Financial Damages

Financial damages are the quantifiable economic loss suffered by a party as a result of an unlawful act, contractual non-performance or fault — in the context of commercial litigation, shareholder disputes or judicial proceedings. Their rigorous quantification is one of the central tasks of the financial expert in Franco-Swiss civil and arbitral proceedings, as damages must be proven and quantified to give rise to compensation.

The traditional components of financial damages in French and Swiss law are: damnum emergens (actual loss — direct financial impoverishment caused by the damaging event) and lucrum cessans (lost profit — benefit the victim would have realised absent the damaging event). The "but for" method (counterfactual analysis) is the standard technique: damages equal the difference between the victim's actual situation and the hypothetical situation "but for" the damaging event.

In M&A litigation and warranty claims, financial damages are typically quantified by reference to the impact on enterprise value (gap between actual value and the value that would have been negotiated absent the breach), discounted future revenue loss, or the remediation cost of discovered liabilities.

Example: a Franco-Swiss acquirer discovers post-closing that a contractual warranty was inaccurate — the main client contract (25% of revenue) contained a silent termination clause exercised 3 months after closing. Financial damages are quantified as the present value of lost cash flows over 5 years (CHF 1.8 million revenue × 20% EBITDA margin × 6x multiple = CHF 2.16 million present value) — supported by a documented sensitivity analysis in the expert report.

At Hectelion, we quantify financial damages for civil, arbitral and tax proceedings in France and Switzerland, with reports structured to the standards of the competent jurisdictions.