The legal landscape of the UAE is ever evolving. Cheque disputes are a common problem faced in a legal environment. To address this issue, the UAE announced a recent reform under federal decree law no 14 of 2022 2022.
This has changed the recourse of how dishonored cheques are treated in UAE courtrooms. The changes are introduced with the intention to bring in the right balance between commercial protection and dispute resolution.
Most recently, a cheque execution dispute was brought to the UAE courts, which has propelled the UAE to update its legal framework. This case will be guidance for the lawyers in the UAE to resolve different issues and problems. The modern law was brought to focus on key procedures and suggests a strategic solution to the problem. Among lawyers in UAE, Dubai lawyers are very famous. We have a top team of lawyers here in Dubai. We are an established Dubai law company.
Background of Cheque execution dispute
According to the case, there were 2 businesses associated operating inside Dubai. They were involved in a substantial transaction worth AED 600,000. The buyer issues a partial payment for the goods delivered.
It was through a post-dated cheque. When the cheque was deposited, the bank returned it due to insufficient funds. In other words, the cheque was dishonored by the bank.
The recipient turns towards a civil lawsuit rather than filing a criminal complaint. The recipient followed the new Cheque law to register a complaint against the buyer.
The recipient intended to obtain quick and smooth financial compensation via the cheque execution process.
Cheque execution system is a much faster, swiftly, and court-backed recovery procedure. Furthermore, the system is supported by the reforms introduced in the regulations. Additionally, you can book the legal appointment with us.
Significant Reforms
The prime change brought to the current UAE law is the reclassification of bounced or dishonored cheques. According to the amendments in commercial transaction law, the returned cheque due to insufficient funds is termed as an executor tool.
This empowers the court judgment. It permits the direct application to the execution court for enforcement without evolving any court trial. According to the recent changes, all the cheque disputes are treated similarly.
On the contrary, criminal prosecution only takes place in a few cases. It may involve cheques drawn on closed accounts, halt payments on cheques with fraud, intentional falsification, and forgery.
The dispute must be pure regarding the non-payment. Only such a type of non-payment qualifies for civil enforcement.
The Role of Dubai Execution Court
The legal process follows it. The claimant submitted the dishonored cheque with the help of a lawyer.
They also submitted the bank return memorandum and the summary application. All the documents were submitted to the Dubai Execution Court. They will review the documents and issue an execution order within the next few days.
The Dubai Execution Court will order the issuer or defendant to pay the cheque in the next 15 days of notification. In case of failure to comply with the court orders, it will result in legal action.
Strict orders may be passed by Dubai Execution courts, like freezing the bank accounts, confiscation of assets or property, travel bans, or potential auction of assets or property.
The defendants or issuer does have the right to respond to the request. In this request, the issuer can contest the execution by giving reasons. He may allege that the cheque was issued under pressure and without proper commercial justification.
The counter-argument was also given, in which it was claimed that the cheque was issued as a security cheque. It was also notable that it was not declared as a payment. This is a common practice in the courts of the UAE.
The UAE courts have consistently ruled out that the intention behind issuing a cheque is baseless and irrelevant. However, it is only possible if there is clarity and proven that fraud or coercion took place.
The lawyer presented the shred of evidence in the UAE courts. They submitted the WhatsApp chats, messages, email threats, and more to prove the transaction’s legitimacy. The claimant’s lawyer presented the arguments that the cheque reflects a genuine debt rather than a security cheque.
The Role of UAE Courts in Cheque Execution Disputes:
UAE Court’s Decision analyzed the evidence presented in the court by both sides. The UAE court upheld the execution order after an in-depth examination.
As a result, the defendant was given a 7-day extension to settle the outstanding amount otherwise; they will be ready for legal action. The defendant may face asset or property seizure or confiscation.
This resulted in a partita payment made by the defendant. However, the remaining was agreed upon as a court-approved payment plan.
This legal case clearly demonstrated that UAE courts prioritize swift and efficient dispute resolution to the dispute. Besides, they also encouraged fairness in financial transactions to prevent prolonged litigation.
Key Role of Lawyers in Cheque Execution Disputes:
The prolific lawyers are instrumental to the entire cheque execution process. They will ensure all the documents are filed in the correct way with the UAE courts.
Besides, he will carry out all the communications with the different stakeholders, including the UAE courts. They will be responsible for preparing the evidence as required by the courts.
Furthermore, the lawyers will ensure the deadlines are met and thus, the procedure is followed. Similarly, on the other hand, the defendant will also benefit from the lawyer’s services.
If he believes that the cheque is misused, he can simply seek time to negotiate a settlement. The role of a lawyer is necessary as they have an understanding of the applicable laws and thus, formulate future strategies using them.
