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Cheque Regulations in the UAE: Crimes, Enforcement, and Legal Rights
Cheque regulations in the UAE
Crimes, enforcement, and legal rights
The cheque is one of the most commonly used payment instruments in the UAE, governed by a series of federal legislations, most notably: Federal Decree-Law No. (50) of 2022 regarding commercial transactions, Federal Decree-Law No. (31) of 2021 regarding crimes and penalties, and Federal Decree-Law No. (42) of 2022 regarding civil procedures.
In this article, our team reviews the key legal issues related to cheques that are frequently questioned.
First: Is a cheque without funds a crime?
Yes. The Penal Code criminalizes issuing a cheque that is not backed by sufficient funds or is less than its value. The crime occurs as soon as the cheque is issued with the knowledge of insufficient funds, whether the cheque is due or deferred.
Second: The cheque as an executive instrument
Under the Civil Procedures Law, a cheque is considered an executive instrument in itself without the need for a court ruling. The holder of the returned cheque has the right to directly approach the execution judge to obtain an order for execution against the drawer's assets.
- The execution request must be accompanied by the original cheque and a return certificate from the bank.
- The execution judge is responsible for issuing the order and verifying compliance with the formal requirements.
- There is no requirement to file a substantive lawsuit beforehand to claim the cheque amount civilly.
Third: Executing the cheque and seizing accounts
The holder of the check may take two parallel paths: the criminal path by filing a report, and the civil path by requesting direct execution. The execution judge may order the attachment of bank accounts and other assets of the drawer provisionally until payment.
Fourth: Objection to the payment of the check
The Commercial Transactions Law allows the drawer to request the stoppage of the check payment in specific cases only:
- Loss or theft of the check.
- Bankruptcy of the holder or their incapacitation.
- Existence of a serious dispute regarding the validity or legality of the check, provided there is a supporting judicial decision.
An objection outside these cases is considered an unlawful act that may expose its owner to legal liability.
Fifth: Postdated checks
A postdated check is a check that bears a future date and is delivered as a guarantee for a commitment or a deferred payment. Despite its common use, the Commercial Transactions Law recognizes its legal effect, as the bank may not cash it before the written date. If it is returned after its date due to insufficient funds, the same criminal and civil provisions applicable to a regular check apply.
Sixth: Expiration of the right to claim the value of the check
The Commercial Transactions Law requires adherence to the deadlines for presenting the check for payment; otherwise, some rights of recourse will expire:
| Place of issuance of the check | Deadline for presentation for payment |
|---|---|
| Issued and payable within the country | 6 months from the date of issuance |
| Issued outside the country and payable within it | 6 months from the date of issuance |
Failure to meet these deadlines does not extinguish the right to civil claim for the value of the check in general, but it may extinguish the right of recourse against certain obligors such as endorsers and guarantors.
Seventh: Forgery of checks and use of forged checks
The Penal Code criminalizes both the forgery of a check and its use with knowledge of its forgery, and the forms of criminalization include:
- Forging the signature or the details recorded on the check.
- Changing the value of the check, its date, or the name of the beneficiary.
- Using a forged check to obtain amounts or services.
The victim has the right, in addition to the criminal lawsuit, to file a civil lawsuit to claim compensation for the resulting damages.
Eighth: The company's liability for checks
If a representative of the authorized company issues a check in its name, the company bears civil liability for it primarily. However, the Commercial Transactions Law and the Penal Code also establish the liability of the person who issued the check or ordered its issuance in the following cases:
- If the check is signed by him in his personal capacity or as a representative of the company.
- If it is proven that he issued the check knowing that the balance was insufficient.
- If he is a director or a general partner who possesses the actual management capacity.
Thus, the legal personality of the company does not always constitute a shield against personal criminal liability in check cases.
Frequently Asked Questions
Can the execution of the check be suspended after it has been submitted for execution?
The execution judge may temporarily suspend the execution if the debtor provides sufficient guarantees or proves the existence of a serious defense such as the forgery of the check or the expiration of the original obligation, by a reasoned decision.
Does the criminal case end with the payment of the value of the check?
Yes, the criminal case in the crime of a bounced check ends with the full payment of its value before a final judgment is issued or with the waiver of the victim, according to the explicit provisions of the Penal Code.
Can the debtor's salary be garnished due to a bounced check?
Wages may be garnished within the legally prescribed limits, as it is generally not permissible to garnish more than a quarter of the net salary, taking into account the exceptions established for the maintenance of the wife and children.
What is the difference between a check as an executive instrument and a regular civil lawsuit?
A check is an executive instrument that allows for direct submission to the execution judge without the need for a court ruling, while a regular civil lawsuit requires filing a claim and waiting for the ruling before execution, making the check process faster and less costly procedurally.
Is a post-dated check considered a legally recognized guarantee?
Yes, it produces its full legal effects from the date written on it. It is advisable to document the relationship between the check and the guaranteed obligation to avoid disputes.
Do I have the right to claim compensation in addition to the value of the check?
Yes, the holder of the check has the right to claim its value and compensation for the material and moral damages resulting from the refusal to pay, through an independent civil lawsuit or a civil lawsuit subsidiary to the criminal lawsuit.
Summary
- A check without funds is a criminal offense that ends with payment or waiver before the final ruling.
- A check is a direct executive instrument that eliminates the need to file a substantive lawsuit.
- Objections to payment are limited to exclusive cases; otherwise, there is legal liability.
- A post-dated check produces the effects of a regular check after its date has arrived.
- Forgery of a check or its use is a crime punishable by imprisonment and fines.
- The company's liability does not preclude the personal liability of the person who issued the check or ordered its issuance.
If you are facing a dispute related to a check or need specialized legal advice, our office team is fully prepared to review your case and provide the necessary consultation.