The new amendments to the Federal Commercial Transactions Law included swift alternatives that enable collecting the cheque value or part thereof, without the need to resort to the old method to collect its value.

The distinguishing feature of the new legislative amendments is that they abridge all those onerous long steps and procedures that unduly consumed a long time and great effort, and also many expenses. The Emirati Legislator summarized them with the amendments enforceable pursuant to Decree Law No. 14 of 2020 regarding the amendments to the Federal Commercial Transactions Law, and they became easy and simple, and we shed light to them as follows:

Whereas civil alternatives have been developed that help collect the value of the cheque or part thereof, including:

• Obligating the bank to partially pay the value of the cheque.
• Making the cheque that marked it by the withdrawn bank with no balance or insufficiency of it as an executive document that is executed directly through the execution judge of the competent court, without following the long procedural route as prescribed in the past.

We point here to these updates as following:

1-What is meant by the partial fulfillment of a cheque?

It means that the drawee bank must pay part of the value of the cheque , if the drawer has a balance that is not sufficient to pay the full value of the cheque , but only part of the value of the cheque is in the drawer’s account, and this matter is also left to the beneficiary’s choice solely, and in accordance with his interest in receiving the available part of the value of the cheque , or refraining from that choice. However, the bank must declare to the beneficiary the value in the account, in accordance with the meaning of the provisions of Articles 600 and 641 of the Decree set out above, and accordingly the drawer is discharged from the part paid and the remainder of the value of the cheque remains as a debt to be payable by the drawer.

2- Shall the cheque that bounces from the bank without cashing due to insufficient balance acquire the power of the executive bond?

Aiming to keep pace with the legislative and economic developments, the UAE Legislator has introduced a new mechanism by the decree set out above, according to which the bounced cheque from the bank without cashing will acquire the power of the executive bond, as the concept from the text of Article No. (635) of the same decree that: The cheque that is marked by the drawee as lacking a balance for its cashing or its insufficiency shall gain the power of an executive deed in accordance with the Regulations of Federal Law No. (11) of 1992 referred to, and its holder has the right to request its implementation, in whole or in part, forcibly.

With regard to its enforcement, and contestation thereof, the provisions, procedures, and rules prescribed by the organizational regulation referred to in this Article shall be followed.

In other words, there is no need to follow the old route to follow up and collect the value of the cheque through the judicial procedures set out above, inclusive of opening a criminal report and following up in this regard until a final judgment is issued, and then following up with the civil lawsuit also in accordance with its lengthy procedures.

Hence, the cheque has gained the power of an executive bond that does not require a court ruling, and that would lead to expediting the legal action that enables the right holder to obtain his dues, and that would lead to strengthening the power of the cheque as an instrument for fulfillment in commercial and financial transactions.

Means of preventing criminal action and facilitating its procedures were also provided in the event that the whole or the remainder of the value of the cheque is paid before proceeding on the compulsory execution procedures or the issuance of a final judgment.

Whereas the new amendment has introduced a mechanism by which the bounced cheque has the power of an executive bond and is automatically executed according to a request submitted to the execution judge in accordance with the text of Article 635 of the same law, with the link between the text of the above Article and the texts of the Regulations of Federal Law No. 11 of 1992 regarding the Civil Procedures Law issued pursuant to the Cabinet Resolution No. 57 of 2018, Article No. 175, Paragraph 2 thereof.

Therefore, the holder of a cheque bounced by the bank without cashing due to its lack of balance or insufficiency can raise the matter directly to the execution judge to obtain the executive formula on the cheque and follow the provisions, procedures and rules prescribed by the Regulations of the Federal Civil Procedures Law in this regard.

3- Is it obligatory to notify the debtor before starting the execution procedures of the bounced cheque from the bank without cashing?

There is no doubt that notifying the debtor of his default according to the general rules in the Federal Civil Transactions Law means to place the debtor in the position of the defaulter in the implementation of his obligation, even if it is obligatory or necessary in some types of lawsuits, but the legislator in our case, does not require the creditor to notify the debtor of his default before proceeding on the execution procedures Rather, the text of Article No. 635 is that the creditor or the applicant for execution has the right to start the execution procedures directly because the text has made the bounced cheque without directly cashing acquire the force of the executive deed and has not linked it to any procedure that requires notification or excuse, and therefore it is possible to proceed on the execution lawsuit directly, without the need for prior notice thereof.

4- The method of applying to the execution judge to obtain the executive formula and execution by cheque:

Accordingly, in practice, the holder of the cheque can submit a petition, according to the competent court, which includes a copy of the cheque, and a statement of the cheque that bounced from the bank without cashing, with the opponents' data, names and addresses related to the issuer of the cheque. An acknowledgment issued by the execution applicant that he did not take other judicial procedures against the opponent, and the matter is presented to the execution judge, who in turn peruses the application and issues the decision to affix the executive formula thereto. Then he follows up by opening the execution file and initiating the execution procedures, taking into consideration that the procedures outlined above are general procedures and requirements may differ slightly according to the system and procedures required by the competent court. For more information, please contact us: Abdelsalam Awad | Senior Associate