Dubai Courts begin decriminalising cases of bounced cheques

Only offences involving fraud will face court action from January 2, 2022

The move is in line with efforts to speed up judicial procedures and improve the efficiency of the court system. Photo: The National

Dubai Courts have begun to apply new legislation that decriminalises most cases of bounced cheques.

Only offences found to involve fraud – such as when a person deliberately sets out to deceive the recipient or withdraws funds before the cheque can be cashed – will be brought before the courts.

The move is in line with efforts to speed up judicial procedures and improve the efficiency of the court system.

“Criminalisation has been limited to cases of fraud in issuing a cheque or in cases where there were sufficient funds but were withdrawn by the issuer,” said Khalid Al Mansouri, Chief Judge of the Enforcement Court, in a statement.

He said settling cases out of court would lead to swifter resolution for complainants.

“This is in line with the initiatives and strategic plans of Dubai to support a sustainable economy and achieve faster, more accurate justice that represents the vision of Dubai Courts of becoming distinct courts globally,” he said.

In October last year, the UAE Cabinet updated the country's Federal Law on Commercial Transactions with several new provisions that aimed to discourage criminal lawsuits against people and businesses for bouncing cheques.

The updated law, which will come into effect across the country in 2022, redefines crimes involving bounced cheques and the issuance of cheques without value.

Under further amendments announced in November, the scope for criminalisation of returned cheques owing to insufficient funds has been narrowed and confined to cases of bad faith and other cheque crimes.

Courts in Dubai are already putting the procedures into effect.

Complainants can directly approach the judge to order payment of the cheque’s value or what is remaining of it.

Banks are also obliged to make partial payments by releasing any available funds in the bank account for the benefit of the cheque bearer unless the beneficiary disagrees.

In 2017, Essam Al Humaidan, Dubai’s attorney general, took steps to move cases of bounced cheques – that were included among a range of other minor offences – outside the court system.

The decision – known as the Penal Order – authorised Dubai prosecutors to issue fines against offenders instead of referring them to the courts.

Fines against bounced cheques up to Dh50,000 in value are Dh2,000. Those who bounce cheques of between Dh50,000 and Dh100,000 were fined Dh5,000.

Dh10,000 would be the fine for bounced cheques between Dh100,000 and Dh200,000.

Bounced cheques accounted for 83 per cent of cases settled without having to go to court in 2020, Mr Al Humaidan said.

Last year, 16,289 cases were settled out of Dubai's courts under the Penal Order, which involved Dh48.1 million ($13.1m) in fines.

These included 13,517 cases of bounced cheques.

“The Penal Order has achieved great results. It has saved time and effort and allowed courts to focus more on serious offences,” Mr Al Humaidan previously told The National.