In a landmark decision, the Dubai Court of First Instance has ruled in favor of crypto payments for salaries under employment contracts, marking a significant step in the UAE’s acceptance of digital currencies. This landmark ruling, issued on August 15, 2024, in case number 1739 of 2024 (Labour), reflects a notable shift in the judicial approach to crypto in the region.
Case Background: A Crypto Salary Dispute– Dubai
The case revolved around a dispute where the plaintiff, an employee, claimed unpaid wages, wrongful termination, and other employment-related benefits. The plaintiff’s employment contract specified a monthly salary in fiat currency alongside 5,250 EcoWatt tokens, a form of cryptocurrency. The employer failed to provide evidence of payment, leading the court to rule in favor of the plaintiff, ordering the employer to pay the owed salary in EcoWatt tokens.
The employer argued that the payment of salaries in EcoWatt tokens was not legally enforceable and that the termination was justified. However, the court found that the employment contract clearly stipulated the payment in both fiat currency and crypto, emphasizing the importance of clear contractual agreements.
A Shift in Judicial Approach
This ruling contrasts sharply with a similar case in 2023, where the same court dismissed a claim involving EcoWatt tokens due to the employee’s inability to provide a clear valuation of the cryptocurrency. The 2024 decision indicates an evolving stance on digital currencies, with the court now recognizing crypto as a valid form of remuneration.
The ruling was based on Article 912 of the UAE Civil Transactions Law and Federal Decree-Law No. (33) of 2021, which governs the determination and payment of wages. By setting this precedent, the Dubai Court of First Instance may encourage broader adoption of digital currencies in various sectors, including employment.
Implications for the Future
Irina Heaver, a partner at the UAE law firm NeosLegal, highlighted that this ruling marks a significant shift in the court’s position, which previously denied recognizing cryptocurrencies as valid salary payments due to their lack of precise valuation. The court’s decision to enforce the crypto salary without converting it into fiat currency demonstrates the UAE’s readiness to adapt to modern financial practices.
As Dubai continues to position itself as a global hub for innovation, this ruling could pave the way for further integration of digital currencies into the region’s legal and economic frameworks, setting a precedent for future cases and potentially influencing crypto regulations worldwide.
