How Proper Compensation Claims Structuring Saves Millions
A business that documented performance as it went has a compensation claim; one that did not has a grievance.
Claimants who expect an award reflecting how badly they were treated are disappointed; defendants who assume a headline figure sticks overpay. Onshore, compensation is measured by the loss the claimant can prove, with no punitive element. What belongs in the package that goes to the court-appointed expert, and the early decisions — right defendant, caps, time bars — that set the number.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
The money saved on a compensation claim in the UAE is usually saved by understanding one thing early: what the law will actually compensate. Claimants who arrive expecting an award that reflects how badly they were treated tend to be disappointed, and defendants who assume a headline figure will stick tend to overpay in settlement. Onshore, compensation is measured by the loss the claimant can prove. There is no punitive element, and no uplift for bad behaviour.
Related: We handle property damage and maintenance claims alongside wider compensation work.
What is recoverable, and what is not
Damages under the UAE civil law framework cover the harm actually suffered and profit actually lost, where that loss follows naturally from the breach or the wrongful act. Three consequences follow, and each of them changes how a claim should be put together.
First, speculative loss is difficult. A projected revenue line for a business that had not yet started trading is unlikely to be accepted. Loss that can be tied to signed contracts, cancelled orders or documented margin has a much better prospect.
Second, the claimant must show causation, and the court is not generous about remote consequences. Reputational harm, loss of opportunity and management time are commonly pleaded and rarely recovered in full.
Third, an agreed damages figure in the contract is not automatically the amount awarded. Where a party asks the court to enforce a liquidated damages or penalty clause, the court may adjust the figure to reflect the loss genuinely suffered. Writing an ambitious number into a contract is therefore not a substitute for being able to prove the loss when the time comes.
Related: Our team is often instructed alongside the best lawyers in dubai on multi-party claims.
The court-appointed expert decides most quantum disputes
Quantum onshore is usually settled by a specialist the court chooses rather than by either side's advocate. Once the loss turns on figures, whether repair costs, lost margin or the value of an asset, the contest moves into the sessions that specialist holds, and the number that comes out of them is very often the number in the judgment.
The practical implications are concrete. The submission to the expert should be a complete, self-contained package: the contract, the variations, the correspondence, the invoices, the payment record, the photographs, the repair quotations, and a clear arithmetic bridge from the raw documents to the figure claimed. Anything the expert cannot verify from the file tends to disappear from the report, and a figure that is not in the report is difficult to recover later. Parties who treat the expert stage as an administrative step, and save their real effort for submissions on the report, usually find they are arguing against a number that has already hardened.
Related: See our fund recovery and compensation claims service.
Evidence, in the form the court will accept
The file supporting the figure has to reach the expert and the judge in Arabic, prepared by a legally accredited translator. Numbers survive that journey; the words around them do not always. A term rendered loosely can move the basis on which the loss is calculated, so the pricing, valuation and measurement clauses deserve as much attention in translation as the arithmetic built on top of them.
The wider point is that compensation claims are won on records created long before the dispute. Site instructions issued in writing, defects notified when they were discovered, invoices matched to deliveries, and a contemporaneous file that has not been assembled retrospectively. A business that documents properly during performance has a claim; one that does not has a grievance.
Related: Read more about our compensation claims practice.
Where the claim is heard changes how it is proved
If the contract points to the DIFC or ADGM courts, the assessment of damages follows common-law principles and the procedure is different in ways that matter to quantum. There is disclosure of documents, witnesses give evidence and are cross-examined, and each side may instruct its own expert whose report is tested in the hearing rather than filtered through a single court appointee. That produces a more forensic contest over the numbers, and it costs more to run.
Arbitration is the third route, governed onshore by Federal Law No. 6 of 2018, as amended in 2023. For a claimant whose defendant keeps its money abroad, that choice bears directly on whether the compensation is ever collected, because an award reaches foreign assets more readily than a judgment does. Before relying on the clause, check that the body it names is still standing. The DIFC-LCIA no longer exists: Dubai Decree No. 34 of 2021 abolished it, the Dubai International Arbitration Centre took over its cases, and the DIFC can still be chosen as a seat. Arbitrations that once went to the Abu Dhabi centre now go to arbitrateAD, which replaced it from 2024. Finding out mid-claim that the named institution has gone costs time the recovery can rarely spare.
The commercial decisions that determine the number
Structuring a claim well is mostly a matter of a few decisions taken early.
- Identify the right defendant. The entity that signed, the entity that performed and the entity holding the money are frequently three different companies. Work out which of them can actually pay before quantifying anything against it, because a perfectly proved figure against an empty company is worth nothing.
- Check the contract for limits. Exclusion clauses, caps on liability, notification requirements and time bars often reduce a claim before it is filed. Read them before quantifying, not after.
- Do not wait. Claims are lost to limitation periods and to contractual notice deadlines more often than they are lost on the merits. Establish the applicable period at the outset.
- Quantify honestly. An inflated head of loss invites the expert to discount the whole schedule. A conservative, fully evidenced figure usually recovers more than an ambitious one.
- Weigh the recovery against the route. A forensic contest over the numbers in a common-law court can cost more than the difference it wins, while a claim decided largely on one court-appointed expert's report is cheaper but leaves far less control over the figure. Make that comparison before filing, not after the first report has landed.
Related: We work with clients and other law firms in dubai on complex recoveries, and our compensation claims guidance sets out the process.
Related Services: Explore our Compensation Claims and fund recovery services for practical legal support in this area.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
