Supreme Legislation Committee discusses protection of cheque holders under civil and criminal legal rules in light of the latest amendments to the Federal Commercial Transactions Law

61 Dubai government entities attended the awareness workshop

UAE, 11 April 2021

To strengthen the legislative culture and increase the knowledge of legal professionals in the Government of Dubai, the General Secretariat of the Supreme Legislation Committee in the Emirate of Dubai (“SLC”) held recently an awareness workshop titled the ‘Update on cheque-related provisions in light of the latest amendments to the Federal Commercial Transactions Law.’

A total of 61 government entities in Dubai participated in the workshop conducted in the presence of a number of SLC senior officials, managers, and employees. Leading the event was Dr. Sherif Mohamed Ghannam, Legal Advisor at the SLC.

During the workshop, attendees discussed the new amendments to Federal Law No. (18) of 1993 Concerning Commercial Transactions. The amendments were introduced pursuant to Federal Law by Decree No. (14) of 2020 following the national efforts to improve the legislative and legal environment regulating commercial and economic sectors. The move aims to enhance the status of Dubai and the UAE as global leading hubs for business and investment.

The agenda of the workshop focused on the protection of cheque holders under civil legal rules, which include claiming the value of the cheque, interest, and compensation in the current legal situation, recourse actions, writs of execution, and ancillary civil claim; and comparing this with what the federal decree by law has introduced regarding the cheque being a writ of execution that requires immediate enforcement. The SLC representative discussed the protection of cheque holders under criminal legal rules and the legal implications, criminal charges and penalties that await the drawer and bank employees for issuing bounced cheques and making a forged endorsement on cheques; and compared these with the new additions and amendments under the federal law by decree.

H.E. Ahmad Saeed bin Meshar Al Muhairi, SLC Secretary General, said that the workshop was an ideal platform for spreading legal and legislative knowledge amongst the participating local government entities. He pointed out that the SLC awareness raising efforts were a success following the participation of 61 Dubai government entities. Through these efforts, the SLC sought to ensure the proper implementation of sustainable and balanced government legislation in support of the UAE’s ongoing preparations for the next 50 years.

Al Muhairi stated: “The workshop discussed the recent amendments to the Federal Commercial Transactions Law, which aim to strengthen the value of a cheque as a reliable tool in commercial transactions that will positively reflect on the local economy, society, and legislative system. The event was also aligned with the national goal to create a fair judiciary and build a safe society.”

Al Muhairi continued: “During the awareness workshop, we talked about the most important aspects related to the protection and use of cheques in transactions according to the new amendments. The new amendments are expected to produce innovative and effective solutions to prevailing and emerging challenges in line with the best global practices. By introducing the amendments, our national economy’s competitiveness and attractiveness will further gain strength, supported by the freedom of exchange and credit effectiveness amid the present and rapid global changes. We will continue our awareness and educational efforts to provide local government entities with modern legislative knowledge, one of the key fundamentals to realizing our wise leadership’s vision to establish a transparent, reliable, proactive, and distinguished government.”

The amendments to the Federal Commercial Transactions Law have redefined the offences related to cheques to include cheque fraud and other activities such as giving orders to banks preventing the encashment of the cheques without valid reason, withdrawing the entire balance before the date of issuance of the cheque, and intentionally writing or signing the cheque in a way that prevents the encashment thereof.

New mechanisms and alternatives were introduced to ensure that the cheque value is encashed in the fastest and simplest way possible. These include requiring banks to partially fulfil cheques after deducting the full amount available to the beneficiary and making bounced cheques writs of execution to be executed directly by the execution judge.

In addition, the amendments aim to ensure protection during criminal proceedings and facilitate the court procedures by equating reconciliation with the payment of the cheque value as a basis for the expiry of the criminal proceedings or stay of execution of sentence.