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Redefining Crimes Involving Cheques
By Hiba Tawfik of Motei & Associates
November 23, 2020

The UAE Cabinet approves key decree amending Commercial Transactions Laws pertaining to bounced cheques and issuance of cheques without value

As part of the UAE’s continuous efforts to strengthen the country’s position and role as a leading hub for business and embracing major players in the commercial and economic sphere, the UAE Cabinet approved a decree amending certain provisions of the Federal Law on Commercial Transactions.

The Decree’s main objective is to strengthen the value of cheques as a prominent tool in commercial transactions. This is expected to come into force in 2020 and has redefined crimes involving cheques to encompass the following:

  • Criminal liability: The amendment aims to facilitate reconciliation by abolishing criminal liability for bounced cheques with certain exceptions yet to be clarified. Instead, payment of the value of the original cheque will be the main condition for abatement of a criminal lawsuit.
  • Collection of payments: The amendments will create a number of alternatives to ensure effective and efficient collection of payments through cheques such as obliging banks to partially pay the amount after deducting the total amount available to the beneficiary, and making bounced cheques an executive document to be executed directly by an appropriate judge in court.
  • Ancillary penalties: The amendment will introduce additional penalties such as cancelling the cheque books of convicted persons, preventing them from obtaining new ones for a maximum period of 5 years and suspending their professional/commercial activities.
  • Penalties for the legal person (excluding bank and financial institutions): Additional penalties include a financial fine, suspending of the license to practice the activity for a certain period of time, and revoking the license for repeated violations.
  • Joint bank accounts: In addition to issues of bounces cheques, the amendment also encompasses rights of joint account holders. If one of the joint account holder dies or loses legal control, the other joint account holders must notify the bank within 10 days and the bank must, from the date of notification, limit the ability to withdraw from the joint account within a party’s share of the account balance until the successor is appointed.

Accordingly, these changes will shorten the judicial procedure for a civil claim to the value of the cheque by facilitating the right to submit a direct request to the execution judge, reconciling with the government’s bigger objective of expediting the resolution of cases and simplifying litigation.

This is a milestone for the UAE in enhancing and prompting competitiveness of the national economy as well as a vital motivation to support the legislative sector in achieving the UAE’s global leadership and prominence.

For further information about this article, please write to: contact@motei.com. M&A is a Dubai-based law firm boasting vast experience in disputes resolution and general corporate, commercial transactional services. Operating in an increasingly challenging market, we are a dynamic, innovative and dedicated firm with an effective blend of experienced lawyers and young talents. We conduct business in Arabic, English and French with equal proficiency.

Disclaimer: Whilst every effort has been made to ensure that the details contained herein are correct and up to- date, this information does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

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