Accuracy

IDEAS » Innovation

Case studies

Expert witness in an arbitration (breach of contract)

Situation

  • Two major international Oil & Gas companies have entered into a JV contract several years ago
  • One party to the contract decides to terminate the JV agreement
  • This termination is considered as a wrongful breach of the contract by the other party (our client)
  • For our client there are very significant operational and financial consequences
  • An arbitration process is therefore launched by our client to obtain damage indemnification

Our role

  • Accuracy is appointed as Expert Witness and covers several aspects of this complicated case
  • Step 1: Market review
    • We carry out an analysis of the market on which the JV is operating.
    • We identify the historical and prospective trends of this market
    • We prepare an analysis of the competition landscape
    • We carry out an analysis of the barriers to entry
  • Step 2: Economic and financial view of the contractual relationship
    • We carry out an in-depth analysis of the contractual documents from an economic and financial standpoint
    • We analyze all documents related to the existing relationship
    • We summarize our understanding of the rights and obligations of each party deriving from our economic and financial analysis of the documentation
  • Step 3 Valuation of the JV
    • We analyse the Business Plan prepared by the JV management
    • We challenge this Business Plan on the basis of our analysis of the market trends
    • We carry out a detailed valuation exercise of the JV using a DCF approach. This valuation is then corroborated by an analogical approach
  • Step 4 Quantification of the damage
    • We quantify the actual loss and expected loss of profit for both parties
    • We identify all existing unsettled balances (receivables or liabilities) between the parties
    • We prepare a statement of accounts between the parties
  • We draft two expert reports (in demand and in response) attached to the lawyers’ submissions presenting our analyses and conclusions
  • We give evidence before the arbitral tribunal and answer to the questions raised by the other party through a cross examination process

Outcome

  • A settlement is concluded between both parties just before the sentence award is issued by the tribunal

Value added for our client

  • Our ability to mobilize a team comprising specialists in several areas: economics and market analysis, valuation, complex accounting, pension liabilities, litigation support
  • Our ability to provide the tribunal with a clear presentation of the facts and of our conclusions despite a highly complex case
  • Our ability to process and analyze efficiently extensive data
  • Our efficient management of the cross-examination: self-control, clarity in the explanations