Civil Law and UAE: Loss of Profit Claims

1. Introduction

A loss of profit claim arises when a party alleges that another person's breach of contract or wrongful act prevented it from earning profits that it would otherwise have obtained.

Examples include:

• a contractor's delay preventing a business from opening;
• wrongful termination of a supply agreement;
• failure to deliver goods;
• destruction of business property;
• interruption of a commercial operation;
• breach of a financing agreement;
• wrongful interference with an investment opportunity;
• failure to complete a project on time.

Under the current UAE Civil Transactions Law, Federal Decree-Law No. 25 of 2025, compensation is assessed by reference to the loss suffered and loss of profit, provided that the lost profit is a natural consequence of the harmful act. Article 255 expressly recognizes loss of profit as a compensable category.

However, loss of profit is not automatically recoverable merely because a claimant puts a figure on it. The claimant must establish the legal basis, causation and sufficiently reliable evidence of the profit allegedly lost.

2. Meaning of Loss of Profit

Loss of profit means the financial benefit that the claimant says it would have obtained but for the defendant's:

• breach;
• wrongful act;
• non-performance;
• delay; or
• other legally actionable conduct.

Simple example

A restaurant is supposed to open on 1 January.

A contractor's wrongful delay prevents opening until 1 April.

The restaurant claims:

• expected January profit;
• expected February profit;
• expected March profit.

The legal question is not simply:

“Would the restaurant have made money?”

The court must consider:

1. Was the contractor legally responsible for the delay?
2. Would the restaurant actually have opened on 1 January?
3. Would customers have generated the alleged revenue?
4. What expenses would have been incurred?
5. Was the projected profit reasonably certain?
6. Did other circumstances contribute to the loss?
7. Did the claimant take reasonable steps to mitigate the loss?

3. Current UAE Legal Foundation

Article 255 — Loss and Lost Profit

The current Civil Transactions Law provides:

compensation is assessed according to the loss suffered and the loss of profit, provided that this is a natural consequence of the harmful act.

This creates two important requirements:

1. Loss of profit must actually be connected to the wrongful conduct.

2. The profit must represent a natural consequence of that conduct.

Thus, Article 255 does not create an automatic entitlement to speculative future earnings.

4. Loss of Profit Is Different From Revenue

This distinction is extremely important.

Suppose a claimant says:

“Because of the breach, I lost AED 5 million in sales.”

That does not necessarily mean:

“I lost AED 5 million in profit.”

The claimant would normally need to account for expenses such as:

• raw materials;
• employee salaries;
• rent;
• utilities;
• transportation;
• taxes or applicable charges;
• financing expenses;
• commissions;
• other variable costs.

Therefore:

Lost revenue ≠ lost profit.

The court should generally determine the net economic benefit that would have been obtained rather than simply awarding the projected turnover.

5. Natural Consequence

The statutory requirement that the lost profit be a natural consequence is fundamental.

Consider:

Defendant's breach → factory closes → production stops → sales decline → profit is lost.

The chain may be relatively straightforward.

But consider:

Defendant's breach → claimant loses one contract → claimant says it would have used the money to acquire another company → new company would supposedly have generated AED 20 million profit.

The second claim is much more remote.

The claimant must establish a sufficiently convincing causal connection.

6. Certainty of Loss

One of the most important principles in loss-of-profit litigation is certainty.

A claimant does not necessarily have to prove the exact amount mathematically.

But it must provide sufficient evidence to establish that:

• the profit would probably have been earned; and
• the amount claimed has a reasonable evidentiary foundation.

DIFC jurisprudence is particularly explicit on this point. Under the DIFC damages framework, compensation is available for loss, including future loss, established with a reasonable degree of certainty; loss of an opportunity may also be compensated proportionately to the probability of its occurrence.

7. Case Law

Case 1: Hepher Associates Ltd & Trevor Anscombe v Rasana Engineering Industries Co LLC [2017] DIFC CFI 043

This is a particularly useful UAE authority.

The claimants sought approximately AED 498,789.36 for loss of profit resulting from the defendant's failure to pay consultancy invoices on time.

