A bounced cheque is a quick road to stress for both parties. The payee is likely to be concerned about getting the money back and the drawer may be concerned about court proceedings, travel restrictions or criminal liability.
But there have been many changes to the law in the UAE governing how bounced-cheque cases are handled. A cheque that bounces because there are insufficient funds in the account is usually handled as a civil matter under civil execution and not as a criminal case.
The current framework is mainly found in Federal Decree-Law No. 50 of 2022 on Commercial Transactions.
Is a Bounced Cheque Still a Criminal Case in Dubai?
Not every bounced cheque is a criminal offence.
Under Article 667 of the Commercial Transactions Law, a cheque on which the bank states that there is no balance or insufficient balance is considered an executive instrument. The cheque holder may request enforcement of the cheque, either in full or in part, in accordance with the procedures set out under the Civil Procedure Law.
This means that where a cheque is returned because there are insufficient funds in the account, the holder may proceed with execution to recover the unpaid amount.
The reason recorded by the bank when the cheque is returned is therefore important in determining the next legal step.
What Happens if There Is Some Money in the Account?
A cheque does not always have to be returned completely unpaid.
If the available balance is less than the amount of the cheque, the bank shall make partial payment to the extent of the available amount, unless the cheque holder refuses it, Article 648 of the Commercial Transactions Law. The bank shall make a note of each partial payment on the back of the cheque and shall give the holder the original cheque and a certificate of payment.
The holder can then pursue the remaining unpaid amount using the original cheque in accordance with Article 667.
For example, if a cheque is for AED 80,000 and only AED 25,000 is available, the holder may receive AED 25,000 and pursue the remaining AED 55,000.
When Can a Bounced Cheque Still Become a Criminal Matter?
Although insufficient funds alone is viewed differently today, certain deliberate acts concerning a cheque can still result in criminal liability.
Under Article 675 of the Commercial Transactions Law, criminal liability may arise where a person:
The penalty can be imprisonment for a period of six months to two years, and/or a fine of a minimum 10% of cheque value, with a minimum fine of AED 5,000 and a maximum fine of twice the cheque value.
Article 676 provides separately for the offenses of forged or fabricated cheques, knowingly using or accepting payment through forged or fabricated cheques, and some other fraudulent uses of cheques. These offences carry imprisonment of at least one year and a fine between AED 20,000 and AED 100,000.
This is why the circumstances surrounding the dishonoured cheque should be examined carefully to determine whether the matter concerns enforcement of an unpaid cheque or conduct that may also result in criminal liability.
How Can the Cheque Holder Recover the Money?
The first practical step is to present the cheque and get a written statement from the bank explaining why payment was refused.
In the event of non-payment or partial payment of the cheque, the holder may request execution, in whole or in part, pursuant to article 667 of the Law of Commercial Transactions, which considers the cheque an executive instrument.
Depending on the circumstances and the orders granted by the court, enforcement may involve measures against the debtor’s bank accounts and other assets. A creditor may also request a travel ban where the separate legal requirements under Article 324 of the Civil Procedure Law are satisfied. A travel ban is not automatic simply because a cheque has bounced.
Where the circumstances surrounding the cheque involve conduct covered by Article 675, such as closing the account, withdrawing the entire balance or intentionally preventing the cheque from being honoured, the matter may also involve criminal proceedings.
Article 682 makes an important point: filing a criminal case does not prevent compulsory execution of the cheque under Article 667 or prevent the cheque holder from pursuing other lawful remedies.
Mrs. Awatif Al Khouri advises individuals and businesses on the proper course of recovery, the pursuit of cheque execution and issues where enforcement and potential criminal liability intersect.
Can the Matter Be Settled Without Continuing the Case?
Many cheque disputes can be settled by payment or negotiated settlement.
The drawer can pay the outstanding amount, agree for instalments or come to any other settlement acceptable to the cheque holder. Any settlement should clearly state the amount to be paid, the terms of payment and what will happen to the original cheque and to any existing proceedings.
According to Article 684, on the fulfillment of the payment or settlement conditions mentioned in the Article, the criminal action may cease, for offenses under Articles 674 and 675. This includes payment prior to the commencement of the compulsory execution, conciliation during the proceedings or payment of the amount of the cheque or the outstanding amount before the final judgment.
Where a decision is made by way of conciliation after the judgment has become final, the penalty shall be stayed pursuant to Article 684. The parties should therefore ensure that any settlement is properly documented and not rely on verbal promises.
What Should the Person Who Issued the Cheque Do?
Ignoring a bounced cheque will usually make the situation worse. The drawer should first get the bank return reason and determine whether the problem is because of insufficient funds, account closed, stop payment instruction, signature problems or other reason.
If the debt is valid, an early repayment or a structured settlement could stop the dispute from turning into a bigger issue. The available objections should be examined promptly where there is a genuine dispute as to the cheque, the underlying transaction, the amount claimed or the manner in which the cheque was issued.
Delay should also be avoided because the Commercial Transactions Law contains specific time limits relating to cheque claims and recourse.
Conclusion
There is no longer a single criminal route for cases of cheque bounce in Dubai. A cheque returned for lack of funds is generally enforceable directly as an executive instrument under article 667, while deliberate conduct such as closing the account, withdrawing the balance or intentionally preventing payment may still give rise to criminal liability under article 675.
The correct solution therefore depends on why the cheque was dishonoured and what steps have already been taken.
Mrs. Awatif Al Khouri provides strategic legal guidance in cheque disputes, including assessment of the bank return reason, execution proceedings, settlement options and cases involving potential criminal liability. Acting at an early stage can help protect recovery rights, control enforcement risks and identify the most effective route towards resolving the matter.
