The following is an excerpted analysis of topics discussed in the book UAE Crypto Litigation, a treatise on the judicial evolution of digital asset disputes in the United Arab Emirates, available at www.uaecryptolitigation.com.
When a debtor defaults on a loan of 10 Bitcoin, or an employer fails to pay a salary denominated in tokens, what is the appropriate remedy? In the United States, the bankruptcy proceedings of entities like Celsius and FTX have famously “dollarized” claims as of the petition date, often locking creditors into losses at the bottom of the market. The UAE courts, however, are increasingly adopting a property-law approach that favors specific performance, ordering the return of the asset itself, rather than its fiat equivalent.
This shift is evident in a landmark decision by the Dubai Court of First Instance regarding a private loan of 16 Bitcoin. When the borrower defaulted, the court did not engage in a complex valuation exercise to convert the Bitcoin to Dirhams; a process fraught with difficulty given the asset’s intraday volatility. Instead, it ordered the defendant to return 16 Bitcoin in specie to the claimant. This implicitly recognizes the digital asset not merely as a value-reference, but as a distinct class of property capable of direct restitution, akin to the specific delivery of chattels in English law.
This principle has even extended to employment disputes. In a novel judgment, a Dubai court ordered an employer to pay outstanding wages in “Ecowatt tokens,” as strictly stipulated in the employment contract. By enforcing the delivery of the specific token, the court upheld the sanctity of the contract’s currency clause.
However, judicial pragmatism dictates a fallback position. Where the specific asset cannot be returned, such as in cases of fraud where the tokens have been dissipated, the Dubai Court of Cassation has established a critical valuation rule. Monetary compensation must be calculated based on the market value at the time of the judgment, not the time of the breach. This forward-looking valuation ensures that a fraudster cannot profit from the market’s appreciation during the delays of litigation, ensuring the victim is made economically whole in current terms.
To understand the strategic implications of seeking specific performance versus monetary damages, see more in ‘UAE Crypto Litigation’ book publication available at www.uaecryptolitigation.com.
