Consultant, startup sent notice I owe them money for dishonest, unfinished work

Talk to the lawyer. The NDA may have an arbitrary clause but that would be for violations of the NDA its itself. Your work would be covered under an employment contract of some sort either a implicit contract which you say you don't have or an implied contract which would be the emails that you exchanged in which describe the work that you would do and the compensation that you would receive.

This is a typical labor dispute. They probably have no money or very little funds and so they're seeking to reclaim it from you. The moment they threatened to sue is the moment you should stop talking to them and refer them to a lawyer. Everything that this hinges on is the initial emails that you exchanged which described the work, the time frame and the compensation that you would receive.

This sounds like an awful experience, and it must be cause you a great deal of distress also. So you have my sympathies.

Unfortunately you don't have much (if any) leverage here (at least to get the money you feel you are owed). And without access to these private communications, I have no way of knowing if there were any protections or guarantees written into your contract (that consultants typically put into their contracts, precisely to defend themselves from situations like these).

The only advice I can give therefore is:

(1) Get a lawyer (who understands and ideally practices in the countries where you do business)

(2) Moving forward, it is absolutely crucial to get -some- form of a proper contract in place, even if it's just a few short paragraphs. It's true that email contracts have some validity (depending on jurisdiction) but there's no reason to leave this to guesswork. Hire a lawyer and find out what the standards are for the countries where you do business. And raise your consulting rates to cover this expense.

(3) Respectfully, consider partnering with someone (even if it's just a friend whom you compensate with beer and pizza) who speaks the languages of these countries -fluently- (and ideally natively) and can be relied on to help you straighten out communication gaps. Because that sounds like what's most likely what was at play here. I strongly doubt these people set out with any intent to screw you over in any way. Just at some point there was a misunderstanding, which led to other misunderstandings, which led to where you are now.

(4) You definitely will not get them to pay you any additional money. On the bright side, it will also be unlikely they will be able to sue you (given that the cost would probably be much more than what they feel you owe them).

That said, for the sake of your reputation, it would be good to at least -try- to settle this matter amicably (even if it means refunding part, or even all of what they say you owe them). To do that properly, you need to at least work in item (3) and if you can all afford it, item (1) of course as well.

Without any explicit IP transfer agreement, you likely own the code you produced (even if they paid you) and could use that as leverage to resolve the dispute. Nonpayment sometimes happens with freelance work -- it may not be worth the stress getting payment for the final invoice. Because they threatened to sue, for peace of mind you could also find a lawyer and ask them to send all future communication to the lawyer.

Not a lawyer here. It’s a mess. First thing is to stop communicating with them as you might involuntarily give them things to harm you.

Then we don’t know the money involved, but imo, no one is going to go through the pain of a lawsuit for less than 20k. Especially if they owe you some invoices they haven’t paid yet.

It seems to me that they won't have real leverage over you. Ignore everything they say, ingore any "serious looking" paperwork they might send you, stop talking to them.

If things escalate and they start actual legal actions, then consider getting a lawyer.