The Strategic Guide to Compensation Claims in the UAE

Compensation claims in the UAE rarely fail because the claimant was wrong about the harm. They fail on quantum and causation. The claimant establishes that something went wrong, and then cannot show, to the standard the forum applies, what the loss actually was and that the defendant caused it. Almost every practical decision in a claim — where it is brought, what is filed, what evidence is assembled and when — comes back to closing that gap.

Related: Our property damage and maintenance claims practice handles the building-related end of this work.

Three forums, three ways of measuring loss

A claim in the UAE will normally be heard in one of three places, and they do not work alike.

The onshore courts apply the federal civil law. Loss must be proven rather than asserted, and a figure advanced without a supporting basis tends to be reduced to what the file will carry. Pleadings and evidence are exchanged in writing, in Arabic, and the process is document-driven from the outset.

The DIFC and ADGM courts are common law courts with their own judges and rules, working in English. Disclosure, witness statements and cross-examination all feature in a way they do not onshore, which changes both the cost of a claim and the kind of case that can realistically be run in it.

What matters commercially is that this choice is usually made long before the loss occurs, in the jurisdiction clause of a contract signed years earlier and often without much thought. By the time a claim arises the forum is generally fixed. Reviewing dispute clauses across a contract portfolio is a far cheaper exercise than arguing about jurisdiction after the event.

Related: See our work on compensation and fund recovery claims across these forums.

The expert report usually decides the number

In onshore proceedings the court will frequently appoint an expert to examine the accounts, the works, or the technical question at the centre of the dispute. The report that expert produces carries real weight, and the practical consequence is that the case is often effectively decided at the expert stage rather than at the hearing.

That has a direct bearing on how a claim is run. Submissions to the expert, and objections to the expert’s method and conclusions, need to be made properly and on the record at the time they arise. A party that treats the expert stage as an administrative formality and saves its arguments for later has usually lost the argument already.

In the DIFC and ADGM courts the model is different. Experts are typically instructed by the parties, their evidence is tested in cross-examination, and the tribunal chooses between competing methods of calculating loss. That gives a claimant more control over how its loss is presented, and gives a defendant more room to attack it.

What has to exist before the loss, not after it

Quantification is an evidential exercise, and the evidence is almost always created before anyone contemplates a claim. The recurring weaknesses look like this.

• Loss recorded nowhere. Downtime, remedial work, replacement hire and diverted management time are real costs, but if nothing recorded them as they were incurred they have to be reconstructed later, and reconstructed figures are the easiest thing in a claim to attack.
• Notice not given. Many contracts require a defect, delay or breach to be notified within a defined window. Failing to serve that notice can limit or extinguish a claim regardless of its merits.
• No evidence of mitigation. A claimant is expected to have limited its loss where it reasonably could. Where the file shows nothing was done, the defendant will say the loss was avoidable.
• A missing link in the causal chain. Consequential loss and lost profit are the heads of claim most often cut down, because the connection between the breach and the lost revenue is asserted rather than traced.

None of this is difficult. It is a matter of the business recording, at the time, what a claim will later need to prove.

Collecting the money

A judgment or an award is not the end of the exercise. Enforcement is a separate process with its own requirements, and it is worth thinking about before a claim is filed rather than after judgment.

Where the defendant’s assets are onshore, an onshore judgment is the most direct route to them. Where the counterparty or its assets are outside the UAE, an arbitration award is often easier to enforce abroad than a court judgment, because awards travel under the New York Convention while judgments depend largely on bilateral arrangements and the receiving court’s own rules. Where a claim is brought in the DIFC or ADGM courts and the assets sit onshore, the judgment has to be taken through the recognised route between those courts and the onshore system, which is procedural rather than difficult but takes time.

Underneath all of it is a commercial question: is there anything to collect? A well-argued claim against a company with no assets is an expensive way of being right.

Deciding whether the claim is worth bringing

Three questions settle it. Can the loss be evidenced from records that already exist? Is the forum the contract selects one in which that evidence can be presented effectively? And is the defendant good for the money? Where the answers are yes, the claim is generally worth running. Where one of them is no, the sensible move is usually to negotiate from a realistic view of the position rather than litigate towards a poor one.

Related: Talk to our disputes team in Dubai before filing rather than after.

Related Services: Explore our Compensation Claims and Fund Recovery Compensation Claims 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

Additional Resources

• Resolving Compensation Claims Disputes Effectively
• Common Compensation Claims Mistakes to Avoid in Dubai
• How Proper Compensation Claims Structuring Saves Millions
• Medical Malpractice Claims in UAE: Your Legal Rights