The Function and Role of Damages Experts

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In dispute resolution processes, such as arbitration, litigation, or mediation, experts are often instructed to provide an opinion on specific matters within their area of expertise. When one party, or several, seeks financial compensation for the damage sustained as a result of another party’s wrongful actions, damages experts are typically instructed to assess the losses.

In arbitration cases specifically, damages experts provide their evidence to the tribunal in the form of written reports and, depending on how the case proceeds, may be required to testify at a hearing. The International Bar Association Rules on the Taking of Evidence in International Arbitration (the IBA Rules) 2020 set out a number of guidelines relating to evidentiary issues in international arbitration. Although the IBA Rules are non-binding (unless explicitly agreed by the parties to a dispute or ordered by a tribunal), they are commonly followed by experts in the preparation of their submissions. The guidelines set out in the IBA Rules broadly revolve around three underlying principles that shape the role of a damages expert: competence, independence and transparency.

Damages expert process in arbitration

Tribunal-appointed versus party-appointed experts

In arbitration, damages experts may be appointed by either the parties to the case or by the tribunal itself.

A tribunal may directly appoint an expert to help it assess the financial consequences of the decisions it makes on key facts or assumptions relating to the matter at hand or to enable it to choose between the views of party-appointed experts.

More commonly, however, claimants and respondents each appoint their own damages expert, with the instructing parties referring to the experts’ reports in their written submissions.[2]

Regardless of whether an expert is appointed by the parties or by the tribunal, the overriding duty of the expert remains towards the tribunal, as opposed to the parties. Indeed, a recent judgment from the Court of Appeal of England and Wales did not uphold the finding that a fiduciary duty was owed by a testifying expert to the appointing party[3]

Involvement of damages experts throughout disputes process

Although the bulk of a damages expert’s work may occur during the expert report phase, experts are commonly involved to different extents throughout the entire dispute resolution process, preferably from the outset of a case, through to the hearings, and possibly after.

In processes where experts are appointed by the parties, the experts’ reports are typically submitted sequentially, giving experts the opportunity to consider and comment on each other’s submissions. In such a process, each expert will often have the opportunity to submit two (or more) reports; however, this may vary depending on the nature of the case, and how it proceeds, or unforeseen events. For example, in some cases where hearings were postponed because of the covid-19 pandemic, the damages experts were required to submit additional reports updating their opinions.

Alternatively, the experts may be required to submit their initial reports simultaneously, usually with a further opportunity for the experts to respond to each other’s reports.

The timeline below illustrates some of the duties that the experts may be required to perform under a sequential submission process.

Duties and obligations of damages experts


The IBA Rules provide that experts’ qualifications and relevant experience should be set out in their submissions.[4]

A damages expert should have the requisite expertise or qualifications to assess damages, which will often involve knowledge of finance, valuation, economics or accounting, among other things.

Prior experience in similar situations and sectors is often preferable, although not indispensable. Where an arbitration relates to a sector requiring specific technical knowledge, the instructing party’s counsel may seek to appoint a damages expert with prior experience of that particular sector, whether through previous expert assignments or time spent working in the industry.

In cases that require specialist knowledge beyond the damages expert’s expertise, counsel may instruct an industry or technical expert to assist the damages expert. We discuss the interaction between a damages expert and a technical expert in further detail later in the chapter.


The IBA Rules also state that experts should submit a statement of independence, alongside or including a statement regarding their relationship with the parties, their lawyers and the arbitral tribunal.[5] This requirement is enshrined in various other arbitration rules worldwide.[6]

The overriding duty of experts in arbitration is to assist the tribunal on matters within their specific area of expertise. Regardless of which party they may be instructed by, experts must remain independent, objective and impartial at all times. Any actions that undermine experts’ independence and impartiality would, by extension, undermine their credibility and the validity of their opinion.

When experts are appointed by one of the parties, there may be an element of inherent bias in the way the case is presented to the experts and in the nature of the evidence provided. Part of the experts’ role, therefore, is to maintain impartiality when considering the information provided, to overcome any such bias and to provide an objective opinion to the tribunal.

