December 28, 2022 Cheque Execution: Impact of Recent Amendments on Debt Recovery Share Early this year, the Commercial Transactions Law affecting the procedures relevant to cheque bounce matters was amended by introducing The Federal Law No. (14) of 2020 Amending certain provisions of the Federal Law No. (18) of 1993 concerning the Commercial Transactions Law. In this article we will explore how these amendments will affect debt recovery hereon. THE APPROACH UNDER LAW NO. 18 of 1993 The previous approach was taken for any reason, whatsoever, the legal action applicable for cheque return was; filing a police complaint, in which the travel ban has been applied forthwith, following up until the complaint referred to the public prosecution where the debtor had either an easy way out of this by merely paying a penalty. THE RESORT UNDER LAW NO. 18 of 1993 FOR DEBT RECOVERY The Limitation to apply the Criminal Aspect is restricted to the following cases; a. intentionally falsifying of the cheques. b. Fraud. c. providing counterfeit cheques. d. Withdrawing the account balance before the date of the cheque encashment in order to prevent the cheque from being cleared. The new law introduces cheque execution procedures in case the reason for return of the cheque is “Insufficient Funds” The amended law abolished the criminal aspect for such return reason and gave Cheques the power as an execution instrument or bond at which the precautionary and the execution proceeding can be taken without the hassle of civil proceedings i.e, proving the claim in front of the Court, proceedings with appeal and execution. The new approach makes the process of recovering the cheque’s value pretty straightforward. RAALC can walk you through this procedure by following the steps mentioned hereunder; a. Submitting an application in the court for referring the matter for cheque execution; b. Obtaining the order for execution, and; c. Submitting an application for imposing a travel ban on the authorised signatory of the cheque. Hereafter, the court takes a total of 3-5 days to issue a notification to the counterparty for the matter. Following which, upon the lapse of 15 days execution procedures are initiated in the event that the counterparty has not settled the matter amicably with the creditor. Execution procedures include the following; a. Filing an application at the Central Bank to seize the counterparty’s bank account; b. Filing an application at the Road and Transport Authority to seize the counterparty’s vehicles; c. Filing an application at the Dubai Land Department to attach any property held by the counterparty; d. Filing an application at the Economic Department to seize the Trade License of the Company. During this period, if the counterparty settles the amount the execution will be closed and withdrawn. However, If the counterparty fails to settle the debt an arrest warrant shall be issued for the authorised signatory of the bounced cheques. An important point to note here is that, there is no minimum or maximum limit to the cheque value for an arrest warrant to be issued. DOCUMENTATION REQUIRED a. Copy of the bounced cheque b. Return memo issued by the bank, not more than 6 months old bearing the reason for return “insufficient funds” c. Authorised signatory details TIMELINE The entire cheque execution procedure takes approximately 3 weeks to be completed.
