Federal Decree-Law No. 14 of 2020, Amending Certain Provisions of the Federal Law No. (18) of 1993 Concerning the Commercial Transaction Law, came into force on the 2nd of January 2022. With the enforcement of this Decree, some significant changes were made to the Commercial Transactions Law No. 18 of 1993. Amongst all the changes, removing a custodial sentence and decriminalizing bounced cheques due to insufficient or no balance has perhaps drawn more attention from the general public.
Before Decree 14/2022, cheque bounce was considered a criminal offense, punishable by imprisonment, fine, or both. Procedurally, if the beneficiary of the cheque, i.e., the cheque bearer, wanted to seek relief, they had to file a criminal case and a civil case, followed by the execution case. This process was time-consuming, complex, and expensive for the bearer of the dishonored cheque.
Moreover, Decree 14/2022 seems to have come into force to remove such delay, complexities, and costs for the bearer of a dishonored cheque. Article 3 of Decree 14/2022 has made Articles 401, 402, and 403 of the Federal Law no. 03 of 1987, The Penal Code, null and void. Thereby, it has decriminalized the criminal aspect of the bounced cheques, and at the same time, it has removed the requirement to file a criminal case for cheques that have bounced due to insufficient or no balance.
Article 2 of the Decree 14/2022 incorporated Article 635 in the Federal Law no. 18 of 1993. Article 635 states that “A cheque, which bears the drawee’s stamp as non-paid for the unavailable or insufficient funds, shall constitute an executive instrument as per the Executive Regulation of the Federal Law No. (11) of 1992 and its bearer shall have the right to demand the coercive enforcement, wholly or partially. With respect to its enforcement and dispute related to it, provisions, procedures, and rules provided for in the said Executive Regulation shall apply.” That means that a cheque that has bounced or got dishonored and certified by the drawee bank as “without or insufficient balance” shall be considered as an execution deed following the Regulation to the Federal Law No. (11) of 1992, as amended, and that the cheque bearer may request the mandatory execution for the payment, in whole or in part. The provisions and the rules identified by the same Regulation shall be followed in this regard.
As a result, under the provisions of the new law, the cheque bearer can use the bounced cheque as an execution deed, provided that the drawee bank certifies the cheque as bounced due to the fact that the account of the cheque issuer does not have a balance or that this balance is insufficient to cover the entire value of the cheque, and can proceed directly to the execution court to file for an execution case for the payment of the cheque amount.
On principle and in practice, the new Law has removed the burden on the cheque bearer to file any case or to go through other procedures before filing for execution for the payment of the cheque amount. The Execution Judge shall take execution procedures based on the bounced cheque as an execution deed provided that the cheque is properly certified by the drawee bank in accordance with the new Law.
As a result, this has reduced the burden on the cheque bearer, who can now use the bounced cheque certified by the drawee bank to turn to an Execution Judge directly to execute the cheque amount without the need to file a lawsuit or take any other judicial action.
Please do not hesitate to contact our specialized team to assist you in respect of the application of the Decriminalization of Bounced Cheques.
