Commercial Transaction Law amendments decriminalise dud cheques, with exceptions
Dubai: Changes to UAE’s Commercial Transaction Law – which include narrowing the scope for criminalisation of returned or “bounced” cheques due to insufficient funds – will be effective starting today (January 2).
Last year, the UAE Cabinet amended some provisions of Federal Law No. 18 of 1993 (Commercial Transactions Law), including those related to bounced cheques.
According to Judge Khalid Obaid Al Mansouri from Dubai Courts, the new legislation turns the bounced cheque into “an executive bond” that can be directly addressed via civil court.
He said: “This means the law shortened the litigation process for claiming the cheque amount and took it directly to implementation. The law has accelerated the maturity value of the cheque since the holder of the bounced cheque has the right to carry out the process directly from an executive judge,” Al Mansouri said.https://player.vimeo.com/video/661682080?h=58c3726589&app_id=122963
Another change, he added, is that according to Article 617 in the Decree Federal Law No.14 of 2020, the bank can partially fulfill the amount of the bounced cheque.
“The bank can pay the amount available in the cheque issuer’s account, regardless of what sum is found in the account. For example, if the cheque value was Dh100,000 and the account had Dh50,000, the bank would have to pay the existing amount of Dh50,000,” he said.https://player.vimeo.com/video/661682194?h=cdb37bb5c7&app_id=122963
The holder of the cheque would have to refer back to the source of the cheque to claim the balance.
Crime and punishment
Wageh Amin Abdelaziz, senior legal adviser at World Centre Advocates and Legal Consultants, told Gulf News there are certain situations in the new law that criminalise the issuance of the bounced cheque.
If the cheque issuer asks the bank, before the date of encashment of the cheque, not to encash the cheque, or withdraws the entire balance of the account before the cheque is presented to the bank, or deliberately writes a cheque in a way that prevents it from being encashed, the punishment for such cases stipulate imprisonment between six months to two years and fine for a minimum of 10 per cent of the cheque amount and not less than Dh5,000.
Meanwhile, punishment for the forgery of cheques shall be imprisonment for a minimum of one year and fine between Dh20,000 and Dh100,000. The same punishment will apply to anyone using a forged cheque or obtaining money by using a fake cheque under a different name or if using the cheque linked to fraud.
“The court has the right to order a ban on the convicted person from practicing any commercial or occupational activity for up to three years if the crime occurred [in the capacity of] practicing a business. In case of repetition, imprisonment for minimum one year and a fine between Dh50,000 to Dh100,000,” said Abdelaziz.
Moreover, the new amendment gives the power to the court to order the suspension of the legal person’s business for no more than six months, and in case of repetition, cancellation of trade licence and insolvency.
Article 644 Bis 1 of the amendment states that if the issuance of the bounced cheque is in the name of, or for the benefit of, a corporate person, the person in charge of actual administration shall not be liable to punishment unless it is evident that such person has been aware of the crime or that such person has committed the crime for the benefit of himself or third parties.
Where the liability of the natural person is not evident, the legal person shall be subject to a penalty of no less than twice the legally applicable penalty for this crime and no more than five times of it, according to the same article.
Article first appeared on GulfNews.