Date: 04 Nov 2020
The UAE Cabinet has ratified a decree to amend certain provisions of the UAE’s Commercial Transactions Law (the “Decree”), and it is expected to come into force in 2022.
Currently in the UAE, giving a cheque without having sufficient funds to meet the payment (colloquially known as bouncing a cheque) is a criminal offence pursuant to the UAE Penal Code. Over the years there have been a number of amendments and qualifications to restrict the criminal liability which arises from the Penal Code with respect to bounced cheque crime.
How will the Decree significantly change the current provisions?
The Decree aims to provide a streamlined mechanism for parties to agree to retrieve the funds of the cheques. The amendments include key changes such as the re-definition of the events that constitute a criminal offence when a cheque is dishonoured, including the following circumstances:
These amendments are significant and once enacted would revoke the current offence of issuing dishonoured cheques, as outlined under the Penal Code, save for the events that are regulated by the new amendments.
It is also pertinent to mention that the amendments aim to ease the enforcement options available to beneficiaries of dishonoured cheques by deeming a dishonoured cheque as an executive document that could be enforced and executed directly by the competent judge at the UAE courts.
The Decree also covers other legal issues, including:
In addition, as a result of the amendments, a number of related penalties would be introduced, including:
The new amendments have been welcomed as a significant development in UAE legislation and should help to further the UAE’s goals and vision to support the economic and commercial sectors, while maintaining protection of cheques as payment instruments.
We will keep you up to date on these developments as they come into force. However, if you have any questions in the meantime, please do not hesitate to contact us.