The Central Bank, the Ministry of Economy and the Ministry of Justice apply the amendments to the Commercial Transactions Law regarding the decriminalization of the check without balance and the partial payment of the value of the check
The Central Bank of the United Arab Emirates announced that the new amendments to the Commercial Transactions Law regarding the decriminalization of the check without a balance and the amendments related to the partial payment of the check and the tightening of administrative penalties for issuing the check without a balance issued under Federal Decree-Law No. (14) of 2020, which will enter into force as of 2 January 2022, in line with the government's plan and its main strategic initiatives to support the economic sector and build a sustainable national economy based on the best international standards and practices, which contributes to raising international competitiveness indicators in this field.
Central Bank Governor Khaled Muhammad Balama confirmed that these amendments are also in line with the Central Bank’s strategic initiatives and plans to continuously upgrade banking laws and regulations to keep pace with developments and fill legal gaps and deficiencies to achieve the Central Bank’s vision in line with the best international practices in this field.
These amendments would help in facilitating and organizing commercial and banking transactions, simplifying the procedures for collecting and honoring the value of the check, and making it more flexible.
He explained that the new amendments limit the negatives revealed by the practical reality of dealing with the check compared to the best and most successful international practices, and consolidate the principles of justice by achieving a balance between the interest of the beneficiary / bearer of the check in fulfilling his right in the fastest possible way and the interest of the drawer in the expiration of the criminal case against him in the event of reimbursement.
With these amendments, the criminalization framework for a bounced check without balance has been narrowed and limited to cases related to bad faith and some check crimes, in order to ensure the achievement of the desired goals of decriminalization and replacing it with preventive measures, with the development of penalties and deterrent alternatives to limit the bad use of the check.
These amendments also aim to guarantee the rights of check beneficiaries and holders, in addition to obtaining the value of the check faster and in a more effective manner determined by the Central Bank, while encouraging the public to use modern technological and digital means instead of traditional paper checks.
Partial payment of the value of the check has also become mandatory, and if the consideration for payment is less than the amount of the check, the drawee must partially fulfill the amount in his possession, unless the bearer refuses to do so.
On this occasion, the Governor of the Central Bank extended his thanks and great gratitude to His Highness, the President of the State, may God protect him, for issuing this decree-law, and to the honorable Council of Ministers, which approved the aforementioned amendments, as well as the other concerned parties that contributed to reviewing the amendments, as these amendments will contribute to the upgrading of laws and regulations Trade and banking and put the country in the ranks of developed countries in this field.
For his part, Minister of Economy Abdullah bin Touq Al-Marri confirmed that the decriminalization of checks without balance under Federal Decree-Law No. 14 of 2020 amending some provisions of the Commercial Transactions Law represents an essential step in developing and enhancing the flexibility of legislation regulating economic work, business activities, trade and investment. In the UAE, and consolidating the principles of justice, equity and equal opportunities in commercial transactions and the business environment in the country, and aim to enable sound business practices at the level of individuals, establishments and institutions.
He explained that this amendment represented in lifting the penal protection for checks without balance, which is scheduled to enter into force as of the beginning of 2022, is part of the series of efforts taken by the UAE during the past months to advance the pace of economic recovery, especially in private sector activities, and bring about a qualitative transformation in The existing economic model in accordance with the principles of proactiveness and sustainability, as well as enhancing the flexibility of economic policies and raising the country’s position on global competitiveness indicators related to the ease of establishing and doing business and increasing the country’s attractiveness to foreign investments and global companies, and keeping pace with the latest global trends, especially aspects related to digital transformation, modern digital payment methods and financial technology developed, in order to enhance the continuity and growth of economic activities, increase confidence in the business environment, and provide advanced and rapid civil alternatives for commercial and financial transactions.
He added: "Removing the criminal status of the check without balance, and limiting it to cases of fraud, forgery and bad faith, while creating more efficient and effective legal mechanisms for collecting the check, contributes to maintaining the dynamism and diversity of the economy, the effectiveness of the judicial system and the efficiency of the commercial environment in the country, through revitalization and vitality. Commercial transactions and the preservation of existing companies, especially start-ups and small and medium-sized companies, as well as through its contribution to avoiding the negative consequences of criminalizing bounced checks without balance and the accumulation of related cases before the courts, and thus the accumulation of debts that negatively affect the financial, banking and commercial sector in general in the country.
On the other hand, His Excellency Abdullah Sultan bin Awad Al Nuaimi, Minister of Justice, stated that it is within the framework of the state’s keenness to improve the environment and the legislative and judicial structure, in a way that supports its competitiveness at the regional and global levels and consolidates its attractiveness for foreign investments and enhances the flexibility of the national economy, which achieves the state’s strategic vision in In this field, amendments were made to the Federal Commercial Transactions Law under which the procedures regulating the check and the procedures for its collection and penalties were unified in one law, where the cases of criminalization were limited to the crimes of check fraud and their use, and the intentional release or signature of them in a manner that prevents them from being cashed, in addition to decriminalization contained in the law Penalties for issuing checks without balance or the so-called bounced or bounced check phenomenon, similar to what a large number of foreign legislations such as France and the United States of America have said.
He also decided that the check is one of the most important commercial papers and the most widespread in the business, as it represents a well-known payment or negotiation tool instead of money, and the check can not play its role as a fulfillment tool unless the dealers are assured of it and trust that their obtaining it in exchange for their rights is equivalent to Cash payment, and the only way to enhance confidence in the check is to strengthen the right of the bearer of the check and strengthen the guarantees that confirm it.For this reason, the recent legislative amendments to the Commercial Transactions Law set out new alternatives and mechanisms to ensure the collection of the value of the check in the fastest and simplest possible way, including obligating the bank to partially pay the check after deducting the entire amount available to the issuer of the check, and making the returned checks an executive document that is executed directly by The execution judge in the court, by placing the executive formula on the bounced check and collecting its value, without resorting to the legal process, whether civil or criminal, which will lead to an increase in confidence in checks as a commercial paper that allows the payment of its value immediately.
The Minister of Justice noted that the amendments introduced a number of ancillary penalties, including withdrawing the checkbook from the convict, preventing him from giving him new checkbooks for a maximum period of 5 years, and stopping the professional or commercial activity of the convict.
He also stressed that all the introduced amendments will facilitate litigation procedures and avoid the accumulation of check cases before the public prosecution, criminal and civil courts, and save effort and money, which is consistent with the state's policy and directives in this regard.
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