HomeReturn of a Check in the UAE: 2025 Guide on the New Law and Recovery Procedures
Historically, checks in the UAE were not just a payment instrument but a fundamental basis of trust in business, often used as guarantees or post-dated checks (PDCs) for millions of dirhams. However, the issue of bounced checks due to insufficient funds remained one of the most pressing legal problems in the UAE for decades, automatically shifting commercial disputes into the realm of criminal law. The situation has drastically changed. The new UAE bounced check law of 2024, whose reforms fully came into effect and were solidified in practice by 2025, concluded a multi-stage process of decriminalization. Now, a bounced check due to insufficient funds no longer results in immediate arrest. Instead, the system has been entirely reoriented toward swift civil recovery, providing creditors with almost instant tools for asset seizure and imposing travel bans on debtors.
What is a Bounced Cheque?
The return of a check is the official refusal by the bank on which the check is drawn to execute the payment order. Simply put, the bank, for one reason or another, cannot or will not pay on the presented document. Upon refusal, the bank returns the check to the presenter with an official mark indicating the reason. The most common reason is insufficient funds in the payer’s account at the time of presentation. However, check returns also occur for many other reasons: the payer’s account may be closed or frozen, the signature on the check may not match the sample held by the bank, or the date on the check may be incorrectly specified. Each of these scenarios for a returned check triggers its own legal mechanism, and understanding these nuances in 2025 is critically important.
Key requirements for the validity of a check
Before a check return becomes grounds for a lawsuit, the check itself must be recognized as valid. Checks in the UAE are financial documents of strict accountability. Errors in their completion can render them legally void, and the bank will refuse the transaction, but this will not be considered a culpable check return on the part of the payer.
The legislation of the UAE (in particular, the Commercial Transactions Law) imposes strict requirements on details. For a check to be recognized as valid and subject to enforcement in case of its return, it must necessarily contain several elements. These elements ensure its legal force.
Key requirements for the validity of a check include:
- The word “check” written into the text of the document in the language in which it is drafted;
- An unconditional order to pay a specific amount of money (the amount in figures and in words must match);
- Name of the bank that must make the payment (payer);
- Place of payment (usually this is the bank’s address);
- Clearly specified date and place of issuance of the check;
- The signature of the check issuer (the person who issued the check), which must be identical to the sample provided to the bank.
If any of these details are missing, the document may not be recognized as a check. Particular attention is paid to the signature and date. Check returns often occur due to minor discrepancies in the signature, which the bank interprets as a security measure. As for the date, checks in the UAE are often issued with a future date (post-dated) as a guarantee. Although by law a check is payable on the day of presentation, in practice, returns of checks on such guarantee documents make up the majority of disputes.
New law on the return of checks in UAE 2024-2025
The main change that completely transformed the landscape of check returns is decriminalization. It was based on Federal Decree-Law No. 14 of 2020, which introduced radical amendments to Federal Law No. 18 of 1993 (Commercial Transactions Law). These changes have come fully into effect, and the law enforcement practices of 2024-2025 have definitively established the new order. Previously, the return of a check due to insufficient funds was a criminal offense. The check holder would go to the police station, file a complaint, and a criminal case would immediately be initiated against the issuer of the check, leading to arrest or a travel ban. This turned any commercial debt, even a disputed one, into criminal prosecution.
Now this mechanism has been abolished. The return of a check due to insufficient funds, an incorrect signature (without malicious intent), or account closure is no longer a criminal offense. This does not mean debt forgiveness. It means that check returns have been transferred from the jurisdiction of the police and Criminal Court to the jurisdiction of the Executive Court. The collection system has become no less, and in many ways more, strict and swift. The return of a check, certified by the bank, is now equivalent in force to a Writ of Execution. The creditor no longer needs to go through a lengthy civil process to prove the existence of the debt. The very fact of the check’s return is sufficient evidence.
Legal Proceedings for Cheque Bounce in UAE
The new procedure for a creditor after the return of a check is as follows: they receive the check from the bank with a refusal mark and apply not to the police but directly to the Execution Court by submitting an application (Order on Petition). The judge of the Execution Court does not consider the dispute on its merits (whether the service was provided, what the contract terms were). They see the returned check and immediately, often within 24-48 hours, issue an enforcement order. Based on this order, the creditor can instantly initiate the seizure of the debtor’s bank accounts, assets, vehicles, and, most importantly, impose a Travel Ban. Thus, returned checks now lead to financial consequences for the debtor much faster than a lengthy criminal process.
Another significant innovation was the obligation of the bank to make a partial payment. If the payer’s account has an amount less than the check’s total, the bank is now obligated (and no longer has the right) to pay this portion. For example, if a check is issued for 100,000 dirhams and there are 70,000 in the account, the bank must pay 70,000 to the bearer. In this case, a note about partial payment is made on the returned check, and the creditor can use this check in court to recover the remaining 30,000. This change is aimed at reducing the number of full check returns.
However, it is important to understand that decriminalization is not absolute. Criminal liability (fines and imprisonment) has been retained for actions that are regarded as fraud. Check returns can still lead to a criminal case if malicious intent is proven.
