governing law, arbitration rules, and insolvency can change the analysis, so counsel should calculate the deadline instead of relying on repeated promises to pay.

Act early when an invoice becomes overdue

First reconcile the undisputed amount and any alleged defect in writing. Then send notice exactly as the contract requires, preserve documents, and stop increasing unsecured exposure. A negotiated schedule can be sensible, but it should be signed and reviewed before any rights are waived.

The next step may be commercial follow-up, a formal demand, interim protection, arbitration, court action, or an insolvency claim. Base that choice on the contract, evidence, claim size, deadlines, and location of assets.

How IndiAndes can help

Before shipment, IndiAndes can verify the commercial counterparty, help keep the Spanish and English deal files aligned, coordinate a contract review in India, document payment milestones, and follow up with the importer locally.

If payment is already overdue, we can organize the file, contact the Indian counterparty, determine whether non-payment stems from a documented product dispute or delay, maintain the payment record, and coordinate with counsel in India. Formal notices, arbitration, litigation, and other recovery actions are scoped and quoted separately.

Sources

Next step

If you are preparing to sell on credit in India, or an Indian buyer already owes you money, discuss your case with IndiAndes. Bring the signed contract, invoices, shipment and delivery records, payment ledger, buyer details, and correspondence so we can identify the missing evidence and coordinate the next India-side action.

Insights contain general business information and do not constitute legal, tax, customs, regulatory or technical advice.