The UAE’s efforts in solving bounced cheque cases through fast and effective civil mechanisms will go a long way in avoiding criminal proceedings in such cases and improving business confidence in the country.
The UAE Cabinet on Monday issued a decree bringing about changes to the Commercial Transactions Law, including those related to bounced cheques.
One of the most significant provisions of the new law coming into effect in 2022 is the mechanism that will ensure the collection of payments through cheques without involving criminal lawsuits.
The essence of the law lies in reconciliation of disputes between parties while the original value of the amount for which the cheque is written is paid to the beneficiary to avoid criminal procedures.
The progressive legislation is a clear move towards finding a balance so that mala fide intent is punished while other less serious cases are given opportunities to settle amicably
While the new law is not a blanket guarantee on decriminalising cheque bounce cases, it provides several viable legal alternatives to discourage wilful delinquencies. The amendments to the law come with a number of alternative penalties, including cancellation of chequebooks of persons found guilty of issuing dud cheques and preventing them from obtaining new ones for a maximum period of five years, as well as halting their professional or commercial activities. Introduction of additional penalties such as financial fines, the suspension of licences to practice economic activities for six months, and the revocation or dissolution of the licences of legal persons who repeat violations will also act as strong deterrent.
The case for decriminalising cheque bounces as far as possible is ever more relevant as businesses across the world have been hit hard by the COVID-19 pandemic. The crisis has had a crippling effect on various sectors of the UAE economy too. It is only natural that in extraordinary situations such as these, the economy is likely to face ruptures in cash flows across various sectors leading to a domino effect in the payment chain. Inclusion of appropriate provisions in the laws, as is the case in the latest amendment to the Commercial Transactions Law is timely and will go a long way in giving the much needed breathing space for businesses to meet their financial obligations without inviting criminal proceedings and or causing financial losses to counter parties.
The progressive legislation is a clear move towards finding a balance so that mala fide intent is punished while other less serious cases are given opportunities to settle amicably. While replacing criminal proceedings in these cases as far as possible with robust civil solutions will lift the business confidence and reduce legal costs business, additionally, this will reduce the burden of law enforcement agencies and the judicial system on cumbersome investigations and delivery of justice.