A Critical Analysis Of Damages, Expert Evidence, And Valuation Methodologies In Commercial Arbitration
- IJLLR Journal
- 5 hours ago
- 1 min read
Sthir Singhal, ADR (Clinical), SVKM's NMIMS School of Law, Bengaluru
ABSTRACT
Commercial arbitration has become the most popular process for resolution of high value domestic and cross-border commercial disputes. In the heart of most arbitral proceedings is the contested question of damages - how much, if anything, is entitled to a claimant. Damage quantification in arbitration is a multidisciplinary process and involves combining the disciplines of economics, finance, and accounting, which create a need to arbitrate between conflicting arguments of loss by way of conflicting expert reports and valuation methods. This paper provides a critical examination of the legal and methodological frameworks which govern the determination of damages, the contribution of expert witnesses in the affirmation of valuation claims, and the key methodologies used in quantifying commercial loss in arbitration proceedings. Drawing upon international arbitral jurisprudence, the rules of major arbitral institutions such as the ICC, SIAC and LCIA, and the provisions of the Indian law, especially the Arbitration and Conciliation Act, 1996 and the Indian Contract Act, 1872, the paper identifies significant inconsistencies in the manner that arbitral tribunal evaluates expert evidence and indulges in competing approaches to valuation. The argument in this paper is that the lack of standardized rules relating to expert's evidence and the methodology of valuation in Indian commercial arbitration is creating a state of unpredictability which is compromising the integrity of the arbitral process. Through a doctrinal approach, the paper concludes with specific legislative and institutional recommendations with the goal of enhancing consistency, transparency and fairness in the determination of damages.
Keywords: Damages, Expert Evidence, Valuation Methodologies, Commercial Arbitration, Discounted Cash Flow, Lost Profits, IBA Rules.