The Court accepted that a loss-of-profit claim was legally permissible under the UAE Civil Transactions Law, but emphasized that the claimants had to establish on the balance/preponderance of the evidence how much profit had actually been lost.

Principle

Loss of profit is legally recoverable in appropriate circumstances, but:

the claimant must prove the amount of lost profit with evidence.

Importance

This case is useful for demonstrating that the UAE legal framework recognizes loss-of-profit claims while simultaneously imposing an evidentiary requirement.

8. Case 2: SPX Middle East FZE v Judi for Food Industries [2013] DIFC CFI 002

This case concerned a plant project and a counterclaim for substantial loss of profit.

The counterclaim was dismissed because it was unsupported by sufficient evidence. The Court also examined whether the plant had actually reached commercial production and commissioning at the relevant time.

Principle

A business cannot simply estimate what it believes it would have earned.

It must establish the factual basis for the claimed profit.

Practical lesson

Useful evidence can include:

• production records;
• historical sales;
• customer orders;
• production capacity;
• financial statements;
• market evidence;
• expert calculations.

9. Case 3: MAG Financial Services LLC v Theron Entertainment LLC [2017] DIFC CA 006

This case involved a restaurant operating from premises in the DIFC.

The Court of First Instance had awarded substantial damages including lost profits, and the Court of Appeal examined the lost-profit award on appeal. The Court of Appeal ultimately allowed the appeal concerning the award of lost profits.

Principle

A claimed lost-profit figure must be legally and evidentially justified; the mere existence of a commercial enterprise does not automatically establish the amount of profit that would have been earned.

Importance

The case illustrates the appellate scrutiny applied to the quantification of lost profits.

10. Case 4: Bond Interior Design LLC v TR88House Restaurant and Entertainment Center LLC [2023] DIFC TCD 001

This is particularly important for construction disputes.

TR88 claimed:

• liquidated damages; and
• lost profits

arising from delay.

The Court held that TR88 had failed to establish that Bond was solely responsible for the relevant period of delay. There was evidence of variations and possible concurrent delay. Consequently, the essential causal basis for the lost-profit claim was not established.

Principle

Before calculating lost profit, the claimant must establish:

the defendant's responsibility for the event that caused the alleged profit loss.

Importance

This is crucial in UAE construction litigation.

A claimant cannot simply say:

“The project was late, therefore I lost profits.”

It must establish:

• contractual responsibility;
• relevant delay period;
• causation;
• absence of competing causes;
• quantum.

11. Case 5: Luciane v The Luterluter Fitness Club Ltd [2020] DIFC SCT 059

This case provides an important statement of the certainty principle.

The DIFC damages framework provides that compensation is due only for loss, including future loss, established with a reasonable degree of certainty. It also recognizes compensation for loss of an opportunity in proportion to the probability of its occurrence.

In the case, the alleged loss of revenue was not sufficiently established by evidence and the claim was dismissed despite a finding of breach.

Principle

Proof of breach does not automatically prove damages.

The claimant must separately establish the loss.

12. Case 6: Mipil v Miwert & Merob [2023] DIFC SCT 223

The claimant sought lost profits allegedly resulting from a travel ban that interfered with an investment venture.

The claimant argued that meetings with potential investors in Saudi Arabia had been arranged and that the investment venture would have generated profits.

The Court found insufficient evidence of the alleged formal investment opportunity and therefore rejected the loss-of-profit claim.

Principle

An alleged future commercial opportunity must be supported by evidence.

Mere statements that:

“I had investors”

or

“I would have made substantial profits”

are insufficient without supporting evidence.

13. Case 7: Nyoka v Nunzio [2024] DIFC SCT 098

The claimant sought loss of anticipated profits arising from delay in opening premises.

The defendant relied on a contractual exclusion clause covering, among other things:

• anticipated profits;
• loss of business;
• pure economic loss.

The Court applied the contractual limitation and rejected the claim for anticipated profits.

Principle

Even where lost profit might otherwise constitute a recognizable category of damages, the parties' contract may affect whether such damages are recoverable, subject to the applicable law and enforceability of the contractual limitation.

