The amendments to the Commercial Transactions Law No. 14 of 2020, which decriminalized the check without a balance, gave the beneficiary of the check the ability to directly execute the check with quick and easy procedures to ensure the speedy collection of the amounts in a way that guarantees him playing his role as a fulfillment tool in place of money. The check on which the drawee proves that there is no balance or that it is insufficient is considered an executive instrument following the regulatory regulations of the Federal Civil Procedure Law, and the bearer has the right to request its execution, in whole or in part, by force.
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The holder of a check that is returned due to lack of or insufficient funds can file the matter directly with the enforcement judge to obtain the executive formula on the check and open an executive file to initiate enforcement procedures.
Cases of criminalization were limited to the following:
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Cases of fraud when issuing a check: such as issuing an order or requesting from the bank before the due date not to cash the check unlawfully. (That is, in cases other than those stipulated in Articles (620) and (625), which is the case of the loss of the check or the bankruptcy of its bearer.
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Cases of criminalization in crimes of forgery and use of checks.
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Closing the account or withdrawing the entire balance on it before issuing the check or before submitting it to the bank for disbursement or if the account is frozen.
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Intentionally writing or signing a check in a way that prevents it from being cashed.
What is the deadline for submitting a check for fulfillment or payment?
The law specifies the deadline for submitting a check for fulfillment or payment. It stipulates in Article 618 that it must be presented within six months if it is drawn inside or outside the country and is due for payment. This period begins to be calculated from the date indicated on the check as the date of its issuance.
As is clear from the text of the article, the period is calculated from the date indicated on the check as the date of its issuance, and not from the date of partial payment.
The reason for shortening this period is due to the legislator’s desire not to oblige the drawer to keep the payment consideration with the drawee bank indefinitely.
Note that if the bearer does not present the check within the deadline for presenting it for payment, his right to claim its value is not forfeited. Therefore, Article 1/620 of the law stipulates that “the drawee may fulfill the value of the check even after the deadline for presenting it has passed, meaning that this deadline does not have A binding force on the part of the beneficiary or the bank, and expiration does not prevent the collection of its value from the drawee bank, as it does not result in the check losing its nature as a payment instrument that flows through the flow of money, and the effect of its expiration is limited to merely depriving the beneficiary of the ability to adhere to the payment that he has before the drawer.
The bearer may be exposed to the loss of his civil right towards the endorsers and the drawer as a result of his failure to perform the procedures required by the legislator to fulfill his right, which includes presenting the check on the specified date as specified in the law. If the drawer proves the availability of the balance throughout the six months, and the bearer does not approach the bank to collect its value, This consideration was removed by an act not attributable to the drawer, and the bearer’s right to recover the value of the check fell from the drawer, as he was considered a “negligent” bearer.
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What is a partial fulfillment of a check?
What is meant by partial fulfillment is the fulfillment of part of the value of the check, and thus the drawer and all endorsers and backup guarantors (if any) are discharged, “partially.” The law in the UAE does not require that the amount of the check held by the drawee bank be equal to the amount of the check.
Whereas the check bearer may accept payment of part of the value of the check and postpone the remainder if he determines that this is in his interest, as if the drawer’s financial condition is bad and it is in his interest to save what can be saved from the debt, the bearer is not obligated to accept partial payment, as he has a choice between accepting partial payment of his right or Refusal to fulfill and recourse to the drawer for the full amount of the check. However, if he accepts partial fulfillment, the drawee bank has no right to refuse to do so, and the bearer has the right to ask the drawee to mark partial fulfillment on the back of the check and for the latter to give him the original of the check and a certificate to that effect. -
What is the mechanism for partial check fulfillment?
In implementation of the provisions of Article 617 of the law, the bank must, if the amount available in the account is less than the amount of the check, make a partial payment to the amount available in its possession unless the bearer of the check refuses to do so, in which case the bank must mark each partial payment on the back of the check stating: The bearer must hand over the original check and a certificate of this payment (according to the mechanism currently being discussed with the banks and will be circulated soon).
In the event of collection through the bank of the check holder/beneficiary, the latter gives a partial fulfillment certificate to the check holder/beneficiary, and the bank may keep a copy of the check that was partially fulfilled and a copy of the partial fulfillment certificate issued by it.
The bearer of the check shall have the right to return the balance with the original of the check marked with partial fulfillment, in accordance with the provisions, procedures and rules specified in the regulatory regulations of the Civil Procedure Law as an executive document, according to the provisions of Article 635 of the law, or by filing a protest after the expiry of the periods stipulated in Article 632 of the law. -
What is the benefit of obtaining a partial fulfillment certificate from the bank?
The partial payment certificate referred to in Article 617 of the law is not considered a check and does not enjoy protection. It is given to the bearer of the check to prove his civil rights before the judicial authorities.
The check holder may pursue the drawer, if he so desires, to claim the remaining amount of the value of the check according to the original check, according to the certificate, or by filing a protest. -
Is partial fulfillment of a check mandatory? Who is obligated to pay partial payments?
Article 2/617 of the law (before the amendment) states the following: (If the consideration for payment is less than the amount of the check, the bearer must ask the drawee for partial payment to the extent he has available).
