Resolving Compensation Claims Disputes Effectively
In a compensation claim the one variable still under a party's control is sequencing: what is done in the first weeks, in what order, and how much of it before anyone takes a public position.
What decides a compensation claim mostly happened before anyone called it a dispute; what is left is sequencing. Sets out the four moves that belong at the front — limiting the loss, securing the records, reading the contract for deadlines before arguments, and building a defensible number — then the clause check, a settlement that will not need enforcing twice, and securing assets early.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
By the time a compensation claim is being called a dispute, most of what will determine its outcome has already happened. The contract said what it said. The loss was recorded, or it was not. Notice was served in time, or it was missed. What remains within the parties’ control is sequencing: what is done in the first weeks, in what order, and how much of it is done before anyone takes a public position.
Related: Our compensation claims team is generally most useful in those first weeks.
The first month
Four things belong at the front of any compensation dispute, and they belong there in this order.
- Stop the loss growing. Whatever the merits, a party that lets avoidable loss accumulate will be met with the argument that it should have acted. Steps taken to limit the damage should be documented as they are taken.
- Secure the documents. Correspondence, site records, delivery notes, payment records, internal approvals, and the messaging threads where the real decisions were discussed. Instruct that nothing is deleted. Records held only by an outgoing contractor or a departing employee should be recovered while relations are still workable.
- Read the contract for deadlines before reading it for arguments. Notice periods, claim windows, escalation steps and time bars decide more disputes than liability clauses do, and several of them expire quietly.
- Produce a defensible number. Not a demand — a calculation, built from records that already exist, with the assumptions written down. Everything afterwards, including any settlement, is measured against it.
Read the dispute clause before you take a position
The dispute clause decides how much pressure each side can actually apply, and it is worth reading carefully before the first strongly worded letter goes out. Three things need to be established: whether the clause points to arbitration or to a court; whether it imposes preconditions such as negotiation between senior representatives or mediation before proceedings; and whether it is capable of working at all.
That last point is not academic. Clauses that name an institution inconsistently, refer to a body that no longer administers cases, or provide for both court jurisdiction and arbitration in the same breath, are common in contracts drafted quickly. Where a clause is defective, that becomes a live issue at the start of the dispute, and the party that identified it first is in a better position.
Arbitration as it now stands
Arbitration seated in the UAE is governed by Federal Law No. 6 of 2018, amended in 2023. The institutional picture, however, has changed in ways that older contracts do not reflect.
The DIFC-LCIA Arbitration Centre was abolished by Dubai Decree No. 34 of 2021 and its caseload moved to the Dubai International Arbitration Centre. Contracts signed before that still name it, and those clauses have to be handled rather than ignored. Separately, the arbitration centre formerly known as ADCCAC has been restructured as arbitrateAD from 2024. Neither change removes the DIFC as an available seat: parties can and do choose a DIFC seat with a different administering institution.
The practical consequences for a compensation claim are these. Check what your clause names against what exists now. If a contract is being renewed or amended for any reason, correct the clause then, when it costs nothing. And where the counterparty holds what it owns outside the UAE, answer the enforcement question before taking a position rather than after: identify the country in which the money would actually have to be recovered, and find out what that country will act on. That answer, not habit, is what should shape the clause in the next contract.
Related: Our fund recovery and compensation work covers both arbitration and court routes.
Where these disputes actually end
Most compensation claims settle. That is not a failure of the process; it is the process. What distinguishes a good settlement from a poor one is whether it was reached from a position the party understood.
Two things make settlement possible. The first is a number both sides can test — the calculation described above, shared in enough detail that the other side’s finance people can check it. Vague demands invite vague responses. The second is a settlement document that is actually enforceable: it should record the payment terms, deal with what happens on default, release the right claims and no more, and state clearly whether it disposes of related claims between group companies. A settlement that has to be enforced through a second dispute has solved nothing.
Mediation is worth considering where the commercial relationship is continuing, or where the real obstacle is that neither side’s management can be seen to concede first. It is unsuitable where one party is simply playing for time, and that is usually apparent early.
Different claims go through different doors
Compensation claims are not one procedure. Where the claim goes depends on what it is about, and choosing the wrong door costs months.
Claims over withheld payments, escrowed funds and commercial contracts run through the general commercial process; our escrow and payment disputes work sits here. Claims involving misuse of a brand, a name or online identifiers are handled through the intellectual property route, and domain name disputes in particular have their own dedicated procedures that operate outside the courts entirely. Tenancy claims are directed to the specialist rental dispute forum rather than the general civil court, which matters to owners and to foreign investors letting property, because the procedure, the timetable and the evidence required are all different.
When the concern is that there will be nothing left to collect
If there is a real risk the counterparty will move or dissipate assets, that has to be addressed at the start rather than at judgment. The onshore courts and the DIFC and ADGM courts each have procedures for securing assets pending the outcome, and applications of that kind depend on being able to show the court something concrete rather than a suspicion. Evidence that the counterparty is winding down, transferring assets or failing other creditors should be gathered as it appears, not looked for afterwards.
The same enquiry does double duty. Whatever is assembled to support an application for security also tells the claimant’s own board what the counterparty is realistically worth, which is information worth having in the first weeks of a dispute rather than at the end of one.
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
