civil law


October 31, 2022



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New rules have been introduced recently related to cheque bounce in the UAE, which include de-criminalization of bounced cheque due to insufficient funds. The new provisions have been introduced through an amendment to the Commercial Transactions Law of the UAE, called the Federal Law No. 18 of 1993 and the erstwhile Penal Code of the country.

The amendment is called the Federal Decree Law No. 14 of 2020 and introduced a flurry of new changes.

The key changes have been set out below.

Criminal Penalties Restricted

In accordance with the amended Commercial Transactions Law, criminal sanctions may still be imposed in some certain specified actions related to cheque. However, apart from the above, there will not be any criminal liabilities for cheque bounce matters.

The criminal sanctions may be imposed in the circumstances set out in Articles 641 bis (2), 641 bis (3) and 641 bis (4). These circumstances have been set out below.

Article 641 bis(2)

“Shall be punished by imprisonment for a period of not less than six months and not exceeding two years, and a fine of not less than 10% of the value of the check and of a minimum of AED 5,000 (five thousand dirhams) and not more than double the value of the check, or by either of these penalties, whoever commits any of the following acts:

  1. Ordering or requesting the drawee prior to the date of drawing a check, to refrain from paying the check he has issued in cases other than those set out in Articles 620 and 625 of this Law.
  2. Closing the account or withdrawing all the funds therein prior to issuing a check or prior to presenting it to the drawee for payment, or having a frozen account.
  3. Deliberately writing or signing a check such as to prevent its payment. The penalty shall be doubled in case of recidivism.

Article 641 bis (3)

”Shall be punished by imprisonment for a period of not less than one year and a fine of not less than AED 20,000 (twenty thousand dirhams) and not exceeding AED 100,000 (one hundred thousand dirhams) whoever commits any of the following acts:

  1. Forging or faking a check, or imputing it to a third party through the alteration of its data by addition, by deletion or by the other means set out in Article 216 of aforementioned Federal Law No. 3 of 1987, with the intent of causing harm to a third party and for the purpose of using it in respect of what it was forged for.
  2. Knowingly using a forged or fake check.
  3. Knowingly accepting amounts paid by a forged or fake check.
  4. Wrongfully using or benefitting from a check that is duly drawn in the name of a third party, or whose use is associated with a fraud.
  5. Knowingly importing, manufacturing, acquiring, possessing, selling, offering or presenting equipment, tools, technological programs, information or data used in committing forgery as provided for in this Article.”

Article 641 bis (4)

“Without prejudice to any more severe penalty prescribed by any other law, shall be punished by imprisonment for life and a fine of not less than AED 500,000 (five hundred thousand dirhams) and not exceeding AED 1,000,000 (one million dirhams) whoever commits the offences set out in Article 641bis (3) of this Decree-Law for a terrorist purpose.”

Execution for Part Payment

In accordance with Article 617 of the Commercial Transactions Law, in case the funds in the bank account is less than the value of the cheque, the bank will make partial payment up to the available amount to the beneficiary, unless the beneficiary refuses. In such a case, the bank will write the amount of partial payment made on the back of the cheque and the beneficiary will receive the original check and certificate of such payment.

Where the notice of unavailability of insufficiency of funds has been affixed to the cheques by the bank, the beneficiary has the right to file a case for execution for full or partial payment of outstanding amounts, without filing a criminal case.


The new changes related to cheque bounce aim to provide benefit to the issuer of the cheque as well as the beneficiary. The issuer of the cheque will no longer be embroiled in criminal matters only on account of insufficient funds in his bank unless the specific actions as set out above have been committed. On the other hand, the beneficiaries now have a right to obtain the partial payment from the banks and commence execution proceedings in the courts in case of insufficiency or unavailability of funds.

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