A Chinese supplier seeking payment in Iraq may hold invoices, delivery records and acceptance certificates while the customer alleges defects or deducts unrelated claims. The legal task is to establish what debt became due, what remains unpaid and whether the customer’s deductions have a valid basis.
Debt recovery in Iraq should begin with that analysis. A ledger balance is useful evidence of the supplier’s position, but it does not replace the contract or proof that its payment conditions were met.
Establish the Debtor and the Payment Obligation
The Iraqi Civil Code regulates contractual obligations, while the Evidence Law governs proof in civil and commercial proceedings. The claimant must identify the correct debtor and the legal basis for the amount demanded.
A parent, subsidiary and branch should not be treated as interchangeable merely because project correspondence uses a common name. The contract, purchase orders, invoices and payments should be reconciled to establish the entity that undertook the relevant obligation.
The payment analysis should then identify the due date, any agreed conditions and whether the amount includes disputed extras, retention or charges requiring separate proof.
Interpret Acceptance Certificates in Context
An acceptance certificate may establish delivery, technical approval or completion of a milestone. Its effect depends on the document and the agreement. The authority of the person signing it may also become relevant.
The supplier should distinguish:
- Physical receipt from contractual acceptance.
- Provisional acceptance from final discharge.
- Acceptance of quantity from acceptance of quality.
- Approval of work from approval of its claimed price.
Where the customer signed subject to reservations, those reservations should be assessed rather than omitted from the claim file. A complete record is more useful than an isolated certificate that leaves the surrounding dispute unexplained.
Reconcile Partial Payments and Credit Notes
A partial payment may support the existence of a commercial relationship, but its allocation must be established. It may relate to a different invoice, a specific delivery or a settlement of a disputed item.
The reconciliation should connect each payment to the relevant debt and identify any agreed deductions. Bank charges, tax retentions and commercial discounts should be recorded separately because their legal treatment may differ.
For example, a customer may have remitted part of the price and retained an amount pending tax clearance. That presents a different issue from an allegation that the supplied equipment was defective. The demand should address the actual reason for non-payment.
Examine Set-Off and Counterclaims
The Civil Code contains rules governing set-off, while the Civil Procedure Law addresses counterclaims in proceedings. A contractual deduction, a statutory set-off and a separate damages claim should be analysed according to their respective requirements.
A customer’s statement that it suffered losses does not by itself establish the amount or legal effect of the deduction. The supplier should request the contractual basis, supporting evidence and calculation, then assess whether the alleged claim can properly affect the receivable.
The assessment should also consider whether the opposing claims concern the same legal entities. A loss alleged by another group company should not automatically be treated as the customer’s own counterclaim.
Choose the Appropriate Recovery Route
The dispute clause, jurisdictional rules and nature of the documents influence the available route. Commercial court proceedings in Iraq should not be commenced without checking whether an effective arbitration agreement or another procedural requirement applies.
Demands and settlement discussions should preserve the distinction between undisputed debt and contested items. Any acknowledgement, payment plan or release must be reviewed for authority and legal effect before signature.
Etihad Law Firm’s litigation and dispute resolution practice can assess the receivable, the debtor’s defences and the evidential record, then advise on a legally appropriate demand, negotiated settlement or recovery proceeding.