The Civil Justice Council’s Guidance for the Instruction of Experts in Civil Claims 2014 sets out a general rule for independence in UK litigation, requiring that ‘the expert would express the same opinion if given the same instructions by another party’, adding that ‘experts should not take it upon themselves to promote the point of view of the party instructing them’.[7]

Experts should objectively consider all available evidence and should seek to perform appropriate verifications against available data, including data obtained via the experts’ own research (which, when referred to in an expert report, should be disclosed). Experts should seek to assess evidence received from the instructing party as critically as they would data from the other party or an external source, and should seek additional clarification or explanations as necessary.

The sequential nature of the party-appointed expert process may cause asymmetries in information, particularly during the first stage of the arbitration process, when the claimant may not have access to relevant information from the respondent. In a multi-stage expert process, experts’ duties include outlining any additional information they would require to produce a more robust assessment of damages, or to respond more comprehensively to the arguments raised by the expert appointed by the other party.

If appropriate, experts may address the issue of incomplete or inconsistent evidence by reflecting an additional level of risk in their damages assessment (e.g., by applying a contingency or by increasing the discount rate).

Experts may be required to amend or update their opinion based on new evidence. This may be the case in a sequential report process when an expert becomes aware of new, relevant information, when another expert has identified discrepancies or errors in the analysis initially performed, or when experts themselves become aware of an error at a later stage following self-review. Experts should not be wary of making amendments to their opinions, as this is a natural outcome of an efficient expert process.


Experts should set out the basis for their assumptions, calculations and opinions as clearly as possible, so the analysis performed can be understood, questioned and possibly modified by recipients of their reports, including other experts. For example, experts should assist the reader in following their report by appending relevant models and calculations (in native format, where possible) and by comprehensively referencing the evidence and exhibits they have relied on in reaching their conclusions.

In addition, experts should clearly state in their reports which instructions they have received and relied on to reach their conclusions. Experts should only opine on issues within their expertise and, therefore, counsel may instruct experts to assume certain other factual or legal matters that are relevant for the purpose of their damages assessments. Any such instructions should be indicated in the experts’ reports, and tribunals have the option to subsequently request experts to consider matters under different instructions.

Experts should also set out in their reports which damages framework they are applying for the purposes of their assessments. Typically, an award of damages should seek to put the claimant back in the position it would have been in but for the alleged actions of the respondent. This requirement is enshrined, for example, in international law through the Permanent Court of International Justice’s decision on the Factory At Chorzów case,[8] which stipulated that damages should ‘wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed’.

As an alternative, experts may opt to apply other generally accepted frameworks or, if relevant, frameworks specific to a particular industry. For example, the International Valuation Standards set out a number of generally accepted standards and principles that provide an overarching framework for valuation-based assignments.

Experts should set out the limitations of their analysis; often, limitations may arise, inter alia, when experts are provided with incomplete or inconsistent evidence, when they are provided with particularly narrow instructions, or when their work is subject to time or resource constraints.

Evidence may be obtained by experts from a number of sources, including exhibits submitted by the parties to the case or, where appropriate, information obtained through the experts’ own independent research. Often, experts may be presented with different sources of evidence on the same topic, which may be contradictory. In such a case, they will be required to apply professional judgement to weigh different sources of information against each other, with a view to ultimately selecting the sources of evidence they believe will be the most useful in providing an independent, informed opinion to the tribunal.

Of course, the exercise of selecting the most reliable source of evidence may be subjective and may not always be clear-cut. Experts may seek to compare contradictory sources of evidence against other benchmarks to provide further assurance regarding the reliability (or not) of those sources.

If the nature of the evidence obtained, or any other circumstance, limits the usefulness of experts’ opinions or requires them to make certain simplifying assumptions, these should be identified in the experts’ reports.

Role of damages experts at each stage of arbitration process

Taking on an expert damages assignment

Counsel will often identify areas requiring input from a damages expert at an early stage of the legal process. Before being appointed formally, damages experts may be initially requested to provide a preliminary opinion on certain matters within their expertise, such as assisting counsel in identifying possible heads of claim or by preparing a preliminary ‘back of the envelope’ assessment of damages.

Counsel may subsequently decide to formally instruct a damages expert. If the process of selecting an expert is competitive, counsel may circulate a Request for Proposal to the potential experts detailing the background to the dispute and setting out the experts’ proposed instructions. Before preparing their proposal and accepting potential mandates, experts should ensure that they are free from conflicts of interest.

