The Evolution of Cryptocurrency in Dubai’s Legal Landscape
Recent developments in Dubai's legal landscape have highlighted significant changes in the treatment of cryptocurrency within employment contracts. This article examines a recent case involving employee compensation and dismissal, alongside a comparison to a prior 2023 ruling, illustrating the evolving relationship between employment law and cryptocurrency.
2024 Case Overview- Dubai Courts of First Instance (DCFI) 1739/2024 (Labour)
The plaintiff began employment with the defendant on July 1, 2022, under a fixed-term contract that included a monthly salary of AED 30,000 and an additional 5,250 Eco Wat tokens. After failing to pay salaries from November 2022 to March 2023, the defendant resolved the issue post-complaint but then terminated the plaintiff's employment on April 14, 2023, without notice, citing non-compliance with conduct rules. The plaintiff argued the dismissal was arbitrary and sought a total of AED 221,378, which included various claims.
Guided by Federal Decree-Law No. 33/2021, the court ruled in favour of the plaintiff regarding delayed salaries, awarding AED 14,000 for the first 14 days of April 2023 and AED 31,500 for six months of delayed Eco Wat tokens. The plaintiff was also awarded AED 30,000 for pay in lieu of notice. However, the court dismissed the claim for arbitrary dismissal due to insufficient evidence and other claims related to medical care and travel allowances.
Ultimately, the court ordered the defendant to pay the plaintiff a total of AED 62,867 and 39,200 Eco Wat tokens, along with 5% legal interest from the date of filing until full payment. All other requests made by the plaintiff were dismissed.
The 2023 Judgment- Dubai Courts of Cassation 6947/2023
In a prior case in 2023 (Judgement No. 6947 of 2023), the court addressed an employee's claim for compensation involving Eco Wat tokens as part of their remuneration. The employee sought payment after experiencing similar issues with salary delays. However, the court ultimately denied the claim, primarily due to the employee's inability to provide a clear method for calculating the value of the Eco Wat tokens in fiat currency. The court's ruling highlighted the need for precise valuation when dealing with unconventional payment forms, emphasizing that without clear evidence, the claim could not be substantiated.
The ruling stated, "It is established according to the Court of Cassation that determining the employment relationship, its start, duration, and the resulting effects falls under the authority of the trial court... Since the claimant did not provide evidence of the value of the digital currency (Eco Wat tokens), the court disregards it." This cautious approach reflected the traditional legal framework's scepticism towards cryptocurrencies, reinforcing the necessity for tangible evidence in financial disputes.
The Shift
In contrast, the recent case has marked a significant shift. The Dubai Court recognized Eco Wat tokens as valid remuneration, affirming the employee's right to receive wages in cryptocurrency and placing the burden of proof for wage payments on the employer. This development signals a growing acceptance of cryptocurrency in employment contracts, allowing for more flexible compensation structures.
Implications of the Ruling
The recent judgment reinforces the idea that clear contractual agreements regarding cryptocurrency can be enforceable, paving the way for broader acceptance of alternative remuneration forms within the UAE’s legal framework. Employers are encouraged to draft precise contracts that incorporate cryptocurrency, ensuring compliance with established legal standards.
The analysis of the recent case alongside the 2023 ruling illustrates the complexities of modern employment disputes involving cryptocurrency. The shift from a cautious to a more progressive judicial approach reflects a significant evolution in the legal landscape. This transformation not only protects employees' rights but also fosters a more adaptable framework for compensation, benefiting both employers and employees as they navigate innovative payment methods in employment agreements.
There you go, are you ready to know more about cryptocurrency in contract in the UAE? Get in touch with Arunoday Ganguly (arunoday@cygalattorneys.com) from Cygal Attorneys Ltd and Dhana Pillai (dhana.pillai@dptc.ae) from DP Taxation Consultancy today!!
