As of January 2, 2022, a cheque bounced due to insufficient funds is no longer classified as a criminal offense in the UAE. However, this change in the law does not absolve the issuer of liability. The recipient retains the right to pursue legal remedies through Cheque Execution Proceedings.
Under the amended Commercial Transactions Law, Article 635 (Bis), individuals who issue cheques that are dishonored due to insufficient funds may face coercive enforcement measures as outlined in the Executive Regulation of Federal Law No. 11 of 1992. This law grants the payee full authority to demand partial or complete payment from the issuer.
The amendments also introduce the Cheque Execution Process, which specifically addresses cases of bounced cheques caused by insufficient funds. The revised law eliminates the criminal consequences of such cases, treating cheques as enforceable legal instruments. This change facilitates faster precautionary and execution proceedings, allowing the payee to bypass lengthy civil litigation, including claims, appeals, and execution delays.
Defending a cheque execution case in the UAE requires presenting a robust legal defense to challenge the enforcement of the bounced cheque. The legal framework for such cases is governed by both commercial and criminal laws, particularly Federal Decree-Law No. 14 of 2020 (amending the UAE Commercial Transactions Law) and the UAE Penal Code. Below are key defenses to consider when contesting a cheque execution case.
Bottom Line
The “Cheque Execution Case” is a recently introduced legal process designed to streamline cheque-related disputes. While it shares similarities with civil cases, it includes specific provisions that can be used as defenses to challenge payment obligations. These cases can be contested or appealed in court, providing an opportunity to secure a favorable outcome. If you aim to dispute a cheque execution case under the new ordinance, there are effective methods to do so without making any payment. Below are three key criteria to consider:
Key Points to Defend a Cheque Execution Case
- Security Cheques Should Not Be Used for Execution Cases
- Security cheques are intended to act as guarantees, not as instruments for initiating execution cases. In situations where banks file claims using security cheques, such cases can often be contested in court and dismissed without requiring payment.
- Discrepancies Between the Claimed Amount and the Actual Amount
- Banks or claimants sometimes file cases for amounts that do not accurately reflect the actual debt owed. These discrepancies provide a valid defense to challenge the claim in court and potentially secure its dismissal.
- Expiration of the Cheque Validity Period
- Execution cases must be filed within a specific timeframe after the cheque is issued or dishonored. If this period has lapsed, the case can be contested and dismissed based on the invalidity of the cheque.
For further guidance or assistance in defending a cheque execution case, you can reach out to our experienced legal team at Tasheel Legal.
Contact Adv. Harish Pavithran via phone or WhatsApp at 0501750107 for professional advice and support. We are here to assist you!
