How Bounced Cheque Law Works in Dubai

The use of cheques as a payment method is still alive, well and growing in the UAE. 

Since the introduction of the ICCS in 2008, the number of cheques processed has seen a steady increase, with nearly 23 million cheques with a combined value of more than AED 1 trillion (~$270 billion) being processed in 2023. The reason for the persistent popularity of cheques in the UAE is related to its established financial systems and the guarantee of funds when a cheque is issued. This is further reinforced by the penalties associated with bounced cheques.

A 2022 report from the Emirates NBD said that around five percent of all cheques issued in the UAE bounced, and until that year, the penalties for the issuer of bounced cheques involved jail time and fines regardless of the circumstances. Since the enactment of Federal Law No 14 of 2020, these penalties are significantly reduced and take into account the intentionality of issuing a bounced cheque. Still, the fines associated with a bounced check can be as much as AED10,000 (~$2,700) and jail time is still a possibility. It’s best to know how to check on a bounced cheque case in Dubai, especially given how common their use is.

Cheque values have recovered from 2020’s Covid-driven lows and surpassed 2019’s totals. Sources: centralbank.ae, www.wam.ae

What is a Cheque Bounce Case in Dubai?

Civil cases for cheque bounce in Dubai usually start when the payee files a complaint with the authorities, which carries various penalties depending on the circumstances surrounding the cheque’s issuance. They are typically handled by the UAE’s civil courts. 

Cheques in Dubai can bounce for a variety of reasons, including signature mismatch, alterations or damage, a stop payment request, or account closure. The most common reason is because of insufficient funds, which is why many landlords or other professionals prefer to receive cheques. Should a check bounce, the payee can file a complaint with the police, who will investigate the matter, potentially leading to public prosecution, penalties and fines. Penalties for bounced cheques include:

• Fines - the amount of the fine for a bounced cheque usually includes the value of the cheque in addition to fines that range from AED 2,000 for cheques valued at under AED 50,000 all the way to AED 10,000 for cheques valued at over AED 100,000.
• Jail Time - in severe or repeat cases, the issuer of a bounced cheque may face imprisonment ranging from six months to two years, though this time can increase for repeat offenders. Jail time is usually reserved for offenders that intentionally made their cheque uncashable. 
• Bank Blacklisting - an issuer that bounces a cheque may be blacklisted by banks, which prevents them from opening new accounts or accessing other financial services.
• Civil litigation - the issuer of a bounced cheque may face civil litigation or lawsuits. 

In most cases, bounced cheque cases can be resolved by paying the cheque amount along with other fines or penalties. They can also be settled out of court or via a judge’s decision. If you accidentally issue a bounced cheque, the best thing to do is contact the payee as soon as possible to notify them and avoid legal ramifications. 

How to Check a Cheque Bounce Case in Dubai

The easiest way to look up details about a cheque bounce case in Dubai is to visit the Bounce Cheque Report service run by the Dubai government. The service is free to use and also allows individuals and companies to report a bounced check online. 

Individuals must submit a photo of their Emirates ID, a photo of the bounced cheque, and a notice of the bounced cheque from their bank. Companies must include a complaint letter to issue a cheque report to the police in arabic, a copy of the bounced cheque, a copy of their trade license, a notice of the bounced cheque from their bank, and must be issued by the manager of the company mentioned in the trade license or by someone legally authorized. 

Required information to use the service includes an Emirates ID number, the cheque number, account number, merit period, and recipient name, and amount of the bounced cheque. You will also have to provide a valid email address and in some cases, a photo of the legal authority with the original documents. 

Finally, the incident must have occurred in Dubai, the cheque’s merit period must not have expired or be more than 5 years, and the offended party must have visited the police station in the area of the incident. 

Once these requirements are satisfied, all that’s left is to fill out an application form, submit your request, and receive the transaction number via email. You can use this service to report a bounced cheque, but also follow up on an existing report or find a specific case. 

How to Clear a Cheque Bounce Case in Dubai

In the event that your cheque bounces, there are best practices to observe to minimize the damage done. If you make it clear that the bounce was unintentional, in most cases you can simply pay the amount that the cheque was intended for. If, however, you cannot reach an agreement, you may need to seek legal representation such as the civil law attorneys at Connect Legal.

First, contact the bank about the check bouncing to understand why the check bounced in the first place. Ask them to provide a letter about the dishonored cheque for your records. You should also contact the beneficiary to try and resolve the matter as amicably as possible. 

If the beneficiary files a case against you and the matter goes to court, you will have to attend court hearings. Failure to do so could result in a judgment being passed without your knowledge, which could be significantly more damaging if you were not at the hearings. If you owe the beneficiary money, try to pay it as soon as possible, even before the court hearings have ended. The sooner you pay the outstanding debt, the better it looks in the eyes of the court. If you cannot pay the lump sum, try to arrange an installment schedule. 

Finally, if at all possible, request to settle the outstanding debt to avoid a criminal record. This may require paying a fee or other such penalties, but it should be via an agreement with the beneficiary. If you have exhausted these options, the only recourse is to hire legal counsel.

Turn to Legal Representation for Cheque Bounce Cases

While the penalties have been reduced for cheque bounce cases in Dubai, even accidental bounced cheques can result in expensive fines. If you have exhausted all other avenues for clearing your bounced cheque case, consult with the legal professionals at Connect Legal.

UAE law can be labyrinthine and the country takes a strong stance against financial issues, resulting in steep fees and potential jail time for bounced cheques. There is also the matter of Islamic finance and law, which can be difficult to navigate for those not familiar with the region. Because even unintentional bounced cheques have such harsh penalties, having representation that can navigate UAE legal structures is strongly recommended.

Connect Legal helps connect clients in the UAE with appropriate lawyers that are experienced with UAE legislation and cheque bounce cases. They know the best ways to minimize or nullify the penalties, or help settle the case out of court with the beneficiary. Instead of letting a bounced cheque demolish your savings or disrupt your life, let Connect Legal find a lawyer to handle these issues.