Employment Disputes and Arbitration in the ADGM: Key Takeaways from the Modus Operations Decision

In Mathonnet v Modus Operations LLC and Ayotte v Modus Operations LLC [2025] ADGMCFI 0005, the ADGM Court of First Instance clarified that employment claims can be referred to arbitration where the employment contract contains a valid arbitration clause, even though ADGM courts would otherwise have jurisdiction under the Employment Regulations. The cases were heard together because they raised the same issue: senior executives claimed unpaid salary and statutory entitlements, while Modus Operations LLC sought to stay the court proceedings based on arbitration clauses in their Executive Services Agreements.

 

The Court’s Analysis

The key issue was whether an employment arbitration clause could displace the ADGM courts’ default employment jurisdiction. The claimants argued that ADGM statutory employment rights must be court‑enforceable and that the Employment Regulations’ references to employees applying to the Court prevented arbitration from replacing court jurisdiction.

 

The Court noted the agreements were strongly arguable employment contracts, but said classification was not decisive. The real issue was whether ADGM law allows employment disputes to be arbitrated where the parties expressly agreed.

 

The Court held that, although ADGM courts have employment jurisdiction, the ADGM Founding Law permits parties to choose arbitration. The Arbitration Regulations require the Court to stay proceedings where a valid arbitration agreement exists, unless it is null, void, or incapable of performance. Once those conditions are met, the Court has no general discretion to refuse a stay.

 

The claimants argued the Employment Regulations override arbitration because minimum employment protections cannot be waived. The Court rejected this, distinguishing substantive rights from the forum for enforcement. The Regulations protect minimum rights, but do not require exclusive court enforcement; arbitration is only an alternative forum and does not reduce those rights.

 

Implications for Employers and Employees

This ruling confirms that arbitration clauses in ADGM employment contracts may be enforceable even for statutory employment claims. Employers should ensure dispute resolution clauses are carefully drafted, while employees should note that agreeing to arbitration may mean statutory claims are decided outside the ADGM courts.

 

Middle East Alliance Legal Consultancy

Middle East Alliance Legal Consultancy advises employers and employees on ADGM employment law, arbitration agreements, and dispute resolution strategy. We assist with drafting enforceable employment contracts, jurisdictional issues, and representation before the ADGM Courts and arbitral tribunals, providing clear and commercially focused guidance on rights and obligations in the ADGM.