DUBAI // A recent lawsuit questioning the constitutionality of the bounced-cheque law illustrated some of the tricky questions surrounding a contentious issue, experts say.
The case, filed by the Emirati businessman, AQ, last month, asked the Dubai Court of Misdemeanours to put the question to the Federal Constitutional Court, saying there was a need to clarify Federal Law Number 401 on bounced cheques.
He is serving three years and six months for several bounced-cheque cases. His lawsuit is not the first to question Law Number 401, according to Dubai Courts sources. All previous cases, including his, were dismissed.
But legal experts say that although the constitutionality is not truly at issue, the law's applicability in the current social and economic environment was questionable.
"The law is a like a living organism - it needs to change and adapt to its ever-changing environment to suit it," said advocate Rashid Tahlak, a Dubai-based criminal lawyer from Dubai Advocates and Legal Consultants. "Article 401 of the UAE penal code needs to be changed - or dropped."
The legislation criminalises a wide-spread problem, statistics show: more than Dh22 billion worth of bad cheques were returned in the first five months of this year, according to the Central Bank. Hundreds of criminal cases have been filed.
The law states a person who defaults on a cheque - with criminal intention - can be jailed or fined, he said. "Cheque cases should be referred to civil courts or arbitrated to reach settlements, as is the case in other nations," he said. "People have to sign blank cheques to rent, borrow, purchase and do business in Dubai. If conditions make it the only method of doing business, the courts must not criminalise non-payment."
The Emirati lawyer, Ali Musabah, agreed, calling for a different approach to such cases.
"The court rarely issues fines in cheque cases and when it does, it does so under very tight conditions," he said. "I believe the courts should reform their approach and issue fines for first-time offenders owing small amounts. If a person was unable to repay his credit card or bank loan for good reason, he should be fined - not jailed."
He said a suggestion was made before the economic crisis hit to resolve cheque issues at police stations. "This would have significantly reduced cheque cases in the courts, but when the global crisis hit, this idea was put aside," he said. "Law Number 401 falls under a constitutional provision that states that no person can be jailed or tried except if specified by law. Bouncing a cheque is a crime, therefore it is constitutional.
"Regardless of the fact that the law may be inadequate or outdated, it is still a constitutional provision."
Mr Tahlak added: "What needs to be done is to call through the FNC for a legislative change."
The Federal National Council acts as a consultative body to the Ministry of Cabinet Affairs and presents its findings to them. Based on that, a decision is made.
According to the chief justice of the Dubai Criminal Courts, Judge Ahmed Ibrahim Saif, a cheque is protected by criminal law because it is viewed as a bond. A criminal judge is not concerned about under what circumstances the cheque was issued. "It is not for him to review this - the judgment is made based solely on the fact that you have presented a bond which was not honoured," he said.
Mr Tahlak said that this view had been upheld several times by the country's highest courts. "The court's interpretation is that no matter what is the circumstance, as long as it was not under duress and in a healthy state of mind, signing a cheque without balance is a crime."
The reason for that, he said, was simple. Cheques are too widespread to allow any type of misuse. "Some sort of legal guarantees should be placed, because cheques are used for everything in the country," he said.