Question:
Who bears cheque bounce charges in the UAE?
Answer:
The UAE is continually updating the laws concerning cheque bounce matters. Some of the newly proposed changes allow for the creation of a clear mechanism whereby the banks are obliged to release the partial payment on the cheque amount when an account balance is available in order to satisfy the cheque amount at least partially. In addition, a bounced cheque is now legal termed as an executive document allowing the beneficiary to proceed with direct enforcement measures before the UAE civil courts. The court will direct the issuer of the cheque to pay the cheque amount, and in the instance, the payment is not made, steps can be taken towards steps for liquidation of assets and also impose imprisonment terms.
Federal Decree-Law No. (14) of 2020 Amending Certain Provisions of the Federal Law No. (18) of 1993 ‘Concerning the Commercial Transaction Law’ (‘New decree’), provides for:
Article 617 of the new decree states that “Where the fund for payment is less than the value of the cheque, the drawee shall partially pay the value of the cheque up to the available fund unless the bearer rejects partial payment. In the case of partial payment, upon each partial payment, the drawee shall initial the back of the cheque confirming the partial payment and give back the original of the cheque to the bearer along with a certificate to that effect. Such certificate shall validate the right of the bearer to demand the payment of the remaining amount against the original of the initialed cheque as per Article (635) Bis of this Law or to submit a protest after the expiry of time limits provided for in Article (632) of this Law”
Another interesting facet of the New Decree is to allow a process for publication of a judgment against an offender in any two widely circulated daily newspapers in the UAE, in both English and Arabic. The published synopsis shall include- in all cases- the convicted defendant’s name, address, profession, and ordered penalty. Publication becomes compulsory in case of repetition of conviction for the crime.
Charges for cheque bounce:
The new decree is proposed to be in effect from January 2022 onwards and imposes a penalty charge of 10% of the cheque value for bounced cheque matters on the issuer of the cheque and subject to a minimum penalty charge amount of Aed 5000 and a maximum penalty charge amount of no more than twice the cheque value.
Pursuant to the current provision in effect:
In Dubai, a cheque bounce case invites on the issuer of the cheque a penalty charge of:
Aed 2000 for cheque value 0.00 – 50,000.00
Aed 5000 for cheque value 50,001.00 – 100,000.00
Aed 10,000 for cheque value 100,001.00 – 200,000.00
In Abu Dhabi, a cheque bounce case can invite on the issuer of the cheque a penalty charge of:
Aed 1000 for cheque value 0.00 – 50,000.00
Aed 3000 for cheque value 50,001.00 – 100,000.00
Aed 5000 for cheque value 100,001.00 – AED 200,000.00
Aed 10,000 for cheque value 200,001.00 – AED 300,000.00
Aed 10,000 for cheque value 300,001.00 – AED 500,000.00
The new amendments have been introduced with stricter penalties to narrow the scope of writing bad cheques and have a concise mechanism in place to handle cheque bounce matters. The New Decree shall be published in the Official Gazette and shall come into force on 2 January 2022.
