I issued a cheque that bounced. Does that mean I will go to jail?

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

Further to Law No 1 of 2017 called the Criminal Order Law, if the amount is less than Dh200,000, bouncing a cheque shall be punishable by a fine. The amount varies between Dh2,000 and Dh10,000, depending on the cheque’s value.

Such decisions could be made by the prosecution within a very short time, without any need to refer you to the criminal courts. This is applied only 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 interest at 12 per cent, starting from the date the cheque was dishonoured.

They could also ask the court to ensure you pay court charges and legal costs. The complainant also has the right to ask the civil courts to freeze 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 all the money back.

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 “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.”