The text (after the amendment) became as follows: (If the consideration for payment is less than the amount of the check, the drawee must make partial payment to the amount available to him unless the bearer refuses to do so). That is, under the old text, the bank would not make partial payment except at the request of the bearer, and after the amendment, the bank became obligated to make partial payment unless the bearer refused. Note that banks previously did not apply partial fulfillment of a check (even if the bearer requested it), but now (after the amendment) they are obliged to perform partial fulfillment of the amount in the account unless the bearer refuses to do so.
What is the role of the bank in the partial fulfillment of a check?
In addition to the role of the bank referred to in Article (600), the bank – following Article (617) of the law – must notify the Central Bank of the account holder’s data according to the mechanism that will be circulated soon, in any of the following cases:
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If the check does not have a sufficient cash equivalent that is available and withdrawable on its due date.
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If the drawer, after issuing the check, recovers all consideration for payment such that it cannot be cashed.
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If the bank partially honors the check.
The bank must adhere to the following:
The mechanism for implementing the new amendments to the law related to partial check fulfillment will be circulated soon by the Central Bank.
Informing the bank’s employees and customers of these new amendments by all usual means and methods, whether through social media, websites, electronic applications, text messages, or in the form of short messages that are displayed on the screens of ATMs, internal screens, or other modern traditional or electronic means.
Raising the level of education and awareness among the bank’s employees and customers, guiding them and enabling them to understand the basic risks providing them with all information related to these new amendments and their effects on them, and clarifying the mechanism and method of applying partial fulfillment of the value of the check, and the procedures that can be followed in this case accurately, and what is required to be taken into account to avoid… Legal accountability and penalties resulting from violating the law and misuse of the check.
Providing the necessary and appropriate means and mechanisms to respond to customer complaints and inquiries and clarify their rights and responsibilities about all new amendments to the Checks Law 2022.
What is the mechanism for reporting returned checks in the UAE that were partially fulfilled by Al Etihad Credit Bureau AECB? What is the impact of this on the credit information report issued by the company? Will this affect the issuance of checkbooks?
Clause (3) of Article (617) of the law states the following:
(The drawee must notify the Central Bank of the account holder’s data, by the regulations and rules issued by the Central Bank in this regard, in any of the following cases:
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If the check does not have sufficient cash equivalent and can be withdrawn on its due date.
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If the drawer, after issuing the check, recovers all consideration for payment such that it cannot be cashed.
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If the drawee partially honors the check following Clause (2) of this Article.
The mechanism for reporting returned checks in the Emirates or that were partially fulfilled by Al Etihad Credit Bureau (AECB) is the same mechanism currently used by the company, and the same applies to the credit information report. As for the impact of this on the issuance of the checkbook, according to the instructions of the Central Bank, for people who have at least four checks returned due to insufficient balance, within a maximum period of one year between the first check and the fourth check, in this case, their accounts must be closed for two years, and if repeated, it increases. To close the account for three years and recover the remaining number of checks they have.
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In the event of partial payment (fulfillment) of a check, will the check continue to be treated as a “bounced check”?
The check is considered returned to the extent of the amount that has not been collected from the value of the check, and this is subject to the regulations and procedures of the Central Bank in this regard.
What data is necessary in a case for enforcing a bounced check?
The bearer of the return check, or his legal representative, must submit a lawsuit to enforce a returns check against the drawer (the party against whom enforcement is requested), and before the competent court, as we mentioned previously, highlighting in his executive file The papers and documents necessary for the lawsuit to enforce the returns check according to the following:
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A certificate with the IBAN for the implementation applicant if he has a bank account.
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The name of the beneficiary receiving the value of the check, his address, means of communication, and identity or passport number.
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A certificate from the bank to which the bounced check was drawn stating the following:
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The drawer’s address, email, and private means of communication, as stated in the contract signed between the bank and the account holder (the drawer)
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Reason for the check to be returned uncashed.
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The date the check was returned and the branch it was drawn on.
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The total value of the check the amount paid from it and the remaining amount (in the event of honoring a partially returned check).
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The name of the account holder in Arabic and English, and his ID or passport number and residence, if any.
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If the issuer of the returned check is a company, the commercial license must be attached to the ID or passport number and the residence of its director.
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The power of attorney for the legal representative, if any, is notarized and certified.
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All of the above must be submitted in Arabic, and if not, it must be translated into Arabic by the internationally accredited centers.
Opening an executive file in a case for enforcing returned checks
After registering the executive file, the execution judge may issue a decision banning the travel of the party against whom enforcement is sought. The party against whom enforcement is requested shall be notified of the lawsuit, and 15 days shall be given to visit the Enforcement Department to pay the value of the returned check or the remainder of its value. If the drawer does not submit any corresponding legal action, the person requesting enforcement may request an inquiry to place a seizure on the funds of the party against whom it is being executed and proceed with the executive procedures required. You will arrange expropriation and auction to collect the amount of the bounced check.
We at Al Dhaheri & Partners Law Firm, and through our extensively experienced legal team, will seek to take immediate measures to implement the returns checks and initiate executive procedures to ensure collecting the value of the returns checks for our clients.
Thus, we reach the end of our article the right to implement balanced checks in UAE law, stressing at the same time the necessity of seeking the assistance of the best-specialized lawyers in our office to provide sound and correct legal solutions by the best legal and judicial practices, by visiting us in one of our branches in the cities of Al Ain and Abu Dhabi or by contacting us.