Importance

Always examine:

• exclusion clauses;
• limitation clauses;
• liability caps;
• agreed damages;
• contractual remedies.

before calculating lost profits.

14. Case 8: Haima Group Management Ltd v Heber Bank PJSC [2017] DIFC SCT 262

The claimant alleged various economic losses, including:

• lost profits;
• loss of economic opportunity;
• other indirect damages.

The case demonstrates the need to identify the legal and evidentiary basis for claimed economic losses rather than simply aggregating every financial consequence allegedly flowing from the defendant's conduct.

Principle

A claim for lost profits must be tied to a legally recognizable loss and supported by appropriate evidence.

15. Case 9: Dr Lothar Ludwig Hardt & Hardt Trading FZE v DAMAC (DIFC) Company Ltd [2009] DIFC CFI 036

The claimants sought damages including lost profits in a complex real-estate dispute involving multiple agreements and developments.

The Court highlighted serious problems with the pleadings, including failure to provide adequate particulars of the factual basis of claims.

Principle

A substantial lost-profit claim should be properly particularized.

The claimant should identify:

• the transaction;
• the relevant breach;
• the period of loss;
• the expected revenue;
• the expenses;
• the resulting profit;
• the causal connection.

16. Case 10: Keshav Global Trading LLC & Keshav Global Private Ltd v ETG Commodities Holdings Ltd [2024/2025] DIFC CFI 069/2024

This recent commercial dispute involved extensive claims for:

• lost profits on contracts allegedly made but not fulfilled;
• lost profits on anticipated contracts;
• wasted expenditure;
• lost investment opportunities.

The Court recognized that claims concerning loss and damage may require extensive documentary disclosure because the consequences of an alleged breach may depend on internal business documents.

Principle

Complex lost-profit claims often require:

• detailed pleading;
• disclosure;
• financial records;
• underlying contracts;
• expert evidence;
• analysis of alternative scenarios.

17. Categories of Loss of Profit Claims

A. Existing Contract Profit

This is generally easier to establish.

Example:

A buyer has a binding resale contract for AED 10 million.

The seller wrongfully refuses to deliver.

The buyer's expected net profit was AED 1 million.

The claimant can potentially demonstrate:

• existence of resale contract;
• purchase price;
• resale price;
• costs;
• breach;
• resulting profit.

B. Expected Business Profit

This is more difficult.

Example:

A restaurant claims that it would have earned AED 3 million during its first year.

The claimant must establish:

• expected opening date;
• capacity;
• historical performance;
• comparable operations;
• customer demand;
• operating costs;
• market conditions.

The further the claim moves into hypothetical projections, the greater the evidentiary challenge.

18. C. Lost Future Profit

Future profits can potentially be recovered where sufficiently established.

But the claimant must deal with uncertainty concerning:

• market conditions;
• competition;
• operating costs;
• future demand;
• inflation;
• business continuity;
• regulatory changes.

The DIFC damages framework's reasonable-certainty principle is especially useful here.

19. D. Lost Business Opportunity

A lost opportunity is different from an established profit.

Established profit

“I had a binding customer contract worth AED 5 million.”

Lost opportunity

“I had discussions with a potential customer and expected to obtain a AED 5 million contract.”

The second claim is inherently more uncertain.

The evidence must establish the probability of the opportunity actually occurring.

The DIFC framework expressly recognizes loss of an opportunity proportionate to its probability of occurrence.

20. E. Loss of Profit From Delay

Delay claims are common in:

• construction;
• real estate;
• hospitality;
• manufacturing;
• logistics;
• infrastructure.

The claimant must usually establish:

Delay → inability to operate → revenue loss → expenses avoided → net lost profit.

A claim is weakened where:

• the claimant was itself responsible for delay;
• there was concurrent delay;
• the business was not ready to operate;
• permits were unavailable;
• financing was incomplete;
• other independent causes prevented profitability.

The Bond Interior Design v TR88House case demonstrates the importance of proving the defendant's responsibility for the relevant delay period.

21. Gross Profit vs Net Profit

This is one of the most important calculation issues.

