Federal Decree-Law No. 14 of 2020 was issued amending certain provisions of the Commercial Transactions Law No. 18 of 1993. These amendments brought substantial changes to the criminal approach of the UAE legislator with regard to cheque crimes; the most important of such changes is that issuing cheques without sufficient funds has become a non-criminal act, except for some cases.

In accordance with the aforementioned Federal Decree-Law, which came into force as of January 2, 2022, the legislator repealed Articles Nos. 401,402, 403 of Federal Law No. 3of 1987 Concerning the abrogated Penal Code, which are the provisions related to the crimes related to cheques, and consequently, cheque-related offences became subject only to the Commercial Transactions Law (and not the Penal Code as was the case
previously). The Federal Decree-Law No. 31 of 2021 Concerning the new Penal Code did not include any provisions relating to the cheque crimes.

In the present article, we will briefly review the amendments brought to the Commercial Transactions Law in respect of cheque crimes, the amendments’ impact on proceedings before courts and police stations, and their objectives within the framework of the initiatives and strategic plans being laid out for the local economy.

The amendments applied by law

The amendments resulted in the decriminalization of the most common of cheque- related crimes, which is issuing a cheque that is dishonored for the lack of funds. The criminalization of other acts that were previously punishable, whether in the Penal Code or the Commercial Transactions Law before the amendment, is still in place. The legislator has introduced new crimes for acts that were not previously criminalized.

Decriminalization of issuing cheques in bad faith:

The legislator decriminalized the act of issuing, in bad faith, a cheque with insufficient funds, which is the most common of cheque-related offences. Previously, it was a crime for the drawer to issue the cheque to the beneficiary with his knowledge that there were no funds that can be withdrawn on the due date. As per the new amendments, giving the cheque in this form has become permissible and out of the scope of criminalization after the entry into force of the amendments.

Consequences of decriminalization

The consequences of decriminalizing the said crime, are as follows:

New complaints

With the entry into force of the latest legislative amendments as of 2/1/2022, there is no crime of issuing a cheque dishonored for lack of
funds. Therefore, it is not permissible to file any new criminal complaints or initiate criminal cases in that regard. Police stations and Public Prosecutors are to refrain from opening any complaints related to this crime, detaining any defendants, or issuing arrest warrants in connection
with such acts.

Existing cases and complaints

The Attorney General of Dubai’s Circular No. 9/2021 gives the new amendments made bythe Federal Decree-Law No. 14 of 2020 a retrospective application in the Emirate of Dubai.We believe that the rest of the Emirates in the UAE may apply a similar approach. Regarding the criminal complaints filed with police stations, the circular stipulated in ArticleNo. 1 that the General Department of Criminal Investigation shall be instructed to dismisscriminal complaints in the decriminalized offence of issuing a cheque in bad faith, cancel allarrest warrants issued in relation thereto, refrain from detaining the defendants anddismiss the complaints.

The aforementioned circular also addressed how to dispose of the cases that are underinvestigation in Article No. 2. The circular stated that the Public Prosecution members haveto issue an order of no cause of action for cases under investigation. Concerning the existing cases before the court of the first instance, the circular mentionedthat a request will have to be submitted by the Public Prosecution to seek the acquittal ofthe accused as a result of the promulgation of the legislative amendments, which are morefavorable to the accused by decriminalizing issuing a cheque in bad faith. As for the cases before the Appeal and Cassation courts, they may be challenged for the same reason.

Final judgments being executed

If the convicted is serving a jail sentence, the Public Prosecution must release himimmediately; if the judgment is for a fine to be paid, it is not permissible to collect it after ithas been paid.

The judgments that have been enforced

The effects of the legislative amendments will be restricted in our view to judgments to beissued; as regards judgments that were executed in full whether with regard to fines thatwere fully paid or freedom restricting penalties that were fully spent, the more favorablenew legislation will have no effect and may not be applicable.

Conclusion

The amendment to the legal framework regarding decriminalization of bounced cheques isan extremely important milestone in terms of the development of the legal framework inthe UAE in accordance with the country’s vision of facilitating trade and commercialtransactions within the UAE. For more information, please contact Mohamed Salameh,Senior Associate at Global Advocacy and Legal Counsel