The Central Bank of the UAE announced new amendments to the Commercial Transactions Law regarding decriminalisation of cheques, and amendments relating to partial payment of the cheque, and toughen administrative penalties for issuing cheques without funds, in accordance with Decree Federal Law No (14) of 2020, which will come into force on January 2, 2022.

Please be advised of the following: Partial payment means payment of part of the value of the cheque, and accordingly the drawer, the endorsers and the guarantors (if any) shall be partially cleared. For payment of a cheques value, the Law in the UAE does not require that the funds available with the drawee bank are equal to the value of the cheque. In implementation of Article (6 17) of the Law, the bank should, where the fund for payment is less than the value of the cheque, partially pay the value of the cheque up to the available fund, unless the bearer rejects partial payment. In this case and upon each partial payment, the bank shall initial the back of the cheque confirming the partial payment and give back the original cheque to the bearer along with a certificate to that effect (as per the mechanism, which is currently being discussed with the banks and to be circulated soon).

In case of collection through the cheque holder/ beneficiary’s bank, the latter will issue the partial payment certificate to the cheque holder/beneficiary. The bank may keep a copy of the partially paid cheque and a copy of the partial payment certificate issued by it. The bearer of the cheque shall have the right to demand the payment of the remaining amount against the original of the initial cheque, as per the Executive Regulations of the Civil Transactions Law, being considered an execution writ, according to the provision of Article (635 bis) of the Law. The bank, in accordance with Article ( 617) of the Law, shall report the details of the account holder to the Central Bank, in accordance with the mechanism to be circulated soon, in any of the following cases:

1. Where no sufficient and usable funds for the payment of the value of cheque is available

2. Where the drawer, after issuing the cheque withdraw all the fund for payment so that it is not possible to pay its value, or

3. Where the bank partially pay the value of the cheque

Therefore, you are required to abide by the implementation mechanism of the amendments to the Law relating to the partial payment of the cheque to be circulated soon.

You should inform your employees and customers of these new amendments by all the usual means and methods, whether through social media, websites, electronic applications, text messages, or in the form of short messages that are displayed on the screens of ATMs, internal screens, or other traditional or modern electronic means. You should also raise the level of education and awareness of your employees and customers, direct and guide them and enable them to understand the basic risks, provide them with all information related to these new amendments and their effects on them, and clarify the mechanism and method of applying partial payment of the cheque, and the procedures that can be followed in this case accurately, and what is required to be taken into account to avoid legal accountability and penalties resulting from violating the Law and misuse of the cheque. You are also requested to provide the necessary and appropriate means and mechanisms to respond to customer complaints and inquiries and to clarify their rights and responsibilities in relation to the new amendments to the Law. Central Bank’s Notices No. 1202/2010 issued on 31/3/2010 and No. 2161/2003 issued on 3/8/2003, regarding partial payment of cheque, shall be cancelled, once the above instructions come into effect. The instructions mentioned in this notice shall enter into effect on 2 January 2022.