UAE to implement amendments to Commercial Transactions Law regarding decriminalisation of cheques, partial cheque payments in January 2022
ABU DHABI, 1st November, 2021 (WAM)
The Central Bank of the UAE (CBUAE) announced that new amendments to the Commercial Transactions Law regarding decriminalisation of cheques, and amendments relating to partial payment of the cheque, and toughen administrative penalties for issuing cheques without funds, in accordance with Decree Federal Law No (14) of 2020, which will come into force on 2nd January 2022, are in line with the government’s key plans and strategic initiatives to build and support a sustainable national economy based on best international practice.
This will contribute to raising the country’s ranking in the Global Competitiveness Index.
Khaled Mohamed Balama, Governor of CBUAE, confirmed that these amendments are also in line with the Central Bank’s strategic initiatives and plans to upgrade banking laws and regulations continuously to track developments in the financial sector.
The CBUAE Governor explained that the new amendments will reduce the negative aspects revealed by practical experience of dealing with cheques, compared to the best and most successful international practices. The new amendments will also consolidate the principles of justice by striking a balance between the interests of the cheque beneficiary or bearer in fulfilling their rights as soon as possible, and the drawer’s interest in removing any criminal case filed for non-payment of the cheque.
Under these amendments, the scope for criminalisation of returned cheques due to insufficient funds has been narrowed, and confined to cases of bad faith and other cheque crimes. This will deliver the desired goals of replacing decriminalisation with preventive measures, coupled with deterrent alternative penalties to reduce the misuse of cheques.
The Minister of Economy explained further that amendments that lift penal protection of the cheque, scheduled to come into force at the beginning of 2022, are part of a series of efforts undertaken by the UAE over the past months to accelerate economic recovery, particularly in the private sector activities, and to bring about qualitative transformation of the current economic model, based on the principles of pro-activity and sustainability. These efforts also include enhancing the flexibility of economic policies and raising the UAE’s ranking in the Global Competitiveness Index, associated with the ease of establishing and doing business, and increasing the country’s attractiveness to foreign direct investment and international companies.
Bin Touq added, “The decriminalisation of cheques issued without funds and confining criminalisation to cases of fraud, forgery and bad faith, while creating more efficient and effective legal mechanisms for collecting the cheque value, contributes to maintaining economic dynamism and diversity, the effectiveness of the judicial system and the efficiency of the commercial environment in the nation, by revitalising commercial dealings and protecting existing companies, especially start-ups and SMEs. It also avoids the negative consequences of criminalisation for returned cheques without funds, and the back-log of related cases before the courts to resolve debts that affect the financial, banking and commercial sectors in the country negatively.”
Al Nuaimi confirmed that the new amendments will facilitate litigation procedures, avoid the accumulation of cheque cases at prosecution offices before civil and criminal courts, thus saving money and effort, consistent with the UAE’s policies and directives in this regard.