A recent decision of the Abu Dhabi Global Market Court of First Instance provides useful guidance on how employment disputes may be treated when an employment contract contains an arbitration clause. In Mathonnet v Modus Operations LLC and Ayotte v Modus Operations LLC [2025] ADGMCFI 0005, the Court of First Instance confirmed that employment claims can in principle be referred to arbitration, even where the ADGM courts would otherwise have jurisdiction over the dispute.
The two cases were heard together because they raised identical issues. Both claimants were senior executives who brought claims against their employer, Modus Operations LLC, seeking unpaid salary and other statutory employment entitlements. Their claims were brought before the ADGM courts under the ADGM Employment Regulations, however, the employer applied to have the court proceedings halted on the basis that under their employment contracts each claimant had agreed to resolve disputes by arbitration instead.
Court’s Findings
At the heart of the dispute was a clause in each claimant’s Executive Services Agreement stating that any dispute arising out of the agreement should be referred to arbitration. The claimants argued that because their claims related to employment rights created by ADGM legislation they were entitled to pursue those claims in court and should not be forced into arbitration. They also relied on provisions in the ADGM employment framework which refer to employees being able to “apply to the Court” in certain circumstances.
The court began by accepting that the agreements in question were, at least on a strongly arguable basis, contracts of employment. This point was important because the claimants had suggested that employment claims should be treated differently from commercial disputes. However, the judge made clear that the real issue was not whether the agreements were employment contracts but rather whether ADGM law allows employment disputes to be resolved by arbitration if the parties have agreed to do so.
In answering that question, the court focused on the structure of ADGM legislation. While the ADGM courts are given exclusive jurisdiction over employment disputes as a general rule, the ADGM Founding Law expressly allows parties to agree on referring disputes to arbitration instead. The Arbitration Regulations further require the court to stay court proceedings if there is a valid arbitration agreement, unless that agreement is null, void, or impossible to perform. Crucially, the judge emphasised that the court has no general discretion to refuse a stay once those conditions are met.
The claimants argued that the ADGM Employment Regulations override arbitration agreements because they set minimum employment protections that cannot be waived. The court rejected this argument, drawing a distinction between substantive employment rights and the forum in which those rights are enforced. While the Employment Regulations guarantee minimum standards, they do not require those rights to be enforced only in court. Arbitration, the court said, is simply an alternative forum for resolving disputes; it does not remove or dilute the underlying rights themselves.
The judge also addressed arguments based on public policy, including comparisons with UK law, where employees are often protected from being forced into arbitration. The court held that there is no equivalent public policy rule under ADGM law that prevents employment disputes from being arbitrated. The fact that UK law takes a different approach did not change the position in the ADGM.
As a result, the court ordered that both claims be stayed and referred to arbitration. The claimants were also ordered to pay the employer’s costs of making the application. Importantly, the court declined to award costs on a punitive basis, recognising that the claimants had relied on a plausible interpretation of the employment legislation, albeit one the court ultimately disagreed with.
Looking Ahead
This decision is important in confirming that arbitration clauses in ADGM employment contracts can be enforceable, even for claims based on statutory employment rights. For employers, it underlines the importance of carefully drafted dispute resolution clauses. For employees, it highlights the need to understand that agreeing to arbitration may mean that disputes will be resolved outside the ADGM courts, even where statutory rights are involved.