Check strength after recent legal amendments
The recent amendment to the Commercial Transactions Law regarding the decriminalization of issuing the check without balance raised several questions, and some expressed fears that it would lose its power as a tool for debt fulfillment, but by careful analysis of the amendment, it can be said that the flexibility of the UAE legislator on this issue was dictated by the social and economic requirements imposed by the strategic vision of the state. It also gave the check holder better options to collect and benefit from it.
The check - in the first place - is a tool for repaying a debt owed to the one who issued it in his favor or to the one to whom it is devolved. Given its importance in transactions, the legislator proceeded to amend the old texts to facilitate and speed up the process of its collection.
Article (635) bis added by Federal Decree-Law No. 14 of 2020 to the Commercial Transactions Law, in its first paragraph, states: “The check affixed to it by the drawee who has no balance or insufficiency is considered an executive document in accordance with the regulations of Federal Law No. ( 11) for the year 1992 referred to, and the holder may request its implementation, in whole or in part, by force.
There is no doubt that this text - dear reader - needs clarification, and the intent of the article is that there is no longer any need to file a complaint or file a report with the police, and follow up on the related procedures, all the way to the prosecution and then the court. There is a need for a court ruling to collect it. Rather, it is sufficient to resort to the execution judge directly to collect its value or the remainder of it, by placing the executive formula on the bounced check for lack of balance.
Hence, it can be said that the bearer of the check does not need a criminal or civil lawsuit in all its degrees, if it is confirmed that there is no balance for it, which reduces many procedures and speeds up the beneficiary’s obtaining his right, and enhances confidence in checks as a commercial paper whose value can be collected immediately.
The most important thing in the amendment related to this issue is that banks are obligated to partially pay if there is a balance less than the amount of the check if the beneficiary accepts this, unlike the previous application.
If the bank has the right to agree to partial payment or not, and this counts for the UAE legislator to guarantee the right of the bearer of the check without balance by various means.
In addition, the criminalization has not been completely abolished in disputes related to checks, and this reflects the wisdom of the legislator, as it is limited to specific cases related to the presence of criminal intent and bad faith, such as fraud, fraud, forging checks, closing the account, withdrawing the entire balance, or deliberately editing The check is prevented from being cashed.
Criminalization in these cases enhances the check's ability to be enforced and take judicial measures, and guarantees the right of the beneficiary or the bearer of the check to request compensation in accordance with the procedures stipulated by law, according to Article 644 of the Commercial Transactions Law amended by Federal Decree-Law No. 14 of 2020.
In summary, it can be said that what the UAE legislator said in these amendments would reduce the burden placed on the judiciary in these cases, and achieve justice and fairness by establishing a balance between the beneficiary’s interest in collecting the value of the check, and showing greater flexibility with the check writer in the event of his commitment to payment, And this in its entirety fortifies the economy system, and enhances commercial transactions.
Arbitrator and legal advisor
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