Dubai Enhances its Crypto Friendly Reputation
Stuart Stobie • September 5, 2024
Dubai Enhances its Crypto Friendly Reputation
In a significant legal development in the UAE, the Dubai Court of First Instance has set a precedent in 2024 by officially recognising the payment of salaries in cryptocurrency under employment contracts. This landmark ruling, issued in case number 1739 of 2024 (Labour), represents a departure from a 2023 decision by the same court. In the earlier case, the court had rejected a similar claim involving cryptocurrency due to the employee's inability to provide an accurate valuation of the digital currency.
Does this mean that receiving our wages in crypto is our future?
Background of the Case
The case at hand involved an employee who filed a lawsuit seeking unpaid wages, compensation for wrongful termination, and other employment-related benefits. The employment contract specified a monthly salary in fiat currency, along with an additional payment of 5,250 EcoWatt tokens, a form of cryptocurrency. The conflict arose when the employer failed to deliver the EcoWatt token portion of the salary for six months and allegedly wrongfully terminated the employee.
What makes the court’s ruling particularly noteworthy is its recognition of cryptocurrency as a valid form of payment, despite the traditional reliance on fiat currency in employment contracts.
The 2023 Judgment
In a related case from 2023 (Judgment No. 6947 of 2023), the court had previously addressed an employment dispute where a portion of the employee’s remuneration was to be paid in EcoWatt tokens. Although the court acknowledged the inclusion of these tokens in the employment contract, it ultimately declined to award the cryptocurrency amount. The court's refusal was based on the employee's failure to provide a clear method for converting the cryptocurrency's value into fiat currency. This decision highlighted the court's cautious approach, emphasising the importance of precise and concrete evidence when dealing with non-traditional payment methods like digital currencies.
This statement from the 2023 judgment highlighted the court’s conventional approach, emphasising the need for concrete evidence of a digital currency’s value before such a claim could be enforced.
The 2024 Judgment
In a marked shift from its earlier stance, the Dubai Court took a more progressive approach in its 2024 judgment. Once again, the case involved an employment dispute over remuneration in EcoWatt tokens. However, this time, the court ruled in favour of the employee, not only acknowledging the legitimacy of cryptocurrency payments but also ordering that the payment be made in EcoWatt tokens rather than converting them to fiat currency.
The court's 2024 decision was based on the principle that wages are a fundamental right of the employee for work rendered.
This ruling marks a significant shift in the court’s approach, signalling a growing acceptance of cryptocurrency as a legitimate and enforceable form of payment. It underscores the importance of honouring contractual agreements, as long as they are clear, mutually agreed upon, and compliant with public policy and law.
Implications
The court’s reference to Article 912 of the UAE Civil Transactions Law and the Federal Decree-Law No. (33) of 2021 in both the 2023 and 2024 rulings reflects a consistent application of legal principles concerning the determination and payment of wages. However, the interpretation of these laws evolved between the two judgments, indicating a broader acceptance and integration of digital currencies within the UAE’s legal and economic landscape.
Conclusion
The Dubai Court’s 2024 ruling exemplifies the UAE’s progressive legal environment and the increasing mainstream acceptance of cryptocurrency. The court’s decision to enforce cryptocurrency payments as specified in employment contracts sets a forward-looking precedent that could pave the way for broader adoption of digital currencies across various sectors, beyond just employment.
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