Doing business with foreign embassies could lead UK companies into a ‘Hundred Years War’ of legal wrangling, warns a specialist Debt Recovery company.

Leeds-based Steve Kuncewicz, of debt recovery experts Incasso, believes UK business face losing large sums of money as a result of diplomatic immunity rules.

“In an increasingly globalised marketplace, credit managers will become involved with more and more cross-border issues,” said Steve Kuncewicz. “That’s all well and good if you’re trying to extend your business into new territories, but it is a situation that poses a unique problem if things go wrong.

“If you’re dealing with a foreign company, there are several avenues you may pursue, but when dealing with a foreign government or its agents, the usual provisions of debt recovery may well be useless by a term which most people will have heard of, but of which few appreciate the true significance: diplomatic immunity.”

This means that if a UK firm has outstanding payments from a foreign embassy, the usual debt recovery proceedings do not apply as a result of the UK being a party to the Vienna Convention.

“This gives diplomatic immunity to all ‘diplomatic agents’ working for the embassy –anyone working in a ‘diplomatic’ as opposed to ‘commercial’ capacity,” explained Steve Kuncewicz. “In practice, this means that, while you may be able to sue someone who is promoting trade with a country, it will be much harder to serve proceedings on a member of the embassy worker or low-level diplomat, let alone an ambassador.”

Disputes with foreign governments involving large amounts of money can be pursued by issuing proceedings against the agent or mission in their home country. However, this will cost a great deal of time and money.

Steve Kuncewicz added: “While doing business with a foreign government may be prestigious and potentially lucrative, UK companies should be aware that a dispute through the courts may feel as if you’ve entered a “Hundred Years War” of mediation.