Following the selection of experts, counsel should communicate experts’ instructions in writing. If experts have any doubts as to the correct interpretation of these instructions, they should seek clarification at the earliest opportunity.

Experts should refrain from taking on an assignment if the proposed instructions would result in their independence being compromised. Experts should also avoid accepting instructions that would result in them providing a biased or misleading opinion to a tribunal, or that would result in a damages assessment that is inconsistent with fundamental financial or economic principles.

Expert damages reports

Structure of a damages report

Although different damages expert reports are likely to contain common elements, the structure may vary contingent on the instructions and evidence provided to the experts. It is often helpful for experts to draw the attention of tribunals to their key findings and conclusions in a summary section early in their reports, before setting out their detailed analysis.

Experts should bear in mind that there may be multiple users of their report, including the expert appointed by another party, parties’ counsel and the tribunal, all of whom have different responsibilities and varying levels of technical knowledge. Therefore, although reports should be written using formal written language, experts should consider using non-technical language to the extent possible and clearly set out the methodology used to reach their conclusions so that the reader can easily follow (or even re-perform) the analysis carried out, even if they are not an expert in the subject matter. Where appropriate, technical terms, abbreviations and acronyms should be defined (and explained) in the body of reports and referenced in a glossary.

Damages experts should seek to present their analysis in a ‘layered’ manner; experts’ reports should set out their opinions and conclusions clearly while also enabling the reader to dig further into the detail of the evidence used or the assumptions made. Experts should try to avoid making their reports too long or complex, as this may hinder a tribunal’s ability to understand the analysis performed or to identify the key messages. Experts may consider setting out more detailed aspects of their analysis in an appendix to their report, to enhance the reader’s understanding of the conclusions reached.

Making assumptions in an expert damages report

Damages experts are often required to produce assessments or valuations relating to a counterfactual situation in which a business or project was able to be operated unimpeded by the alleged breaches. Experts may be required, therefore, to make a number of assumptions as to the performance of the relevant business or project, for example, in relation to revenue growth, direct costs, operating costs and working capital or capital expenditure requirements. Experts may also need to make macroeconomic assumptions, or assumptions relating to the wider industry, or to legislative or regulatory matters.

Whether or not experts can use hindsight in making such assumptions (for example, in relation to economic growth or inflation in prices of raw materials) will depend on whether they are performing an ex ante (before the facts) or ex post (after the facts) damages assessment. When performing an ex ante assessment, experts put themselves in the parties’ shoes at the selected valuation date, typically around the date of breach, using only information available up to that date. Conversely, under an ex post assessment, experts use all information available up to the date of the assessment.[9]

Any assumptions used by experts should be clearly set out in their reports. Experts should seek to explain why they have made particular assumptions, by reference to documentary evidence, discussions with the instructing party or their own experience. Experts should try to avoid making superfluous or speculative assumptions, so as not to undermine the robustness of their analysis. If experts make simplifying assumptions for the sake of expediency (or in the absence of other information), this should be noted in their reports.

To test the reasonableness of their assessment, experts should seek to benchmark the assumptions they have made against other sources of data. This can be done individually (e.g., by comparing specific operational assumptions to industry average data) or more holistically (e.g., by comparing the valuation obtained using a specific set of assumptions with a valuation obtained applying an alternative set of assumptions). Experts may seek to compare the outcome of their damages assessment against the damages figure that would be obtained using a different valuation approach (for example, comparing the outcome using a discounted cash flow methodology to a transaction multiples approach).

Considering evidence from other experts

If required given the nature of the case, the instructing parties may instruct other experts alongside the damages expert to opine on specific issues. This may be the case in arbitrations pertaining to industries in which specific expertise is required, such as the mining industry.

Where appropriate, the damages expert may assist counsel in identifying matters within the other expert’s expertise, which may help with the preparation of a robust damages assessment (e.g., by opining on certain technical or operational assumptions that are beyond the damages expert’s knowledge).

Damages experts should critically evaluate the evidence put forward by other experts and consider the extent to which they are able rely on another expert’s assumptions, in the same way that they would evaluate any other source of information. If necessary, the damages expert may provide sensitivities to test the assumptions of other experts, or assess the impact of assessing damages under alternative assumptions.

