UAE: How can I recover money from a client after repeated cheque bounces?

For speedy legal remedy, you may consider filing an execution case against your client before the court of competent jurisdiction

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Published: Sun 14 Jul 2024, 8:15 AM

Last updated: Sun 14 Jul 2024, 8:35 PM

Question: I am a businessman based in the UAE. I understand that most bounced cheques are no longer a criminal offence. If cheques submitted by one of my clients repeatedly bounce, what are the legal options available to me to recover my money?

Answer: If a cheque issued by an individual (drawer) to another individual or entity (drawee) is dishonoured for insufficient funds in a bank account of a drawer, the drawee is entitled to file an execution case, claiming the amount of the dishonoured cheque, against a drawer known as ‘Writ of Execution’ in the court which has the jurisdiction to hear the matter in the UAE. This is in accordance with Article 212 of Federal Decree Law No. 42 of 2022 on the Promulgation of the Civil Procedures Law, which states,

1. Compulsory enforcement may be carried out only under a writ of execution, in satisfaction of a right which is verified, urgent and of a specified amount.

2. Writ of execution are as follows:

a. judgements and orders, including penal judgements along with any refunds, compensation, fines and other civil rights contained therein.

b. documents authenticated in accordance with the law governing authentication and documentation.

c. minutes of the conciliation ratified by the courts.

d. other documents granted such capacity by the law.

3. The execution may not take place, in cases other than those exempted by law, except under a copy of the writ of execution stamped with the following executory formula: The competent authorities and entities shall proceed with the execution of this writ and assist in its execution even coercively whenever requested to do so.

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4. In the event that the execution applicant did not submit a request to take action in the file for a period exceeding one year after the last procedure, the execution judge may order the temporary closure of the file.

5. Writs of execution shall not be executed if abandoned for (15) fifteen years from the date of the last executory transaction or left for the same period since its issuance without enforcement.

Based on the aforementioned provision of law, if a drawee obtains an execution order in its favour, then a drawee may proceed with filing execution proceedings against the drawer as mentioned in Article 667 of Federal Decree-Law No. 50 of 2022 on Issuing the Commercial Transactions Law and as mentioned in Article 233 to Article 238 of the UAE Civil Procedures Law.

A drawer shall be notified by the relevant court in UAE which has jurisdiction related to the execution proceedings filed by a drawee. The notification may include details such as the amount mentioned on the cheque which is dishonoured, relevant court fees, legal costs and other fees (if any) claimed by a drawee against a drawer. This is in accordance with Article 233 (3) of the UAE Civil Procedures Law.

The drawer may propose to the court and/or the executor once he is notified by the court of the execution order that he intends to deposit part or whole of execution amount to the court’s treasure in favour of the drawee. This is in accordance with Article 235 of the UAE Civil Procedures Law.

In the event a drawer does not pay the execution amount within 7 days after notification of the execution, the court may issue an arrest warrant against a drawer on request of a drawee. This is in accordance with Article 319 of the UAE Civil Procedures Law.

Moreover, the court may also impose a travel ban on a drawer if the execution amount is more than Dh10,000. This is in accordance with Article 324 of the UAE Civil Procedures Law.

In addition, Article 663 to Article 667 of the UAE Commercial Transaction Law provides for the provisions in case of the dishonour of cheque and outlines the recourse available to the bearer of a dishonoured cheque, allowing him or her to seek compensation from a drawer, endorsers, and other obligors, provided the cheque is presented within the legal time frame and proven dishonoured through a protest or an alternative statement issued by a drawee specifying the date of presentment.

Based on the aforementioned provisions of law, for speedy legal remedy, you may consider filing an execution case against your client before the court of competent jurisdiction in the UAE. Alternatively, you may also consider filing a subject case (commercial case) before the court which has jurisdiction in the UAE. For this purpose, you may have to serve a legal notice initially to your client and in the event of non-settlement of the cheque amount by your client, you may file a subject case (commercial case) along with a copy of the dishonoured cheque and other documentary evidence before a court of competent jurisdiction in the UAE.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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