Cross-Border Escrow

Cross-Border Escrow is an arrangement used to hold funds securely where a transaction or project involves parties in more than one jurisdiction.

Instead of money moving directly between international counterparties, funds are paid into an independent UK-based escrow account. The funds are held there and released only when the agreed conditions are met.

Cross-Border Escrow is particularly suited to transactions with a tangible UK nexus, including transactions in pounds sterling, assets or businesses located in the UK, or at least one UK-based party.

Cross-Border Escrow is suitable for buyers, sellers, funders, investors, developers and project sponsors involved in international transactions that touch the UK.

It is commonly used where one party is overseas and the other is UK-based, where enforcement risk is a concern, or where neutral handling of funds in a stable jurisdiction is important.

Advisors often recommend UK-anchored escrow where counterparties operate under different legal systems and want a clear, rules-based payment mechanism.

Cross-Border Escrow is typically used where payment and performance occur across jurisdictions.

Examples include international M&A involving a UK target, cross-border asset purchases denominated in sterling, infrastructure or remediation projects involving UK land, or international supply arrangements tied to UK contracts.

It is also used where parties want funds held in a recognised and stable legal environment while completion steps are possibly carried out elsewhere.

Escrow involves holding real money, independently and in advance, so that payment does not depend on a future claim being accepted.

Bonds and insurance rely on a third party promising to pay later, subject to conditions, exclusions and their own financial capacity at the time of claim.

International transactions create additional risk around payment timing, currency, enforcement and jurisdiction.

Parties may be unfamiliar with each other’s legal systems or concerned about recoverability if a counterparty fails to perform. Paying funds directly across borders can increase exposure and reduce leverage.

Cross-Border Escrow addresses these challenges by placing funds in a neutral UK-based legal trust structure, reducing reliance on social trust and improving legal certainty around release conditions.

The primary benefit is jurisdictional stability combined with neutrality.

Funds are held under a clear UK legal framework and released only when agreed conditions are satisfied. This provides reassurance to both UK and international parties.

Escrow also reduces execution risk by separating payment mechanics from cross-border contractual performance.

Benefits for UK-based parties

For UK-based parties, Cross-Border Escrow ensures that funds linked to UK assets, businesses or projects are held within a familiar and predictable legal environment.

It reduces exposure to foreign enforcement processes and provides clarity over how and when funds will be released.

Benefits for overseas counterparties

For overseas parties, Cross-Border Escrow offers a recognised and neutral jurisdiction for holding funds.

It avoids paying directly into another party’s domestic account and can simplify transaction structuring where multiple legal systems are involved.

Benefits for advisors and stakeholders

For legal, financial and project advisors, Cross-Border Escrow provides a structured and auditable mechanism that can sit alongside international documentation.

It simplifies completion mechanics, reduces post-completion disputes and provides a defensible payment structure in complex cross-border settings.

Cross-Border Escrow can support a wide range of transactions with a UK nexus.

This includes M&A escrow linked to a UK company, asset purchase escrow involving UK property or equipment, project escrow for UK infrastructure works, and security escrows tied to UK legal obligations.

Funds may be held in sterling or other agreed currencies, subject to the structure of the transaction.

Yes. Cross-Border Escrow arrangements are almost always tailored to reflect the jurisdictions involved and the transaction structure.

Release conditions can be linked to foreign completion steps, international certifications or joint instructions from parties in different countries.

Cross-Border Escrow can also be combined with TPMA structures where some funds are held while others are paid out in stages.

All escrow arrangements are administered through the dospay digital escrow portal.

The portal provides a single place where authorised parties can view account balances, payment history and escrow status. It also supports the submission and tracking of information required for payments or releases, in line with the escrow agreement.

Using a digital portal reduces reliance on email chains and manual reconciliation. It improves transparency and creates a clear audit trail for payments and releases. Advisors often find this helpful when reviewing payment history or responding to queries during the life of the project.

In practice, Cross-Border Escrow works like any other escrow, but with international counterparties.

Funds are paid into a UK-based escrow account. The funds remain held while cross-border conditions are satisfied.

Once the agreed perforamnce evidence is provided, funds are released in accordance with the escrow agreement.

Cross-Border Escrow does not replace the underlying contract, share purchase agreement, development agreement or supply contract.

The transaction documents continue to govern the parties’ rights and obligations. The escrow agreement governs only how funds are held and when they are released.

The escrow agent does not interpret foreign law or adjudicate disputes. It holds and releases funds strictly in line with the agreed escrow terms, within a UK legal framework.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed at the outset and documented clearly.

Instructions are usually tied to specific events, such as the issue of a certificate, confirmation of a milestone or the occurrence of a payment default. The escrow agent checks that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

Only parties authorised under the escrow agreement may give instructions.

Instructions must match the agreed release conditions.

Unilateral or informal requests are not accepted.

• Funds deposited.
• Conditions satisfied.
• Funds released.

The international dimension does not change the discipline of escrow.

We confirm the UK nexus, the transaction structure and the agreed release conditions.

An escrow agreement is prepared reflecting the cross-border elements.

Onboarding is completed for all relevant parties before funds are paid in.

Timing depends on onboarding and transaction complexity.

Where parties are based in multiple jurisdictions, additional verification steps may be required.

Early coordination helps avoid delay.

To open a Cross-Border Escrow account, standard onboarding checks are required. These are similar to the checks required when opening a bank account or instructing a professional services firm.

This usually includes confirming the identity of authorised individuals, the ownership and control of any corporate parties, and the source of the funds to be paid into escrow.

We also need a clear summary of the underlying transaction, the agreed release conditions and the currency in which funds will be held or paid.

The following information is typically required:

• Full details of all parties to the transaction
• Identification information for authorised signatories
• Corporate documents showing ownership and control, where applicable
• Source of funds information for the escrowed amount
• Summary of the transaction and key release conditions
• Agreed currency and payment routing details
• Expected completion or milestone timetable

Providing this information clearly and early helps ensure the account can be opened without unnecessary delay.

An international escrow is funded by the party responsible for paying under the underlying transaction.

Funds are transferred into the UK-based escrow account in accordance with the agreed timetable and currency structure. This may involve domestic or international transfers, depending on where the paying party is located.

Once received, funds are ring-fenced and held strictly for the purpose set out in the escrow agreement.

Releases are managed strictly in line with the escrow agreement and the underlying transaction documents.

The agreement specifies what evidence is required and who is authorised to give instructions. This may include joint instructions from parties in different jurisdictions or confirmation that specific completion steps have been satisfied.

If the agreed conditions are met and valid instructions are received, funds are released promptly. If instructions are incomplete, unclear or disputed, funds remain held until the agreed process is followed.

If instructions are disputed or unclear, we will not release the funds.

Instead, the funds remain held safely in the escrow account while the parties follow the process set out in the escrow agreement. This may involve clarification, confirmation from an agreed third party, or the use of the dispute resolution process under the underlying contract.

This approach protects both parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

If a party to the underyling contract becomes insolvent, we continue to operate under the escrow agreement.

Because the funds are held in escrow and not in the control of either party, they are protected from being used for other purposes. We will follow the agreed instructions and any applicable insolvency process, as set out in the escrow agreement.

In practice, this can provide greater certainty than relying on funds held directly by one of the parties, particularly where payment timing or entitlement is being considered as part of an insolvency situation.

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What happens if DOS & Co. becomes insolvent?

All escrow funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve working with the parties to agree the identity of a new escrow agent who will 'step in' to carry out our obligations under the escrow agreement.