Providing opinions in an expert damages report

Experts should set out their conclusions and opinions in a clear and succinct manner that can be understood by readers who may not be experts in the subject matter, in particular the members of the tribunal. Experts’ conclusions should follow on logically from the analysis and calculations they have documented in their report and should be supported by the evidence referred to and the assumptions made.

As a general rule, conclusions should be documented in such a way that another reader would be able to follow an expert’s analysis and arrive at the same conclusion. Where part of an expert’s opinion is based on experience of similar cases rather than specific documentary evidence, this should be made clear in the report.

Preparing a financial model to support an expert damages report

Often, experts will provide a damages model to support their analysis. A financial model, which is typically produced in a spreadsheet software program such as Microsoft Excel, will be underpinned by the assumptions made by an expert and, depending on the nature of the case, may be of differing levels of complexity.

Although there is no ‘one size fits all’ approach for developing a damages model, a number of considerations should be taken into account. Experts should take all measures possible to ensure the model is accurate and error-free; the more complex a model, the greater the risk of an erroneous formula that may undermine the entire damages calculation. To the extent possible, the model should be concise and logically structured, with inputs referenced back to the source data. Where required, experts may incorporate ‘switches’, to enable the user of the model (e.g., the expert appointed by the other party, counsel or the tribunal) to assess the quantitative effect of using different assumptions or running an alternative damages scenario.

If helpful, experts may wish to include instructions or signposting in the model itself to instruct a user as to its operation. In preparing a damages model, experts should continue to bear in mind their duty to assist the tribunal, as making a model excessively complex and difficult to follow will, inevitably, limit its usefulness.

Furthermore, damages experts may use a sensitivity analysis to show how modifying a particular assumption may affect the overall damages assessment. Examples of sensitivities that an expert could use include adjusting the annual growth rate, updating assumptions of variable costs per unit or changing the cost of capital.

Experts should aim to focus their sensitivity analysis on the inputs that drive their conclusions or to which the damages calculation is particularly sensitive. Providing a dynamic model that clearly illustrates the effect of key assumptions will assist the parties to the case in focusing on the topics that are most material to the case and, in turn, will avoid the damages experts (or the tribunal) dedicating a disproportionate amount of time to matters that are of limited importance from a quantum perspective.

In performing a sensitivity analysis, experts should consider that assumptions are often interrelated and that changing a single assumption in isolation may not always be logical from an economic perspective. In such a case, experts may wish to perform a sensitivity analysis by modifying several assumptions at once to reflect a particular situation or factual outcome, accompanied by an appropriate explanation of the scenario the updated assumptions represent.

When assumptions are particularly subjective or uncertain (or require further information to determine), experts may present their final damages figure as a range of possible outcomes. This may also be helpful, for example, when certain assumptions are dependent on the tribunal’s decision on certain factual matters that may affect the damages assessment (for example, if the tribunal were required to determine whether or not a particular revenue-generating activity fell within the scope of a contract). If a range of damages figures is provided, experts should attempt to explain the different outcomes by reference to differences in the underlying assumptions used.

Additional considerations for a rebuttal expert report

In a sequential report submission process, the respondent’s expert will typically have an opportunity to respond to the claimant’s expert’s report twice, whereas the claimant’s expert will have one opportunity to respond to the respondent’s expert’s comments on the former’s initial report.

In rebuttal reports, experts will often be instructed to perform their own damages assessment under the same instructions as the expert appointed by the other party. An expert could also be instructed to assess damages under different sets of instructions in the same case, to provide the tribunal with a range of possible outcomes. Alternatively, experts may be asked to comment on the analysis and opinions of the other expert, including highlighting any limitations of that analysis and points of agreement, without seeking to perform additional analysis to derive their own assessment of damages.

In any case, to provide an objective and impartial opinion on the subject matter, experts must be familiar with the arguments of both parties to a dispute. When responding to another expert’s report, experts should give due consideration to the other expert’s arguments and analysis, as well as the additional evidence submitted by an opposing party. Experts should seek to address any rebuttal or criticism from the other expert of the assumptions they made or conclusions they reached and, where appropriate, seek to propose alternatives.

