The UAE Cabinet has enacted a significant legislative change affecting cheque bounce cases, effective January 2, 2022.
The Federal Decree-Law No. 14 of 2020 has introduced amendments to the UAE Penal Code and the Commercial Transaction Law. These changes specifically address issues related to cheque bounce, removing its status as a criminal offense. This is a noteworthy shift in the legal landscape for financial transactions within the country.
Previously, issuing a cheque that bounced due to insufficient funds could result in criminal charges for the issuer. However, with the new law in effect, such instances will no longer be handled as criminal offenses. This change aims to modernize the legal framework surrounding financial transactions, aligning with global practices that treat bounced cheques primarily as civil matters.
The rationale behind this legislative reform is to foster a more investor-friendly environment and enhance the ease of doing business in the UAE. By decriminalizing cheque bounce cases, the UAE seeks to encourage greater economic activity and provide reassurance to investors and business owners dealing with financial instruments.
While cheque bouncing will not attract criminal charges, it is important to note that legal remedies for recovery of owed amounts through civil courts remain available. This ensures that the aggrieved parties have a channel to claim their dues without resorting to criminal proceedings, thereby adding a layer of protection for both parties involved in the transaction.
The decision reflects a forward-thinking approach by the UAE government to address the needs of a rapidly evolving economy, considering the interests of both businesses and individuals. Legal experts suggest that these changes could lead to increased confidence among foreign investors looking to engage with the UAE market.
This amendment signifies a progressive step towards aligning UAE’s legal practices with international standards and could foster increased economic engagement.
