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Abu Dhabi, UAETuesday 11 December 2018

UAE legal Q&As: a cheque I issued bounced, will I go to jail?

A reader asks what the repercussions are of a bounced cheque and another asks if a business contract can be applicable to the laws of their home country

I gave a Dh100,000 cheque to one of my suppliers. Due to my cash flow issue, the cheque bounced. Can I go to jail or has the law changed in Dubai?

Further to Law no. 1 of 2017 called Criminal Order Law the cheque cases, if the amount is less than Dh200,000 it shall be punishable by fine. This fine varies between Dh2,000 and Dh10,000 depending on the cheque value. Such decisions could be given by the prosecution within a very short period time without any need to refer you to the criminal courts. This is only applied in the emirate of Dubai.

However, you have to bear in mind that the complainant still has the right to file a civil case against you to claim the cheque value and an interest of 12 per cent starting from the date the cheque was dishonoured. They could also ask the court to obligate you to pay the court charges and legal costs.

The complainant also has the right to ask the civil courts to cease your company bank account by up to Dh100,000 until the civil case is decided. They may also ask the civil courts to issue a travel ban order on an urgent basis against you until the court issues its final decision and until you pay back the money.

I am a European citizen. I am in the process of selling my assets to a family member in the UAE. Can I write in the contract that the applicable law is our home country’s law?

Unfortunately, that is not possible because Article 19 of Federal Law No. (5) of 1985 on the Civil Transactions Law of the UAE states that “1. Contractual commitments in form and context shall be governed by the law of the State where the common residence of the contracting parties is located. Should they have different residences, the law of the State where the contract is made shall apply, unless the parties agree otherwise, or the conditions show that another law is to be applied.

2. However, the law on the location of the real estate is the law to be applied on contracts made in this regard.”

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