To the extent possible, reports from opposing parties’ experts should seek to follow a similar structure, so that areas of agreement and disagreement are evident to the reader.

Joint-expert meetings and reports

Prior to commencement of the hearings, the experts appointed by both parties may be required to meet, to identify common ground and any remaining areas of contention.

The experts may be asked to formalise the outcome of this meeting through a joint statement of experts, setting out matters on which they agree and disagree. This statement usually benefits the tribunal by enabling the arbitrators to focus on the outstanding contentious issues during the hearings.


To ensure they are sufficiently prepared for the hearings, experts should make sure they are familiar with the relevant evidence submitted by the parties and the analysis performed by both experts during the preparation of their reports. This will enable an expert to identify areas of disagreement with another expert and to clearly articulate the underlying reasons to the tribunal.

During the hearing, damages experts are often subject to direct, and possibly redirect, examination from the instructing lawyers, cross-examination from the opposing counsel and questions from the tribunal.

Direct examination can take the form of questions from the instructing lawyers or a presentation that will have been prepared and typically submitted beforehand to the parties and the tribunal, with the aim of summarising an expert’s opinion and areas of agreements and disagreements with other experts.

Following this presentation, experts will typically be cross-examined by the opposing counsel on relevant areas of contention. It is essential during the cross-examination that experts remain conscious of their overriding duty to assist the tribunal; experts should remain independent and impartial at all times and seek to give clear answers to the questions put to them, to ensure they come across as credible. As with the drafting of an expert report, the responses given during cross-examination should be made with the target audience in mind (i.e., the tribunal), who may not be financial experts; the language used should be tailored accordingly, avoiding the use of jargon to the extent possible.

Experts may be subject to redirect examination, where the instructing lawyers ask them additional questions to clarify certain matters raised previously. Redirect examination can be a way for the instructing lawyers to take experts to additional evidence that they were not shown in their cross-examination.

Typically, time is allocated during the hearings for the tribunal to directly address questions to experts, to clarify certain points that may have arisen during cross-examination. Experts appointed by each party may be required to answer questions from the tribunal concurrently, in a process known as ‘expert conferencing’ or ‘hot-tubbing’. This process can be used by the tribunal to encourage the experts to find common ground, or to get to the bottom of the reasons for certain disagreements.

After the hearings, experts may be asked to provide further comments on quantum for the purpose of the post-hearing brief, which is used by the parties to highlight and address key issues that have arisen during the hearing process. In some cases, experts may be asked by the tribunal to assist with specific further issues to enable the tribunal to render the award; for example, to agree on the appropriate calculation of pre-award interest.


Much of the role of a damages expert is enshrined, either directly or indirectly, in existing arbitration rules and industry-standard guidance.

Even where this is not the case, damages experts should seek to apply best practice to satisfy their overriding duty to assist the tribunal by opining on matters within their specific area of expertise. In particular, experts should remain independent and objective at all stages of their involvement in the arbitration process, critically assessing the evidence provided to reach a transparent and well-reasoned opinion based on a supportable set of assumptions.


[1] Anthony Theau-Laurent is a partner, Edmond Richards is a director and Louis Osman is a manager at Accuracy.

[2] Alternatively, on occasion, an expert may be appointed jointly by both parties to an arbitration.

[3]Secretariat Consulting Pte Ltd v. A Company [2021] EWCA Civ 6 (11 January 2021).

[4] International Bar Association Rules on the Taking of Evidence in International Arbitration, 2020, Article 5(2)(a).

[5] ibid., Article 5(2), Paragraphs (a) and (c).

[6] For example, Article 29 of the UNCITRAL Arbitration Rules (2021) stipulates: ‘The expert shall, in principle before accepting appointment, submit to the arbitral tribunal and to the parties a description of his or her qualifications and a statement of his or her impartiality and independence.’

[8]Factory At Chorzów, Germany v. Poland, Judgment, Claim for Indemnity, Merits, Judgment No. 13, (1928) PCIJ Series A No. 17.

[9] Experts may also use a hybrid approach, with a valuation date at the date of breach but making use of hindsight to reduce uncertainty in relation to selected inputs, such as commodity prices or inflation. Although such an approach is not a true valuation per se, it can help the expert isolate the impact of the alleged breaches.

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