In a landmark decision, the Dubai Court of First Instance has ruled that cryptocurrency can be legally used as a valid form of salary payment under employment contracts. This decision, arising from case number 1739 of 2024, marks a significant shift in the United Arab Emirates’ legal stance on digital currencies.
Case Background: An Employment Dispute
The case involved an employment dispute where the plaintiff, an employee, claimed unpaid wages, wrongful termination compensation, and other benefits. The employment contract specified a monthly salary to be paid partly in fiat currency and partly in 5,250 EcoWatt tokens, a form of cryptocurrency. Over six months, the employer failed to pay the cryptocurrency portion of the salary, prompting the employee to file a lawsuit.
The Court’s Decision
The Dubai Court of First Instance ruled in favor of the employee, recognizing the validity of the cryptocurrency payment as outlined in the employment contract. The court ordered the employer to fulfill the contractual obligation to pay the salary in EcoWatt tokens without requiring conversion into fiat currency.
This decision marks a departure from the court’s earlier stance in a similar case in 2023, where a claim for cryptocurrency wages was denied due to the lack of a straightforward method for valuing the tokens.
Legal Perspective
Irina Heaver, a partner at UAE law firm NeosLegal, praised the ruling as a “progressive approach” that aligns with the evolving nature of financial transactions in the Web3 economy. She commented, “This decision reflects a broader acceptance of cryptocurrency in employment contracts and highlights the court’s recognition of the evolving nature of financial transactions within the Web3 economy.”
Implications for the Future
This ruling is expected to encourage further integration of digital currencies in everyday financial transactions in the UAE, potentially paving the way for broader adoption of cryptocurrencies in various sectors. With over 3,000 cryptocurrency companies operating in the UAE and employing tens of thousands of people, this decision provides employees a much-needed layer of protection.
Legal Foundation
The court’s decision was grounded in Article 912 of the UAE Civil Transactions Law, which states that wages are a worker’s right against the employer and that the employer must pay wages on due dates. The court ruled, “As the respondent did not provide evidence of payment in EcoWatt tokens, the court orders the respondent to pay the claimant the value of her wages in EcoWatt tokens.”
Conclusion
The ruling by the Dubai Court of First Instance to recognize cryptocurrency as a valid form of salary payment under employment contracts signifies a progressive step in the legal acceptance of digital currencies. This decision not only provides protection for employees but also aligns with the broader movement towards integrating digital currencies into the financial ecosystem.
As the use of cryptocurrency continues to grow, this ruling could serve as a precedent for other jurisdictions considering similar legal recognition of digital currencies in employment and other financial transactions.