Federal Decree Law, Amendments and Laws
The government of the United Arab Emirates recently announced changes regarding rejected checks. The Federal Decree-Law No. 18 of 1993 pertaining to commercial transactions. Top Lawyers in Dubai with Government Lawyers and Law Firms.
Position in the Past & Recent Changes
The most significant modifications are the altered criminal penalties associated with the offence of a bounced check. Lawyers in Abu Dhabi will tell you exactly what recent changes have been done to the laws regarding this issue.
Previously, under the former UAE Penal Code (Federal Law No. 3 of 1987), a cheque bounce caused by a lack of cash may result in incarceration as a form of criminal punishment (Article 401). The Penal Code's deletion by the new law, however, essentially eliminates any criminal culpability in the event that a check bounces due to a lack of cash.
Instead, the new law offers the following options as a remedy for a lack of funds: The beneficiary of a bounced check may utilize it to launch an execution case with the UAE courts in accordance with Article 635 bis.
The modified Commercial Transactions Law provides as follows in Article 635 bis. According to the Implementing Regulation of the aforementioned Federal Law No. 11/1992, "A check with a notice of lack of funds or insufficiency of funds attached by the drawee will constitute a writ of execution, and its bearer may request its complete or partial obligatory execution.
The Implementing Regulation mentioned in this Article's execution and any challenges thereto shall be governed by the regulations, practices, and guidelines set out there.
According to Article 617 of the Commercial Transactions Law, the beneficiary of the check is also entitled to receive partial payment under the Commercial Transactions Law as amended. This is relevant when the amount of money on hand is less than the check's value. The beneficiary will continue to be entitled to receive the balance of the due sums even after the issuer certifies that a partial payment has been made.
The Execution Process:
As a result, once the bank confirms the lack or inadequacy of cash, the beneficiary may bring an execution case in accordance with the Civil Procedure Law (Federal Law No. 11/1992) before the UAE courts under Article 635 bis of the amended Commercial Transactions Law. This essentially means that execution procedures can now be brought against the check issuer, and as part of such processes, the court may order the attachment or seizure of the check issuer's personal property, shares, and real estate, among other things (up to the value of the cheque).
