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Decriminalization of cheque bounce in UAE: Granting more security?

Year of 2020, generally known as year of pandemic. The world witnessed the uncertainty which in unprecedented in the history of humankind. Though the world has survived and managed multiple epidemic situations in the past, still Covid-19 stands unique its way and its impact caused to humanity at large. However, the nation states have managed the time-to-time emergency situations of this virus and its variants.

For us and United Arab Emirates – UAE, it is a year of Historic EXPO 2020, though it was moved to 2021 due to the pandemic situation and successfully attracting the world by the grace of almighty under the visionary leadership of this Arab federation.  We have also witnessed a sweeping legal reform in this period including the changes in the cheque bounce and its legal impacts which came to effect by this January.

Cheque bounces were termed as Cheque fraud offence punishable under Art. 401 of UAE penal code, whereby the registration of case will attract the automatic arrest warrant and travel ban for the issuer and signatory.  The cases were decided with the penalty of imprisonment or fine depending upon the value of the cheque at the discretion of the presiding judge. There was time to time executive decree assigning the misdemeanor offences for the consideration of prosecutor at the emirates level. At the end of the day, the drawee had to approach the civil court for the realization of dischargeable debt through the appropriate procedure.

There was huge out-cry from the business community to decriminalize the cheque offences on multiple grounds. In this context the government brought federal Decree no. 14/2020 amending and adding articles to the commercial transactions law no.18 of 1983.  Most of the amendments primarily reference to the cheque rules.  Art. 3 of the federal decree no.14/2020 abolished the Articles (401), (402) and (403) of the Federal Law No. (3) of 1987. But the federal decree also added certain actions of the drawer with criminal implications under Art. 641(1), (2) and (3) of the commercial transactions code. Those actions are of fraudulent in nature and shall make mens rea of the drawer from the actus reus. Therefore, the legislative intent is justifiable from the safe jurisprudential approach.

Reading together the other provisions of the federal Decree No. 14/2020 and commercial transactions code enable the beneficiary of the cheque to receive the partial payment depending upon the available fund in the account without any approval from the account holder.  The beneficiary can proceed execution proceeding with the support of certificate from the bank under federal civil procedure code no. 11 of 1992 for realizing the amount. Means the civil execution can be directly sought including the travel ban and seizure of assets without civil or commercial case proceedings.

In conclusion, it can be said that the changes brought by the new federal decree shall boost the business confidence and promote the corporate’s trust to deal with cheques in UAE

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