Dubai Court Validates Crypto as Legal Salary Payment

In a landmark ruling, Dubai’s Court of First Instance has recognised cryptocurrency as a legitimate form of salary payment in employment contracts.

This decision, emerging from case number 1739 of 2024, signals a significant shift in the legal treatment of digital currencies in the United Arab Emirates (UAE).

Court Upholds Crypto Payments

The ruling stems from an employment dispute where the plaintiff, an employee, claimed unpaid wages and compensation for wrongful termination.

The employment contract in question stipulated that the salary be paid partly in fiat currency and partly in EcoWatt tokens, a cryptocurrency.

After the employer failed to pay the cryptocurrency portion for six months, the employee sought legal redress.

In its 2024 decision, the court ruled in favour of the employee, affirming that the payment in EcoWatt tokens, as outlined in the contract, must be honoured. Notably, the court did not require the conversion of the cryptocurrency into fiat currency, a significant departure from a similar case in 2023.

Progressive Legal Recognition

Legal experts, including Irina Heaver of NeosLegal, have praised the ruling as a progressive step that aligns with the evolving nature of financial transactions in the Web3 economy.

Heaver emphasised that this decision acknowledges how value is created and exchanged in this space, where it is common for employees to be compensated in both fiat and digital tokens.

Significant Legal Shift

The court’s earlier 2023 ruling had dismissed a similar claim due to the plaintiff's failure to provide a clear method for valuing the cryptocurrency. However, the 2024 decision reflects a significant shift, with the court recognising the validity of cryptocurrency payments without requiring their conversion into traditional currency.

This ruling is grounded in Article 912 of the UAE Civil Transactions Law, which mandates that employers pay wages as stipulated in employment contracts. The court ordered the employer to fulfil the obligation to pay the wages in EcoWatt tokens, thus enforcing the agreed-upon terms of the contract.

Impact on UAE’s Crypto Landscape

This decision is likely to encourage the further integration of digital currencies in the UAE’s financial ecosystem. With over 3,000 cryptocurrency companies operating in the UAE, employing tens of thousands of individuals, the ruling offers employees a layer of protection and could pave the way for broader acceptance of cryptocurrencies in various sectors.

Critical Assessment

While this ruling marks a significant step forward for cryptocurrency recognition, its broader implications remain to be seen.

The legal and regulatory frameworks surrounding digital currencies in the UAE will need to evolve to ensure that such rulings support sustainable economic growth and protect both employers and employees in this emerging financial landscape.