Decoding Bounced Cheques in the UAE: Navigating the Altered Legal Landscape
August 11, 2023
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In recent times, substantial shifts have transformed the landscape of handling bounced cheques within the UAE. These changes have arisen due to the revision of criminal penalties for bounced cheques owing to insufficient funds. To help individuals better grasp this new legal landscape and its nuances, this blog post provides guidance on the steps to take when grappling with a bounced cheque situation in the UAE.
Notably, the UAE Cabinet has recently introduced extensive revisions to various provisions within Federal Law No. 18 of 1993, often referred to as the Commercial Transactions Law. Among these revisions, there lies a notable transformation in the regulations pertaining to bounced cheques. These changes officially took effect on January 2nd and have brought about a shift in the manner of reporting such cheque-related incidents.
If you find yourself holding a bounced cheque, the initial step of paramount importance is securing a certificate of the bounced cheque from the bank. This certificate is pivotal and plays a central role in the comprehensive documentation required when presenting your case in court.
This certificate should encapsulate essential details of the account holder, including their name, address, email, Emirates ID, and any other relevant particulars as they are recorded in the bank’s system. It’s noteworthy that the bank is also tasked with the responsibility of delving into the issuer’s additional accounts, encompassing cash assets and other pertinent details concerning the cheque holder.
Once you have gathered the essential certificates and details, the issuer of the bounced cheque can access the Dubai Courts’ website to utilize the services designed for managing bounced cheques. If you are in Dubai, the cheque execution service can be accessed directly through the Dubai Courts website or via the services of legal firms, as per the guidance provided by Dubai Courts.
When proceeding with your claim, it’s imperative to ensure that you have the following requisite documents:
An identification card (for individual applicants) or a Lawyer Card (if the application is being submitted by a lawyer).
The Commercial License, if the applicant represents a company or any other type of business entity.
A copy of the bounced cheque and a “Cheque Return Memo” elucidating the reasons for the cheque’s return.
Documents validating the grounds for issuing the cheque.
An affidavit affirming the accuracy of the information provided in the cheque request. This affidavit also serves to confirm that no prior lawsuit has been initiated to recover the amount specified in the bounced cheque.
A completed section detailing the return address, which should encompass comprehensive information about the involved parties, their addresses, and the proposed payment relief based on the cheque’s amount.
Managing a bounced cheque comes with its associated costs. The cheque holder is obligated to cover the following expenses:
Two percent of the cheque’s amount or the remaining amount, if the bank has made a partial payment from the account.
A fee for requesting a travel ban on the issuer of the bounced cheque, ranging from Dh50 to Dh300. Typically, this fee is limited within the Dh200 to Dh5,000 range.
Upon settlement of these fees, the cheque holder will receive an executive bond, and a travel ban against the issuer will be activated.
In a bid to recover their funds, the holder of a bounced cheque has several options:
Liquidating any assets or cash held by the issuer.
Placing the issuer on a wanted list to compel them to pay the cheque amount, but only after a mandatory 15-day notice period following the notification through the court.
On the other hand, the issuer has a grace period of 15 days after notification to settle the amount comprehensively with the court. This settlement should include a financial report, a wage certificate, and an inventory of assets, such as vehicles, commercial licenses, shares, and properties.
The recent amendments to the UAE’s Commercial Transactions Law have indeed streamlined the process of handling bounced cheques. It is crucial for both cheque issuers and holders to be well-versed in these changes to effectively navigate the altered legal landscape. If you find yourself in a situation concerning a bounced cheque, following the steps outlined above and seeking legal counsel when necessary is strongly advised. Your awareness of this process is instrumental in achieving a favorable resolution.