Suppose:

Expected sales = AED 5 million

But expected operating costs were:

• materials: AED 2 million;
• wages: AED 1 million;
• rent: AED 400,000;
• utilities: AED 100,000.

The claimant cannot ordinarily treat the entire AED 5 million as lost profit.

A simplified calculation would be:

AED 5,000,000 − AED 3,500,000 = AED 1,500,000

The precise methodology depends on the nature of the business and applicable law.

22. Deduction of Avoided Costs

If the breach prevented the claimant from performing its own obligations, some expenses may have been avoided.

For example:

A claimant expected to earn AED 2 million profit but would have spent AED 800,000 performing the contract.

If the breach meant the claimant never incurred those expenses, the damages calculation must account for the avoided costs.

The DIFC damages framework expressly incorporates avoided costs into its measure of damages.

23. Causation

A claimant must establish:

But for the defendant's wrongful conduct, would the claimed profit probably have been earned?

Consider:

A developer delays a shopping centre.

The claimant says:

“I lost AED 10 million in restaurant profits.”

But evidence shows:

• the restaurant had not obtained its operating licence;
• financing was incomplete;
• the restaurant had no employees;
• the restaurant had not secured suppliers.

The delay may not be the actual cause of the alleged AED 10 million loss.

This is why causation precedes calculation.

24. Concurrent Causes

Loss of profit may have multiple causes.

For example:

• contractor delay;
• government approval delay;
• claimant's own design changes;
• market downturn;
• shortage of materials.

If several causes contributed to the lost profit, the claimant may need to establish the portion attributable to the defendant.

Bond Interior Design v TR88House is particularly relevant because the Court found that concurrent delay prevented the claimant from establishing that the defendant was solely responsible for the relevant period.

25. Mitigation of Lost Profit

The claimant cannot ordinarily allow losses to accumulate unnecessarily.

Suppose a supplier breaches a contract in January.

The claimant could obtain substitute goods in February but chooses to wait until December.

The claimant may face a mitigation argument concerning profits lost during the period that could reasonably have been avoided.

Therefore:

Loss of profit + duty to mitigate

must be considered together.

26. Evidence Required

A strong loss-of-profit claim may require:

Contractual evidence

• original contract;
• purchase orders;
• customer contracts;
• invoices;
• amendments;
• correspondence.

Financial evidence

• audited accounts;
• management accounts;
• bank statements;
• tax records;
• historical sales;
• cost records.

Commercial evidence

• market reports;
• customer orders;
• production capacity;
• comparable transactions;
• market prices.

Expert evidence

A financial expert may calculate:

• expected revenue;
• variable costs;
• fixed costs;
• net profit;
• alternative scenarios;
• discount rates;
• probability adjustments.

27. The Role of Expert Evidence

Expert evidence can be particularly important in complex claims.

An expert may construct two scenarios:

Actual world

What actually happened.

Counterfactual world

What would probably have happened if the defendant had performed.

The difference between the two may represent the claimed economic loss.

However, an expert cannot create causation where the underlying facts do not support it.

An expert can calculate a loss; an expert cannot manufacture the factual foundation for that loss.

28. Business Projections

Business plans can be useful but are not automatically reliable.

Suppose a claimant presents a business plan forecasting:

AED 20 million annual profit.

The court may ask:

• Who prepared the plan?
• Was the business already operating?
• Was there historical revenue?
• Were customer contracts signed?
• Were the projections conservative?
• Were the assumptions realistic?
• Did actual performance support them?

The further a claim is based on hypothetical assumptions, the more careful the court will generally need to be.

29. New Businesses

Lost-profit claims by newly established businesses can be particularly difficult.

An established company may have:

• five years of accounts;
• repeat customers;
• historical margins.

A new company may have:

• only a business plan;
• projected sales;
• anticipated customers;
• no historical profit.

Therefore, evidence of actual commercial commitments becomes particularly important.

30. Loss of Profit and Contractual Exclusion Clauses

Contracts frequently contain clauses excluding:

• consequential loss;
• indirect loss;
• loss of business;
• loss of goodwill;
• loss of anticipated profits.

