UAE authorities implement amendments to law decriminalising cheque bounce

Abu Dhabi: The law regarding decriminalisation of cheques, and amendments relating to partial payment of the cheque, and toughen administrative penalties for issuing cheques without funds will come into effect from January 2, 2022, according to the Central Bank of UAE.

“New amendments to the Commercial Transactions Law, in accordance with Decree Federal Law No (14) of 2020 are in line with the government’s initiatives to build and support a sustainable national economy based on best international practice.

“The Central Bank’s strategic initiatives and plans to upgrade banking laws and regulations continuously to track developments in the financial sector, to fill any legal gaps and shortcomings, and to deliver the CBUAE’s vision to follow best practice internationally in this respect,” said Khaled Mohamed Balama, Governor of the Central Bank of the UAE.

“These amendments would assist in facilitating commercial and banking transactions, streamlining procedures for collecting the cheque’s value, and making the use of cheques more flexible.”

The new amendments are aimed at reducing the negative aspects revealed by practical experience of dealing with cheques, compared to the best and most successful international practices.

The new amendments would also consolidate the principles of justice by striking a balance between the interests of the cheque beneficiary or bearer in fulfilling their rights as soon as possible, and the drawer’s interest in removing any criminal case filed for non-payment of the cheque.

Narrow scope for criminalisation

Under these amendments, the scope for criminalisation of returned cheques due to insufficient funds has been narrowed, and confined to cases of bad faith and other cheque crimes. This would deliver the desired goals of replacing decriminalisation with preventive measures, coupled with deterrent alternative penalties to reduce the misuse of cheques.

These amendments are also aimed at securing the rights of cheque bearers and beneficiaries, and would also expedite collection of the cheque value in a more effective manner (determined by the Central Bank), whilst also encouraging the public to use modern technology and digital means, instead of traditional paper cheques.

Partial payments

According to these amendments, partial payment of the cheque has also become mandatory. If the amount available for payment is less than the cheque value, the drawee bank must pay the amount partially, unless the bearer rejects partial payment.

“Amending Certain Provisions of the Commercial Transactions Law, is an essential step in developing and enhancing the flexibility of legislation regulating economic, business, trade and investment activities in the UAE,” said Abdullah Bin Touq Al Marri, Minister of Economy

Changes to the law would reinforce the principles of justice, fairness and equal opportunities in commercial transactions and the business environment in the country, and contribute to enabling sound commercial practices at both individual and institutional levels.

“Criminalisation has been confined to cheque forging and their illegal use, deliberately writing or signing cheques in a way that render them unpayable, the criminalisation referred to in the Penal Code on issuing cheques without funds, or the phenomenon known commonly as returned or “bounced” cheques, was cancelled, similar to the adopted practice in a large number of jurisdictions, such as France and the United States of Ameria,” said Abdullah Sultan Bin Awad Al Nuaimi, Minister of Justice.