UAE approves Cabinet Resolution amending Federal Law No. 18/1993 regarding Dishonoured cheques
A cabinet resolution amending certain provisions of Federal Law No. 18/1993 promulgating the UAE Commercial Code, ('the Resolution') was approved by the UAE Cabinet on 26 October 2020. The changes adopted by the Resolution, which will come into effect by the end of 2022, include amendments to the rules on dishonoured cheques and the issuance of valueless cheques.
The following changes are included in the Resolution:
Avoidance of criminal litigation by supporting alternative dispute resolution practices. As the primary condition for removing a criminal proceeding against a debtor, the Resolution facilitates payment of the sum of dishonoured cheques;
Implementation of additional fines, including the cancellation of cheque books of persons convicted of dishonouring a cheque and banning them from receiving new cheque books for up to five years. It is also possible to terminate the technical or economic activities of convicted persons for up to six months. In the case of multiple crimes, technical or business operations may also be cancelled, or the perpetrator may be forced into bankruptcy;
The beneficiary of a dishonoured cheque can file a direct claim with the execution judge before the execution court to confiscate the issuer's properties;
Providing more opportunities for reconciliation for issuers and beneficiaries of dishonoured cheques; and
Implementation of a procedure for the service of joint bank accounts: following the death or loss of control over the bank account of the joint account holder, the other joint account holder(s) shall inform the bank within ten days of the date of death or disqualification of the first joint account holder and the bank shall then restrict the right to withdraw from the joint account beyond the disqualification of the deceased / disqualified account holder.
These placatory measures introduced by the amendments will uplift the spirits of businesses and lessen the burden of courts that currently adjudicate criminal proceedings in regards to dishonoured cheques.
The amendment to the law, once it has been published in an Official Gazette, may provide further clarification on areas covered by the current legislation but not followed in practice.