Nyoka v Nunzio illustrates the importance of such contractual wording. The Court applied an exclusion clause covering anticipated profits and pure economic loss.

Therefore, before bringing a loss-of-profit claim, examine:

1. governing law;
2. exclusion clause;
3. limitation clause;
4. liability cap;
5. agreed damages clause;
6. interpretation of the contract.

31. Loss of Profit and Liquidated Damages

A contract may provide:

“AED 100,000 per day for delay.”

The claimant may nevertheless attempt to claim additional lost profits.

Whether both are available depends on:

• contract wording;
• applicable law;
• nature of the agreed damages;
• whether double recovery would occur;
• whether the contract permits additional damages.

The Bond Interior Design decision demonstrates the importance of distinguishing liquidated damages from separate lost-profit claims.

32. No Double Recovery

A claimant cannot ordinarily recover the same economic loss twice under different labels.

For example:

Claim 1

AED 2 million lost profits.

Claim 2

AED 2 million “business interruption loss.”

If both represent the same economic harm, awarding both would produce double recovery.

The damages assessment must therefore identify the actual economic loss, not merely the number of labels attached to it.

33. Loss of Profit and Loss of Opportunity

These concepts should not be confused.

The DIFC damages framework expressly accommodates loss of an opportunity according to its probability.

34. Speculative Claims

A claim becomes speculative where it depends heavily on assumptions such as:

• hypothetical customers;
• unconfirmed investments;
• unexecuted contracts;
• uncertain market expansion;
• unrealistic growth rates;
• unproven margins.

Mipil v Miwert & Merob illustrates this problem: the alleged investor opportunity was not sufficiently established by evidence.

Similarly, SPX v Judi demonstrates that a substantial commercial loss-of-profit counterclaim may fail where evidence does not adequately establish the alleged profit.

35. Loss of Profit in Construction

A construction claimant may claim:

• rental income lost because of delay;
• hotel operating profits;
• sales revenue;
• financing-related commercial losses;
• lost business opportunities.

But the claimant must separate:

Delay attributable to defendant

from

Delay attributable to claimant or third parties.

This is particularly important in projects involving:

• variations;
• extensions of time;
• concurrent delay;
• approvals;
• design changes;
• subcontractor delays.

Bond Interior Design v TR88House provides an important illustration.

36. Loss of Profit in Real Estate

Real-estate disputes may involve claims for:

• rental profits;
• resale profits;
• development profits;
• hotel income;
• commercial property income.

A claimant may need to establish:

• possession date;
• expected rental rate;
• occupancy rate;
• operating expenses;
• market conditions;
• actual comparable properties.

Simply stating:

“The property would have generated AED 1 million”

is normally insufficient without supporting evidence.

37. Loss of Profit in Financial Transactions

Financial disputes may involve claims based on:

• lost investment returns;
• lost trading opportunities;
• missed financing;
• inability to deploy capital.

Such claims require particularly careful causation analysis.

A claimant should distinguish:

actual lost profit

from

hypothetical investment return.

A speculative assertion that:

“I would have invested the money and earned 20%”

is not necessarily sufficient.

38. Loss of Profit in Digital Assets

Modern UAE disputes may involve:

• cryptocurrency;
• tokens;
• digital platforms;
• automated trading;
• digital businesses.

Here the court may need to consider:

• market volatility;
• trading history;
• actual transactions;
• alternative investments;
• timing;
• liquidity;
• mitigation.

Gate Mena v Tabarak Investment Capital demonstrates how modern digital-asset disputes can involve difficult questions concerning valuation and damages.

39. Burden of Proof

The claimant generally bears the burden of establishing its damages claim.

For a loss-of-profit claim, the claimant should establish:

1. Legal entitlement

Why is the defendant legally responsible?

2. Causation

How did the defendant's conduct cause the lost profit?

3. Actual probability

Why would the profit probably have been earned?

4. Quantum

How much profit was actually lost?

5. Avoided costs

What expenses were saved?

6. Mitigation

What steps were taken to reduce the loss?

