The Use of Expert Witnesses in Financial Disputes in the UAE

Judges aren’t expected to have specialized competence in every technical field a case might touch, which is exactly why courts turn to expert witnesses for complex financial disputes. In forensic accounting specifically, expert witnesses are most valuable where quantum, how much is actually owed, is the hardest part of the case to determine. A significant business dispute involving a loss-of-profit claim, say, a machine that failed to perform at the level the contract specified, requires calculating the profit that would have resulted had the contract been properly performed, a calculation that’s rarely as simple as it sounds.

This guide covers how expert advice helps in financial disputes, the legal basis for court-appointed experts in the UAE, common methods used to quantify financial losses, and why expert independence matters so much in this specific area.

How Is Expert Advice Helpful in Financial Disputes?

Fraud cases involving the collapse of financial institutions illustrate why expert input matters, these schemes are often difficult to interpret and can be nearly impossible to distinguish from legitimate investments without genuine technical expertise. In a civil case, identifying and understanding sufficient evidence to meet even the lighter civil standard of proof can be genuinely challenging. Expert witnesses help ensure evidence is interpreted correctly in these situations. They’re particularly valuable in disputes requiring complex calculations, offering critical evaluation of the facts and assumptions underlying a loss calculation, rather than simply crunching numbers handed to them. An expert who behaves as a mere calculator, accepting the information provided without questioning it, is genuinely vulnerable to criticism from the court.

Also check: Banking & Finance Expert Reports

Can the Expert Appointment Application Strengthen the Claimant’s Position?

UAE courts often use experts to prepare reports under Article 69 of the UAE Federal Evidence Law. This technique is commonly applied even when the need for genuine expertise isn’t immediately obvious, often because one party lacks sufficient documentation to support their claim, in the absence of a discovery procedure comparable to common-law jurisdictions. Generally, the court appoints an expert either on its own initiative or at a party’s request, once submissions have concluded.

Common Methods Used to Quantify Financial Losses

Financial expert witnesses generally rely on a small set of established methodologies, chosen based on the nature of the dispute and the data actually available:

• The but-for method. Estimates what the claimant’s financial position would have been “but for” the breach or wrongful act, comparing it against their actual position to determine the loss.
• The comparable period or comparable business method. Uses historical performance from a period unaffected by the dispute, or performance from a genuinely comparable business, as a benchmark for what should have happened.
• The net worth or asset-based method. More common in fraud or misappropriation disputes, tracing the increase in a party’s assets against declared income to identify unexplained gaps.

Choosing the right method, and being able to defend why it was chosen over the alternatives, is often as important to the court’s assessment as the resulting figure itself.

Must check: Court Expert Witness

Worked Example: Calculating a Loss of Profit Claim

A manufacturing business’s production line depends on a machine contractually guaranteed to run at 95% uptime, but the machine actually achieves only 80% uptime due to a defect. Using the comparable period method, the expert reviews the business’s production and revenue figures from a prior period when a properly functioning predecessor machine was in use, establishing that at 95% uptime, the business would typically generate AED 12,000,000 in annual revenue from that production line. At the actual 80% uptime achieved, revenue for the disputed period came to AED 9,600,000. Applying the business’s established profit margin for that product line, roughly 20%, to the AED 2,400,000 revenue shortfall gives an estimated loss of profit of AED 480,000. The expert’s report would need to explain not just this calculation, but why the comparable prior period is a fair benchmark, and address any other factors, such as market demand changes, that could have affected revenue independent of the machine’s performance.

Role of Expert Witnesses in Financial Disputes

Civil processes in the UAE are based on the parties’ written pleadings, substantiated by documented evidence, generally without an oral hearing. Federal and Dubai courts frequently refer cases to court-appointed experts for factual determinations across finance, accounting, banking, and other technical disciplines.

Expert reports aren’t legally binding and can be disputed by the parties, but courts often treat them as compelling. Where a court declines to follow an expert report, the judge is expected to give precise reasons for that decision. In a civil action, oral evidence can only be used to prove a fact with the court’s approval, and the ability to cross-examine witnesses is significantly limited compared to common-law proceedings.

Why Expert Independence Matters More in Financial Disputes

Financial disputes carry a specific independence risk that other technical fields don’t face in quite the same way: the underlying data and assumptions used in a loss calculation often come, at least initially, from the instructing party itself. An expert who accepts a party’s revenue projections, cost assumptions, or characterization of events without independently testing them isn’t functioning as an expert witness in any meaningful sense, they’re functioning as an advocate with a technical vocabulary, and courts are generally quick to recognize the difference. This is precisely why the methodology section of a financial expert’s report, showing the reasoning and testing behind each assumption, carries as much weight as the final number itself.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. is a registered Auditors in UAE firm providing court-appointed expert witness services in financial, accounting, and banking disputes across all levels of the UAE judiciary.

Contact Farahat & Co. today to discuss your financial dispute expert witness requirements.