Bouncing a cheque in the UAE can have serious legal consequences. Bounced cheques can result in criminal charges, including fines and imprisonment.
The Federal Law Number 18 of 1993, issuing the Commercial Transactions Law, which regulates the matters of issuing cheques, defines a cheque in its Article number 483 as a commercial paper containing an order issued by the drawer to a bank (the drawee) to pay, on the date indicated therein as the date of issue, a specific sum of money to the order of a third person (the payee), being the beneficiary, or the bearer thereof.
LEGAL PENALTIES
Article 401 of Federal Law No. 3 of 1987 outlines penalties, including fines and imprisonment, ranging from AED 1,000 to AED 300,000, depending on the severity of the case.
INNOVATIVE SOLUTION
“ONE DAY COURT” To streamline the process and reduce the burden on legal entities, UAE legislators introduced the “ONE DAY COURT” system, expediting minor bounced cheque cases with decisions issued within 24 hours.
REVISED PENALTIES FOR “SIMPLE CRIMES
” The amended law allows criminal courts to impose fines without imprisonment for “simple crimes” involving cheques valued at AED 200,000 or less. The fine ranges from AED 5,000 to AED 10,000.
CIVIL PROCEEDING AND IMPLICATION OF BOUNCING OF CHEQUE
- CRIMINAL TO CIVIL TRANSITION:
Following sanctions in criminal court, the case moves to civil court for determination of civil claims.
Civil court issues an order for full debt payment or the remaining amount.
- ENFORCEMENT MEASURES:
Failure to comply leads to asset attachment and an additional offense, resulting in a jail term.
Upon completing the term, and if no other charges remain, the offender is released.
- PASSPORT CONFISCATION AND RELEASE:
Confiscated passports are returned upon completing the jail term.
Offender can leave the country without restrictions if no other charges persist.
- ARTICLE 642 PUNISHMENT:
Article 642 of UAE Commercial Transaction Law allows the court to publish the judgment in Arabic and English newspapers or online.
Includes personal details, and publishing expenses are borne by the convicted person.
- ONE DAY COURT System:
New system expedites minor bounced cheque cases, offering resolution within 24 hours.
Successfully implemented in Abu Dhabi, Dubai, and Ras Al Khaimah, enhancing efficiency in handling misdemeanors.
CRIMINAL PROCEEDINGS AND IMPLICATIONS IN CASE OF CHEQUE BOUNCE
- INITIATING CRIMINAL CASE:
Cheque bearer files a formal complaint against the drawer with relevant emirate’s police.
In Dubai, complaints can be filed on the Dubai Police mobile app.
- POLICE INTERVENTION:
Police inform the cheque issuer after receiving the complaint.
Dispute can be settled at the police station by paying the cheque amount, avoiding further proceedings.
- ASSET ATTACHMENT AND TRAVEL BAN:
Failure to settle leads to asset attachment.
Bounced cheques are considered criminal, resulting in a travel ban and potential arrest warrant.
- PUBLIC PROSECUTION AND COURT PROCEEDINGS:
If not resolved at the police station, complaint moves to public prosecution.
Public prosecution investigates and decides on bail or detention based on evidence.
- PENALTIES ACCORDING TO LAW:
Article 401 of Federal Law No. 3 of 1987 dictates penalties.
As per the amendment in 2020, penalties include fines of AED 1,000 to AED 30,000 or imprisonment for one to three years.
- CHEQUEBOOK WITHDRAWAL AND FINE:
Court may order withdrawal of the chequebook.
Failure to comply results in a fine up to AED 100,000.
- ABU DHABI AND DUBAI DECISIONS:
Abu Dhabi PP Decision: No criminal sanctions for bounced cheques up to AED 500,000.
Dubai Decision: Bounced cheques up to AED 200,000 incur a fine of AED 10,000.
- DUBAI FORGERY PUNISHMENT:
Forgery of cheques in Dubai results in imprisonment for one year and a fine of AED 20,000 to AED 100,000.
“BEWARE THE BOUNCE”
