ABU DHABI 2 November 2021: 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, to fill any legal gaps and shortcomings, and to deliver the CBUAE’s vision to follow best practice internationally in this respect. These amendments will assist in facilitating commercial and banking transactions, streamlining procedures for collecting the cheque’s value, and making the use of cheques more flexible.
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.
These amendments are also aimed at securing the rights of cheque bearers and beneficiaries, and will also expedite collection of the cheque value in a more effective manner (determined by the Central Bank), whilst also encouraging the public to use modern technological and digital means, instead of traditional paper cheques. According to these amendments, partial payment of the cheque has also become mandatory. If the amount available for payment is less than the cheque value, the drawee bank must pay the amount partially, unless the bearer rejects partial payment.
