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Resolving Judicial Disputes: Ruling on Cheque Execution

Overview of Ruling

The recent decision by the Authority for Unification of Federal and Local Judicial Principles at the Union Supreme Court in Abu Dhabi (hereinafter USCAD) on December 21, 2023, addresses conflicting judicial principles related to cheque execution. This ruling resolves a dispute that arose from different interpretations of cheque bounce scenarios by the Dubai Court of Cassation. In the following article we will explain the decision and the interpretation the Court gave within its decision.

The decision of the USCAD emphasizes that the phrase “closed account” is to be considered equivalent to lack of balance and insufficient balance. This significant alteration has crucial implications for the legal treatment of bounced cheques and the rights conferred upon the holder in such instances.

The resolution focuses on cheque execution, particularly in situations where cheques bounce due to insufficient or no balance. Preference is now given to the principle that excludes cheques bounced due to a ‘closed account’ from being considered an execution instrument. The USCAD has determined that cheques bouncing due to a closed account will no longer be accepted as payment instruments, in contrast to previous practices.

Justification for the Decision

The USCAD justifies its decision by highlighting that a cheque marked as closed account signifies its inability to be encashed, making it comparable in consequences to cheques bouncing due to insufficient funds. This decision aligns with the provisions of Federal Decree Law No. 50 of 2022, which recognizes a bounced cheque as an execution instrument, enabling the bearer to initiate enforcement actions against the debtor forcibly.

Protection of Transactions

By adopting the principle that excludes closed account cheques from being execution instruments, the USCAD aims to safeguard the integrity of transactions. This decision ensures clarity and consistency in the interpretation of cheque bounce scenarios, thereby enhancing the stability of commercial transactions.

How Lawbridge can support you

Overall, the USCAD’s resolution of conflicting judicial principles brings clarity to cheque execution rules and strengthens the legal framework governing financial transactions in the UAE. Whether you are a creditor seeking to enforce payment through bounced cheques or a debtor facing legal implications, our team of experienced lawyers is here to provide you with comprehensive legal advice and representation. We understand the complexities of cheque execution laws and can guide you through the process with clarity and confidence.

Don’t let uncertainties in cheque execution laws jeopardize your financial interests. Contact us today to schedule a consultation and ensure that your rights and obligations are protected under the new legal framework established by the USCAD’s decisive ruling.

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