Under UAE law, a cheque is considered an instrument of payment rather than an instrument of guarantee. Accordingly, breaching its obligations may, in certain cases, result in criminal liability. Although recent legislation has reduced criminalization in some situations, there are still cases that require filing a police report.
The most important of these cases are:
– Issuing a cheque without sufficient available and withdrawable funds.
– Withdrawing all or part of the funds after issuing the cheque.
– Issuing an order to the bank not to honor the cheque (in bad faith), such as when the drawer instructs the bank to stop payment without a lawful justification (e.g., a malicious claim of loss or theft).
– Drawing or signing the cheque in a manner that prevents its encashment.
– Closing the bank account before the cheque is presented for payment.
Important legal notes:
Under the recent amendments to UAE legislation (particularly the Commercial Transactions Law), criminal liability for certain cases of issuing a cheque without sufficient funds has been removed in some situations. These cases have instead been shifted to a civil/enforcement pathway, whereby the cheque may be directly enforced as an executive instrument, similar to an enforceable debt instrument.
However, actions involving fraud or bad faith—such as withdrawing the available funds, closing the account, or issuing a stop-payment order without a lawful justification—are still considered criminal offences and may require filing a criminal complaint.
Conclusion:
Not every bounced cheque requires filing a police report. A criminal complaint is only justified when criminal intent or fraud by the drawer is evident, and not merely a case of insufficient funds.