Dishonoured Cheques in the UAE: Navigating the Legal Landscape

In the UAE, cheques remain a common method of payment. However, what happens when a cheque bounces? In this blog post, our legal experts dive into the legal consequences of dishonoured cheques ​


What are cheques issued by a natural person? 

These are cheques issued by an individual from their bank account which is operating within the country. 

What are cheques issued by a corporate body?

These are cheques issued by a company, signed by its legal representative or the authorised signatory. 

What is a dishonoured cheque?

A dishonoured cheque, also known as a bounced cheque, is a negotiable instrument drawn by a drawer on a bank (drawee) that the bank refuses to pay upon presentation due to insufficient funds or other reasons.

Under what circumstances can a cheque be dishonoured?

  1. Insufficient Funds

If a cheque is rejected due to insufficient funds, it is considered an executive instrument according to Article 667 of the UAE Commercial Transactions Law: 

The cheque on which the drawee states that it has no or insufficient balance shall be an executive instrument. The bearer of the cheque may request the execution thereof, in whole or in part, by force.

The provisions, procedures and rules set out in the Civil Procedures Law shall apply to the application for execution and contention therein.

This empowers the payee (bearer) to enforce payment directly through the execution process, without the need for a separate court judgement. In such cases, the liability of the drawer is limited to civil liability, with no criminal liability on the drawer. 

  1. Account Closure 

If a cheque is dishonoured due to account closure, it is also considered an executive instrument. Its value is collected through execution procedures, and enforcement measures are taken accordingly.

Although the law does not explicitly state that a bounced cheque due to account closure is considered an executive instrument, the Federal Court of Cassation, through the Judicial Principles Unification Committee, has ruled in principle that both the bounced cheque due to insufficient funds and the bounced cheque due to account closure are considered executive instruments. 

However, in addition to being an executive instrument, the bounced cheque due to account closure entails criminal liability. The majority of the Committee decided in Request No. (1) of the year 2023, “The Federal and Local Judicial Principles Unification Committee,” to adopt the judicial principle by considering that the phrase “account closure” is equivalent to the expressions “insufficient funds” and “insufficiency thereof” – as stipulated in Article 667 of Federal Decree-Law No. 50 of the year 2022 regarding the issuance of the Commercial Transactions Law. 

  1. Other

The cheque is not considered an executive instrument if it bounces for any reason other than those mentioned earlier. Therefore, it cannot be enforced through executive procedures and its value cannot be collected directly through enforcement measures. Instead, other legal avenues must be pursued to claim its value, and the legal route is determined according to the reason for issuing the cheque and the debt owed under this cheque. 

What is the civil liability of a natural person who issues a cheque?

A cheque functions as a substitute for cash payment. It is a negotiable instrument that acts as a legally binding order to the bank, on which it is drawn, to pay a specified sum of money to the named payee (the beneficiary) upon presentation.

Upon issuance, the drawer (the natural person who issues the cheque) assumes civil liability for payment. The burden of proof regarding sufficient funds or authorization to draw on the account does not lie with the beneficiary.

A copy of this family charter needs to be deposited in the Register. In the event of a conflict between the Memorandum and the family charter, the provisions of the Memorandum shall prevail.

What is the civil liability of a corporate body that issues a cheque?

For cheques issued by a corporate body, the authorised signatory who signs the instrument becomes jointly liable with the company. This arises from the signatory’s duty of care, which includes verifying sufficient funds in the account before issuing the cheque.

This joint liability applies when the cheque bounces due to insufficient funds and remains in effect for the presentation period, typically (6) six months from the date the cheque was drawn. However, the signatory can avoid liability by providing evidence of sufficient funds within this timeframe.

When does a dishonoured cheque entail criminal liability?

Article 675 of the UAE Commercial Transactions Law outlines specific circumstances where a natural person who issues a cheque may face criminal liability. These include:

  • Pre-dated dishonour – Instructing or requesting the drawee bank (the bank on which the cheque is drawn) to dishonour the cheque before its designated date, except in the limited situations outlined in Articles 651 and 656 of the same law
  • Account manipulation – Closing the account, withdrawing the entire balance, or intentionally causing the account to be frozen before the cheque is issued or presented for payment.
  • Deliberate falsification – Intentionally executing or signing the cheque in a manner that prohibits honouring thereof. 

If a cheque issued by a corporate body bounces due to the reasons mentioned above, both the legal entity and the authorised signatory are considered jointly liable in case of any criminal offence related to the dishonour of the cheque, as per Article 683. 

In cases where either of the crimes is committed, in the name and for the account of a juristic person, the person in charge of the actual management shall not be punished, unless he is evidently aware of the crime, or commits the crime to fulfil the interest of himself, or of others.

