Business owners in the UAE can take decisive legal action when faced with repeatedly bounced cheques from clients, leveraging recent legal provisions to expedite the recovery of owed funds.
As of recent changes, most bounced cheques are no longer considered a criminal offence in the UAE. However, when a cheque is dishonoured due to insufficient funds, the drawee (the entity or individual to whom the cheque was issued) can file an execution case against the drawer (the issuer of the cheque). This process, known as a ‘Writ of Execution’, allows the drawee to claim the cheque amount through the courts.
Under Article 212 of Federal Decree Law No. 42 of 2022 on the Civil Procedures Law, compulsory enforcement can only occur under a writ of execution, which includes judgements, authenticated documents, ratified conciliation minutes, and other legally recognized documents.
If the court grants an execution order in favor of the drawee, they can initiate execution proceedings against the drawer. The court notifies the drawer of the execution, detailing the dishonoured cheque amount, court fees, legal costs, and any additional fees claimed by the drawee. The drawer may respond by proposing to deposit part or the entire execution amount to the court’s treasury.
Failure to comply within seven days of notification can lead to severe consequences for the drawer, including arrest warrants and travel bans if the execution amount exceeds AED 10,000.
These provisions ensure that drawees have a clear legal pathway to recover funds swiftly. Business owners facing such issues should consider filing an execution case or a commercial case with the court, supported by a legal notice and relevant documentary evidence. This structured approach offers a robust legal framework for resolving financial disputes efficiently in the UAE.
