1. Introduction
“Disgorgement damages” has been introduced to the legal community as one of the non-compensatory remedies for damages under the Anglo‑American common law system. This remedy refers to the deprivation, in whole or in part, of the benefits obtained by the wrongdoer through the violation of the legal or contractual rights of the entitled party, and subsequently, the return of those benefits to the right‑holder. The novelty of this remedy has consistently generated numerous questions among common‑law scholars. Its concept, its position among other forms of damages, its contractual or non‑contractual foundations, as well as issues concerning calculation and payment, are among the questions that have occupied both doctrinal scholarship and judicial practice. In a previous work, we examined in detail the concept, status, and advantages of this remedy; therefore, this study proceeds on the assumption that the phase of identifying disgorgement of profits has already been addressed.
Nevertheless, merely proposing the recognition of disgorgement damages, without a precise explanation of its scope, conditions of application, and constitutive elements, cannot meet the theoretical and practical needs of the legal system. The central issue is, in fact, determining in which domain of civil liability (whether tortious or contractual) this remedy may properly be adopted and applied. Can it be accepted, without qualification, across all types of contracts and in all instances of non‑contractual obligations? Or do the particularities of each domain require a careful and purposeful distinction?
On the other hand, a further foundational question arises: under what conditions may the right‑holder be permitted to benefit from disgorgement damages? Is the mere establishment of the conventional elements of civil liability (namely, harm, wrongful act, and causal link between the two) sufficient for the application of this
remedy? Or must additional or distinct elements and conditions be considered alongside these conventional requirements?
2. Literature Review
In recent years, Iranian legal scholars, influenced by common law doctrine (from the United States, England, Australia, and Canada) and recognizing the advantages of disgorgement of profits derived from rights violations, have produced commendable works on this subject for the legal community (Babaei & Azadbakht, 2025: pp. 1-58; Babaei & Azadbakht, 2026: pp. 1-33; Nematollahi & Seyyed Ali Routhe, 2020: pp. 31-55; Rezaei, 2024: pp. 155-176). Nevertheless, these works have addressed only the concept, foundations, and feasibility of accepting disgorgement of damages. A thorough analysis of the scope of this remedy and the conditions for claiming it has largely remained unexplored. This study examines, in detail and through a close analysis of U.S. and English law, the contexts in which disgorgement of profits may be applied and the conditions for claiming it.
3. Methodology
Adopting a descriptive–analytical approach, the present study examines the conditions and elements required for claiming disgorgement within the framework of tortious and contractual liability in Anglo-American common law.
4. Results and Discussion
The remedy of “disgorgement damages,” as one of the emerging yet effective methods of compensation, has garnered increasing
acceptance in contemporary legal systems and has gradually established an independent position within the framework of civil remedies. Unlike traditional methods of compensation, which primarily focus on redressing the harm suffered by the injured party, this institution seeks to establish a fair balance between the parties by divesting the wrongdoer of any illicit profits obtained and thereby preventing unjust enrichment. From this perspective, disgorgement of profits is not only a compensatory tool but also possesses a deterrent function.
An examination of this institution reveals that, both theoretically and practically, disgorgement of profits is compatible with various branches of civil liability, including tortious and contractual obligations. In the realm of contractual liability, the primary basis for justifying the obligation to disgorge profits can be found in the concept of the obligee’s “legitimate expectation.” This expectation, in essence, entitles the contracting party to be assured that the obligor will not gain an economic advantage through the breach of contractual commitments. Within this framework, disgorgement of profits serves as a mechanism to preserve contractual equilibrium and prevent the reduction of contractual obligations to a mere economic calculation by the obligor.
In the domain of tortious liability, although the general principle is to compensate for the harm incurred through compensatory damages and to restore the injured party’s situation as much as possible, there are circumstances where these methods may be insufficient to fully satisfy the right‑holder’s claim. In such cases, the disgorgement of profits can function as a supplementary remedy, acting in conjunction with other compensation methods. This is particularly
relevant in scenarios where the wrongdoer has obtained significant benefits without causing calculable harm; in such instances, relying solely on compensatory damages might perpetuate an unjust situation and could even incentivize rights-violating behaviors.
However, the application of the disgorgement remedy is subject to specific rules and conditions and cannot be applied absolutely or without restriction. Among the essential prerequisites for this remedy are: the violation of the legal or contractual right of the entitled party, the wrongdoer’s acquisition of economic benefit as a result of this violation, and the suffering of harm by the entitled party. Furthermore, establishing the wrongful act by the violator, the inadequacy of other compensatory measures, and ultimately, confirming the causal link between the violation of the right and the benefit obtained by the violator, are among the necessary elements for claiming and adjudicating the disgorgement of profits.
5. Conclusion
The sum of these considerations indicates that the remedy of disgorgement damages, when its conditions of application and its place alongside other civil remedies are precisely delineated, can be considered an effective institution for achieving justice, preventing unjust enrichment, and strengthening the deterrent function of civil liability. This is an institution that, with due regard to its governing principles and foundations, has the potential for development and institutionalization within the framework of Iranian law as well.