What is the applicable penalty for a natural person?

Any person who commits any of the actions mentioned above shall be sentenced to serve imprisonment for a period of not less than (6) six months which may extend up to (2) two years and/or pay a fine of not less than (10%) of the value of the cheque, of minimum (AED 5,000) five thousand dirhams, and shall not exceed twice the value of the cheque. In the case of recidivism, i.e. repeat offences, the penalty shall be twice the value of the actual penalty. 

What is the applicable penalty for the corporate body?

  1. In the case where the responsibility of the natural person cannot be established, as described in Clause (1) hereof, the juristic person shall be fined the amount of not less than two times the fine legally prescribed for the crime and shall not exceed five times thereof. The juristic person’s legal entity’s licence to operate may be suspended for a maximum of (6) six months. In case of recidivism, the court may order the revocation of licence or dissolution of the juristic person, as the case may be. The judgement shall be published at the expense of the juristic person, in two daily widespread newspapers issued in the state, one in Arabic and the other in English. Alternatively, the decision may be published electronically in two platforms, approved by the Minister of Justice, one in Arabic and the other in English. 
  2. The imposition of penalties under Clause (2) does not preclude the application of any additional penalties authorised by law.
  3. The provisions set out in Clause (2) do not apply to licensed financial institutions regulated by the Federal Authority.

How is malicious intent determined in cases of dishonoured cheques?

Any action taken by the drawer upon signing the cheque, which leads to its non-payment, constitutes malicious intent. The legislator has left the determination of malicious intent to the discretionary power of the criminal court. For example, among the cases of malicious intent is issuing a cheque with a non-matching signature or reporting the loss of the cheque after its issuance, or any other action by the drawer that leads to the non-payment of the cheque . The law imposes a deterrent penalty on issuing a cheque with malicious intent.

What legal avenues are available for claiming the value of a non-executive cheque?

Payment order procedure is considered the optimal approach for claiming the value of the cheque in these cases. However, there are certain situations where pursuing regular litigation is preferred, especially if there is a serious and genuine dispute regarding the entitlement to the amount specified in the cheque. 

Many rulings have settled on the notion that even if the cheque is issued as a guarantee, it can still be claimed through the payment order procedure, placing the burden of proof of the non realisation of the entitlement on the drawer. However, it has been seen in multiple cases rulings that reject the acceptance of the payment order due to the existence of a serious dispute regarding the entitlement to the cheque amount or a dispute over the reason behind it and the legitimacy of this reason. 

Under what circumstances can a criminal case for a dishonoured cheque be terminated?

The criminal case shall end if the full or partial payment of the value of the cheque is made before the commencement of the compulsory execution proceedings, or if it is reconciled or the full or the rest of its value is paid before it is decided by a final judgement, and if the reconciliation occurs after the judgement becomes final, its execution shall be suspended.

What is the civil liability of the drawer in a criminal case?

The drawer is considered civilly obligated to pay the value of the cheque separately from the criminal claim, according to Article 682 of the Commercial Transactions Law:

If a criminal action is filed against the drawer, in either of the cheque crimes provided herein, this shall not prejudice the force execution of cheque or taking the judicial measures, according to the provisions, procedures and rules referred to in Article (667) hereof, or the right of the beneficiary or the cheque bearer to claim remedy, according to the procedures provided in law. 

This means that the criminal claim brought by the beneficiary regarding the cheque does not affect the civil claim. But the civil court is expected to suspend the case until the issuance of the criminal judgement, as the issue to be decided by the court is a common issue between the civil and criminal claimants.

What are the execution procedures that need to be followed?

  • Submit an execution memo for cheques, and all documents should be translated into Arabic, legal translation approved by the UAE Ministry of Justice. 
  • After registering the file, the client will get a decision to issue execution writ as well as a decision to prevent the person executed against from travelling in the circumstances determined by the execution judge. 
  • After passing 7 days from the notification of the debtor legally, the Applicant submits a request to inquire and attach the apparent funds of the debtor and to proceed with the sale procedures and to request for warrant for the debtor to bring him.


The cheque must be within jurisdiction of the execution court as not to be among the circumstances of incrimination related to the cheque: such as crimes of cheque forgery, cheque fraud by giving instruction to the bank not to disburse the cheque, without right withdrawing entire balance before issuing date of the cheque, and deliberately writing or signing the cheque in a way that prevents it to disburse. 

This article has been written by the experts at OH LLP.  

*It reflects the personal opinion of the law firm and does not constitute legal advice*

We at OHLLP understand that each client’s requirements are different and can provide you with dedicated and personalised legal opinion. Do not hesitate to contact us for further enquiries: 

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