Consequences of Bounced Checks in Dubai

What Happens if a Check Bounces in Dubai?

Using checks as a payment method in the UAE remains a common practice, especially in business and real estate transactions. However, if a check cannot be cashed due to insufficient funds, it can have serious consequences for the issuer. Below, we detail the legal proceedings that may be initiated in the case of a bounced check and what the potential consequences could be.

What qualifies as a bounced check?

A check is considered bounced if the amount specified on the check cannot be paid to the beneficiary (drawee) due to a lack of funds in the issuer's (drawer) bank account. In such cases, the beneficiary can enforce their rightful claim through the Emirates' court system.

Legal Framework

Article 212 of the 42nd Federal Decree-Law of 2022 (Civil Procedures Law) governs the Writ of Execution. This allows the affected party to initiate enforcement proceedings in court to collect the valid claim.

A claim from a bounced check becomes enforceable if:

The affected party has a court order, or

The check is deemed an official, certified document under the law.

Execution can only proceed based on a Writ of Execution that includes an enforcement clause, requiring authorities to carry out the procedure.

Procedure in Case of a Bounced Check

1. Filing an Enforcement Order

The drawee may file an enforcement request at the appropriate court, citing the amount of the bounced check and associated costs (court fees, legal representation, etc.).

2. Notification to the Issuer (Drawer)

The court notifies the drawer of the initiation of proceedings. The notification includes the demanded amount and all related costs and fees.

3. Payment Opportunity

Upon receiving the notification, the drawer is entitled to pay the amount wholly or partially into the court treasury in favor of the drawee (according to Article 235).

4. Enforcement Actions if Payment is Not Made

If the drawer does not pay within 7 days, the drawee can request the court to:

Issue an arrest warrant (Article 319),

Impose a travel ban if the amount reaches or exceeds 10,000 dirhams (Article 324).

5. Compensation Options

Under commercial law, the drawee may file an additional civil compensation claim against the drawer and other liable parties (e.g., guarantors) if the check was presented within the legally prescribed timeframe.

What Can the Check Issuer Do?

If someone issued a check that bounced, the first step is to immediately contact the affected party and seek legal advice. If the amount can be paid, it should be done no later than 7 days after the court notification to avoid more severe consequences, such as a travel ban or arrest.

Summary

In Dubai, a bounced check is not just an unpleasant incident—it can have serious legal and personal repercussions. The UAE legal system clearly regulates such cases and provides opportunities for the efficient enforcement of rightful claims. Therefore, the check issuer must always ensure that the amount on the check is available, or they risk facing court enforcement, arrest, or even a travel ban.