Stop payment instructions by issuer of a cheque to his bank are no longer valid except under two specified circumstances. Image Credit: Agency

Dubai: Stop payment instructions by issuer of a cheque to his bank are no longer valid except under two specified circumstances, according to the new Commercial Transactions law amendment that will come to effect on January 2, 2022.

A stop payment memo or a ‘protest to the cheque’ as referred in the banking lingo, means that the drawer of a cheque issues an order to the bank not to pay the cheque value to the bearer.

As per the Commercial Transactions Law, the legislator prohibits the drawer in principle from ordering his drawee bank not to pay the cheque’s value to the bearer, whose rights include the consideration for payment (the balance).


The Central Bank of UAE has clarified that, in certain cases, the legislator allows a drawer to protest, (issue stop payment order the bank) not to pay a cheque’s value.

The amended law permits two types of protest to the cheque’s payment: one of which is for the benefit of a cheque bearer who lost a cheque against his will, such as the cheque being stolen or lost. While the second type follows a bankruptcy declaration, when a bankrupt is restrained from managing their funds and disposing of them, to protect their creditors.

The first case is a protest in case of the cheque being stolen or lost. The bearer of the cheque may object to the drawee bank in paying the cheque value, if the cheque is stolen or lost, or being obtained by fraudulent means. In this case, stop payment request (protest) can be made by either the drawer himself, or by the cheque bearer following the cheque being stolen or lost.


The new amendment to the commercial transactions law also redefines banking secrecy and confidentiality clauses.

According to the new provisions, a bank employee’s declaration that there is non-sufficient fund for the value of the cheque/part of the value of the cheque is not considered a violation of banking secrecy, as long as this declaration is within the limits of this statement.

“There is no violation of banking secrecy, so long as the bank employee’s declaration that there is non-sufficient fund, or that there is a part of it in the drawer/client’s account to cash the cheque is limited to that only, without referring to other data,” according to a note from the CBUAE.

No legal recourse

According to the amended law, when a bank provides a certificate to the cheque bearer/beneficiary of partial payment or declares that the fund is insufficient to cash the cheque, this is not a disclosure of the client’s account secrecy, provided that the bank’s declaration is limited to this statement, without extending to other information about the account, or that the client has other accounts.

It is not permissible for the customer to sue the bank because it disclosed account confidentiality, as long as the bank complied with the limits of permissibility.

On the other hand, the law punishes bank employee who refuses to cash a valid cheque without reason, or who refrains from clarifying a reason for dishonouring a cheque, or who refrains from partial payment, or who refrains from issuing a certificate to that effect, or refrains from delivering the original cheque.