They are most commonly used for financial transactions in the United Arab Emirates, so bounced checks are quite common in the country.
Cases for Cheque Bounce
They are most commonly used for financial transactions in the United Arab Emirates, so bounced checks are quite common in the country. Bounced checks occur in a variety of commercial applications, including but not limited to bank loans, rent payments, business transactions, and personal transactions.
Here is a guide to bounced check processes in the UAE, along with information about how to proceed if you are in the middle of an argument.
A bounced cheque, also known as a dishonored cheque or a bad cheque, is one that is rejected for a variety of reasons:
Article 401 of the Penal Law states that bounced cheques are a criminal offense in the UAE: “A punishment of confinement will be imposed upon anyone who, in bad faith, draws a cheque with no existing or drawable provision, or who, after issuing the cheque, withdraws all or part of the fund so that the balance becomes insufficient to settle the amount of cheque. Somebody who orders the drawee’s bank not to pay the company cheque may as well be inflicted with punishment under the law. Likewise, anyone who deliberately signs, makes, or issues a company cheque may be punished.”
If the wrong individual names or delivers a cheque the amount endorsed or delivered to the bearer is be subject to the same penalties as the person who created the cheque.
Misusing a cheque with insufficient funds is considered a criminal violation with damaging and civil penalties. If the cheque bounces, the plaintiff can file two separate suits to pursue a criminal case and a civil case for compensation and costs.
The UAE Cabinet amended certain provisions of the Federal Law No. 18 of 1993, The Commercial Transactions Law, in September 2020, including those relating to bounced cheques.
Amendments to these mechanisms establish new procedures for tracking payments relating to bounced checks. Banks are required to make partial payments to the beneficiary of a cheque when he or she has presented the check to cover the payment, if the checking account has sufficient funds to cover the claim partially.The beneficiary can then petition the court to recover the balance of the bounced check. The status of the bounced check will be generally treated as an executive document; it will be enforced and executed directly through the courts in the United Arab Emirates.
The changes will come into effect in January 2022.
The amended provisions of federal law No. 18 of 1993 concerning the Commercial Transactions Law can be found here.
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