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November 18, 2017


UAE legal Q&A: What is the punishment for a bounced cheque now that there is no jail time?

Question: I have a small shop in Dubai. I gave a cheque of Dh150,000 to one of my suppliers. Due to lack of cash flow I was not able to honour the cheque. I heard that cheque cases now are not punishable by jail sentences. Is it true?

Answer:In Dubai, under law No 1 of 2017 called the Criminal Order Law, the cheque cases, if they are less than Dh200,000, shall be punishable by a fine only. Fines vary between Dh2,000 and Dh10,000 depending on the cheque value. Such decisions could be given by the prosecution within a very short amount of time without any need to refer you to criminal courts. 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 percent starting from the cheque date.

They could also ask the court to force you to pay the charges and legal costs. The complainant also has the right to request the civil courts to stop your company bank account up to the amount of Dh200,000 until the civil case is decided. They may also request the civil courts to issue an urgent travel ban against you until the civil court issues its final decision and you repay the money.

Question: 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?

Answer:Unfortunately, that is not possible because Article 19 of Federal Law No (5) of 1985 on the Civil Transactions Law states that: "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. However, the law on the location of the real estate is the law to be applied on contracts made in this regard." Therefore, the law applicable on real estate in that of the UAE only.

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