40. A Practical Formula

A simplified loss-of-profit calculation can be expressed as:

Expected Revenue

− Expected Variable Costs

− Avoided/Relevant Expenses

± Other Necessary Adjustments

= Potential Lost Profit

Then consider:

Potential Lost Profit

− Loss Avoided Through Mitigation

= Recoverable Lost Profit

This is only a conceptual framework; actual damages methodology depends on the applicable law and facts.

41. Important Case-Law Table

42. Mainland UAE vs DIFC

A critical qualification is necessary.

The cases above are predominantly DIFC Courts decisions. They are highly useful UAE authorities for understanding commercial damages, but they should not automatically be treated as binding precedents on UAE mainland courts.

For a mainland UAE dispute, the primary legal framework is the Federal Civil Transactions Law and applicable UAE procedural/commercial legislation.

For a DIFC dispute, the applicable DIFC legislation and DIFC jurisprudence may apply.

Therefore, always determine:

1. the forum;
2. governing law;
3. date of the relevant transaction;
4. contractual provisions;
5. applicable damages legislation.

43. Transitional Issue Under the 2025 Civil Transactions Law

Because the new Civil Transactions Law became effective on 1 June 2026, historical claims require careful temporal analysis.

A dispute arising from an older contract should not automatically be analyzed entirely under the new law merely because litigation occurs after 1 June 2026.

The court must consider:

• when the contract was formed;
• when the breach occurred;
• when the loss occurred;
• transitional provisions;
• applicable governing law.

This is especially important when comparing older UAE Civil Transactions Law case law with the current statutory framework.

44. Practical Checklist for a UAE Loss-of-Profit Claim

Before filing such a claim, collect:

Contract

• signed agreement;
• amendments;
• purchase orders;
• delivery schedules.

Revenue evidence

• customer contracts;
• invoices;
• historical sales;
• confirmed orders.

Cost evidence

• payroll;
• material costs;
• rent;
• utilities;
• commissions.

Causation evidence

• notices;
• delay records;
• correspondence;
• project schedules;
• expert reports.

Profit evidence

• financial statements;
• management accounts;
• budgets;
• forecasts;
• expert calculations.

Mitigation evidence

• alternative suppliers;
• substitute contracts;
• replacement premises;
• alternative customers;
• other steps taken to reduce loss.

45. Exam-Oriented Summary

Meaning

Loss of profit is compensation for profit that the claimant establishes it would have earned but for the defendant's legally actionable conduct.

Requirements

1. Legal breach or wrongful act.
2. Causation.
3. Natural consequence.
4. Reasonable certainty.
5. Reliable quantum evidence.
6. Deduction of avoided costs.
7. Consideration of mitigation.
8. No double recovery.
9. Compliance with contractual limitations.
10. Applicable governing law.

Important UAE cases

• Hepher Associates v Rasana Engineering
• SPX Middle East v Judi Food Industries
• MAG Financial Services v Theron
• Bond Interior Design v TR88House
• Luciane v Luterluter Fitness Club
• Mipil v Miwert & Merob
• Nyoka v Nunzio
• Haima Group v Heber Bank

46. Conclusion

Loss of profit claims are recognized in UAE civil law, but they are evidence-intensive claims rather than automatic heads of compensation.

The current Civil Transactions Law expressly recognizes loss of profit, provided that it constitutes a natural consequence of the harmful act.

The central principles are:

Breach alone is insufficient.

Projected revenue is not automatically lost profit.

An expert calculation cannot substitute for proof of causation.

Future profit must have a sufficiently reliable evidentiary foundation.

Concurrent causes, mitigation, avoided costs and contractual limitations can substantially affect recovery.

The UAE/DIFC cases demonstrate a consistent practical theme: courts distinguish between genuine, provable economic loss and speculative commercial expectations. Hepher Associates confirms that lost profits can be recovered when sufficiently proved, while SPX, Mipil, Luciane and Bond Interior Design demonstrate circumstances in which inadequate proof, uncertainty or causation problems can defeat the claim.

One-line revision formula

UAE Loss of Profit = Proven Expected Profit − Avoided Costs − Reasonably Avoidable Loss, subject to Causation + Natural Consequence + Reasonable Certainty + Contractual and Statutory Limits.