Recovery Of Bounced Checks Through Civil Cases

The United Arab Emirates has recently amended and added new articles to the UAE’s commercial transaction law no.18 of 1993. Bounced checks due to lack of funds are decriminalized under this law. The new law enables the beneficiary to directly approach courts. A bounced cheque appears to be more tragic in the UAE as discussed by Criminal Lawyers of Dubai numerous times on different platforms. The given articles were provided for the penalization of the issuance of cheques in poor faith or malicious purpose.

The Amendments:
 

Decriminalization:
 

1. Under the newly amended law, a check returned due to lack of funds will not be considered criminal and no police complaint is to be filed against the person issuing such a check. But certain activities can cause criminal liabilities. If a check was issued to commit fraud, deliberately signing the checks wrongly, giving fake checks, or withdrawing the account balance to avoid clearance of the check.
    

Banks are obliged to make partial payments:
 

1. Under the newly amended law, a check returned due to lack of funds will not be considered criminal and no police complaint is to be filed against the person issuing such a check. But certain activities can cause criminal liabilities. If a check was issued to commit fraud, deliberately signing the checks wrongly, giving fake checks, or withdrawing the account balance to avoid clearance of the check.

Penalties:
 

A Fine can be imposed on the offender based on the criminal act he has commented. Other penalties are dependent on the amount payable. Since the new laws have decriminalized the causes of bounced checks thus no imprisonment until and unless fraud is committed. The new penalties protect the rights of both parties. And it also makes the check collection process more effective.

The Complaint Process:
 

First, a legal notice should be served to the issuer with a demand for payment within the prescribed time. Once the notice goes unattended, the check can be presented to the local court for the issuance of an executive order to recover the money.

Documents Needed:
 

1. Identity card.
2. Commercial license if the applicant is a company or any business.
3. Check return memo, explaining why it was returned and a copy of the check.
4. Provide the documents which validate the purpose of the issued check.
5. An affidavit clarifying all the information provided on the check request is true.
6. The complete return address should be mentioned, i.e., the bank and basic information about the parties, their addresses, etc.

The new charges came into force on 22 January 2022. Any bounced check due to insufficient funds will not cause criminal liabilities but civil liabilities cannot be avoided. However, it’s important to prove the issuer’s bad intentions in case of criminal charges. His bad intention can be proved if the account is closed, or frozen, all the balance was withdrawn, if the bank was instructed not to cash the check, or if the issuer signs it incorrectly or in a way that prevents it from being cased.

The time frame for the recovery is based on the location of the asset and the issuer of the check, it might take around four months.

It’s best to seek legal advice from experts before starting any legal process for the recovery of bounced checks.