Criminal offenses related to checks now include:
- Issuance of an order to the bank (stop payment) not to pay the check until its presentation, except in cases of loss of the check or bankruptcy of the holder;
- Closing a bank account or withdrawing all funds from it before the date of check presentation with the clear intent to prevent its payment;
- Intentional forgery of a signature on a check;
- Issuing a check, knowing that the account cannot be used (for example, frozen).
In these cases, the return of a check will be investigated by the police as fraud. Thus, check returns in 2025 represent a hybrid threat: in 95% of cases, it is a quick civil recovery procedure, and in 5% — a serious criminal charge.
Legal actions and liability of the parties
The legal framework regulating checks in the UAE and check returns is multi-layered. The primary document is Federal Law No. 18 of 1993 (Commercial Transactions Law). It was amended by Federal Decree-Law No. 14 of 2020, which initiated the reform of check returns. Additionally, Federal Decree-Law No. 31 of 2021 (Penal Code) formalized the abolition of criminal penalties for returned checks without malicious intent. Finally, circulars and resolutions from the Central Bank of the UAE regulate the technical aspects: how banks should process check returns, what markings to place, how to execute partial payments, and how to report dishonest clients to the credit bureau.
The primary responsibility for the return of a check lies with the person who issued it. If the check is issued on behalf of a company, the responsibility becomes double. Financial responsibility falls on the company as a legal entity (its accounts and assets will be seized). At the same time, personal responsibility (including a travel ban and civil arrest) falls on the individual who signed the check—usually, this is the general manager or owner authorized to sign financial documents. This is a common trap for managers: even if they have left the company, they may still bear responsibility for returned checks they signed during their tenure if those checks are presented later. Returned checks tie responsibility to the signer.
The actions of the creditor (check holder) after the return of the check must be swift. They need to obtain the check with the bank’s mark and immediately consult a lawyer to file the case in the Enforcement Court. Any delay gives the debtor time to transfer assets or leave the country. Returned checks require an immediate response. For a debtor who is aware of the inevitable return of the check, the only correct strategy is not to hide but to immediately initiate negotiations with the creditor (preferably through lawyers) regarding debt restructuring. They should attempt to reach a settlement agreement before the creditor turns to court and initiates enforcement proceedings.
Sanctions and practical recommendations
Sanctions for check returns in 2025 can be divided into three groups. The first is civil enforcement measures by decision of the Executive Court. This is the fastest and most common outcome of a check return. These include: a travel ban, which is imposed on the signatory of the check; arrest and forced deduction of funds from all personal and corporate accounts of the debtor in all UAE banks; seizure of movable and immovable property (vehicles, real estate) for their subsequent sale at auction. If the debtor does not comply with the court’s decision on payment, the creditor has the right to demand their civil imprisonment for non-compliance with the court order.
The second group consists of banking and administrative sanctions. They are imposed by the Central Bank of the UAE through commercial banks. In cases of repeated bounced checks, the bank has the right to revoke the client’s checkbook for a period of up to 5 years. Even more seriously, information about all bounced checks is immediately forwarded to Al Etihad Credit Bureau (AECB) — the federal credit bureau. A bounced check leaves a black mark on the credit history of both the company and its owner. This makes it practically impossible to obtain any loans, mortgages, auto financing, or even open a new account in the future. The consequences of a bounced check for reputation are enormous.
The third group is criminal sanctions. As already noted, they are applied only in cases of fraud (for example, a deliberate order to the bank not to pay). The penalties here are severe: large fines (reaching double the amount of the check) and imprisonment for a term from 6 months to several years, depending on the severity of the offense.
In light of these serious consequences, the practical recommendations are obvious. For those who accept checks in the UAE:
- Always verify the authority of the person signing a check on behalf of the company.
- Make sure all the details of the receipt are filled out correctly, without any corrections.
- At the slightest suspicion, ask to issue a cheque at the bank (Manager’s Cheque), which is guaranteed by the bank.
- In case of a returned check, act immediately through the Executive Court.
For those who write checks in the UAE:
- Never write a check if you are not 100% sure that there will be funds in the account by the date it is presented.
- Keep accurate records of all issued deferred checks.
- If you anticipate the return of a check, immediately contact the creditor to negotiate before the check is deposited.
- Never instruct the bank to stop a payment unless you have legal grounds for it (loss), as this may be considered a criminal offense.
The new law on check returns in the UAE in 2024 has brought clarity and speed to the collection process. Check returns are no longer a criminal trap but have become a tool for swift financial enforcement.
Have you encountered a check return?
Whether you are a creditor unable to recover your money or a debtor facing a travel ban and account freeze, the situation requires immediate professional intervention. Check returns under the new UAE legislation are developing rapidly.
Our team of lawyers has deep expertise in handling cases related to check returns in Dubai and across the UAE. We assist creditors in instantly initiating a case in the Execution Court for asset seizure, and help debtors negotiate, lift sanctions, and find a solution for debt settlement.
Do not let a bounced check determine your financial future. Contact us today for a confidential consultation and the development of an immediate action plan.
