Department for Business, Innovation and Skills
On 29 June Greece announced it was introducing capital controls on the movement of currency. Controls have been relaxed and the limits to the amount of funding that can be withdrawn from banks in Greece and sent abroad has been increased, however the controls will likely remain in place for some time. If you trade with Greece, or you rely on suppliers there, you may still find that you are directly affected by the situation. The way your company is affected will depend on:
- the business that you do
- the contracts you have
- whether your bank has been affected
As a result of the temporary capital controls introduced by Greece, it is possible that you may experience delays in receiving payments originating from Greece. Greek companies may experience problems making payments and deliveries. The main impacts you may experience relate to contracts and the transfer of money (cash flow). Where countries have experienced disruption in the past, companies have experienced:
- delays on payments and deliveries
- impacts on demand due to ongoing economic uncertainty
Contracts
Contracts are a significant issue as Greek businesses may not be able to meet payment deadlines on the days specified.
If you are worried that companies which you supply to may be affected by the situation, you should speak to them directly to find out more (for example whether they are experiencing a temporary delay to making a payment or any other issue that may affect your contract).
Check your contracts
Contact the businesses you trade with to make sure that they can still carry out the practical arrangements required by your contract with them.
What happens to payments will depend on the terms of the contract between you and the other party. Make sure you understand what terms your contract specifies for payments. You may need to seek legal advice to do this.
Make sure you understand the obligations of any contracts you have in place with businesses in Greece, and whether these are written or verbal-seeking advice from your trade association, legal and financial experts as appropriate. If you do negotiate a change to an existing contract ensure all changes are agreed in writing.
If you do not have a written contract, you may want to consider if you have an oral contract. Under English and Welsh law, an oral contract is formed:
- where an offer was made (for example, to supply goods)
- this offer was accepted by the other party
- something was promised in exchange for the offer (for example, payment) and
- both parties intended their agreement to be legally enforceable (for example, it was not a casual arrangement between family members but a business transaction)
If you have concerns, seek advice from your trade association, or legal and financial experts.
Legal advice
If you need a legal adviser with expertise in trading with Greece, Business Support Helpline advisers hold lists of:
- Greek commercial lawyers who correspond in English
- British law firms that operate in Greece
Contact the Business Support Helpline.
Several private law firms have made public advice available for free on their websites.
It is likely there will be a period of legal uncertainty whilst businesses process the changes brought about by Greece introducing capital controls. This uncertainty is likely to last for at least a few days/weeks.
Trading in Greece
If your business trades in Greece your first step should be to find out whether customers can still pay you when expected and also whether suppliers can still provide goods and services as expected.
You may want to review any written contract you have. If your contract is not in writing, but was formed as a result of an oral agreement, you should consider what was agreed. You may have notes or emails relating to this.
If you are concerned that you will be affected, you should speak to your legal adviser.
Working with suppliers
If one of the companies in your supply chain is in Greece you should check with your supplier whether they can still supply the goods/services. If they cannot supply, you should talk to your trade association about alternatives and seek legal advice where appropriate.
If your supplier wont deliver goods you have paid for, you should speak to them directly to find out more (for example, whether they are experiencing a temporary delay to payment systems, or something more severe).
Dealing with contract issues
If a party fails to make payments or provide goods or services due under your contract, you may wish to consider taking legal action. We recommend you seek independent legal advice before starting any legal action. Talking to the other party to your contract may be a helpful first step.
As an alternative to legal action before the courts, you may wish to consider whether you can re-negotiate the contract or whether mediation may help. Your contract may contain a term which requires you to undertake mediation or arbitration. Even if you are successful, you may not recover all of your legal costs. This is because courts do not always allow a party to recover all of their legal costs. Before incurring costs and starting any legal action you may wish to perform a credit check on the party in breach, to find out whether they have enough funds to pay any damages / fulfil their contractual obligations.
You may wish to bear in mind that legal proceedings take time as the courts have to consider the position of both parties in relation to the law and the facts of the case.
Where to take legal action
Business Support Helpline advisers hold lists of:
- Greek commercial lawyers who correspond in English
- British law firms that operate in Greece
Trading with Greece in the future
If you are in the process of finalising a business deal with a Greek firm and have concerns you should consult your trade association, or legal and financial experts for advice. You should make sure all legal and financial issues are addressed before finalising any contract.
In some cases it may be possible to secure export finance support (including insurance). Find details of support available online or contact UK Export Finance (UKEF) on 020 7271 8010.
Greece has introduced capital controls but it remains a full member of the European Union (with the right to trade freely between member states). There may be temporary disruption (e.g. due to the operation of capital controls you may wish to discuss with your counterparties whether this will affect you.
Transfer of money (cash flow)
Greece has imposed temporary capital controls to prevent the outflow of large amounts of currency from the country. Capital controls are measures designed to limit the flow of money/capital/funds in and out of a country. As the Greek authorities have outlined, these will be temporary in order to protect the Greek financial system and economy.
The controls limit the volume of transfer of funds out of Greece. They also place strict limits on cash withdrawals in Greece. The introduction of these controls could cause general delay and disruption to the Greek financial system. This could affect payments from Greece, including by credit and debit card.
The implementation of controls in Greece might cause some disruption to the regular operation of these branches. The government is monitoring the situation closely and will update its advice if the situation changes.
Finance-related support
You may need to seek support, for example, by asking your bank to extend credit facilities to cover temporary interruptions to cash flow. The earlier you can discuss this with them the better as some forms of support may take some time to arrange.
Find out what to do if you think you may have difficulty meeting tax payments and get advice on debt management.
Business Debtline offer free impartial advice on cash flow and debt. You can call them on 0800 197 6026.
The Business Support Helpline can also help if you have any questions, issues or concerns about how the situation may affect your business or your plans to start a new business.
If you cant get your money out of Greece then depending on the circumstances preventing the release of the money, you may want to discuss the situation and your options with your:
- counterparties
- business association
- legal advisor
- bank
The Greek authorities have established a Banking Transactions Approval Committee to approve transactions leaving Greece. As of 24 July, transfers over 100,000 will need to be approved by the committee.
Frozen payments
The introduction by Greek authoriti