Riddle Over Dud Cheques Deal For Expats In UAE

There is still confusion in the UAE over whether expats can be jailed for using dud cheques to back up loans.

Last October, there was a royal decree ordering Emirati citizens could no longer be jailed for bouncing cheques.

The use of post-dated cheques is widespread and often used by businesses and individuals as a guarantee for expensive transactions, like apartment rentals and business deals.

However, local news outlets reported Ali Khalfan Al Dhaheri, from the Ministry of Presidential Affairs, as saying that it would be ‘fair and equal’ that foreigners would no longer be imprisoned for issuing collateral cheques that later bounced.

All public prosecutions involving foreigners were believed to have halted and detainees had been released from custody.

1.6 million cheques bounced

It was also made clear that civil cases could still be brought against someone who dishonoured their cheque.

But now UAE’s Higher Committee of the Nationals Defaulted Debts Settlement Fund has clarified that the decree does indeed just relate to UAE nationals.

In a statement they confirm that they are only interested in handling the debts of Emirati citizens, according to payment terms set by courts and that they would no longer be jailed.

However, this decriminalisation of issuing bad security cheques would not be extended to expats.

The issuing of bad cheques is something of a serious issue in the UAE, with the Central Bank revealing that of the 28.5 million cheques written in 2011, 1.6 million bounced – worth around £9 billion.

In 2009, at the height of Dubai’s downturn, it was estimated that around 2,500 people were absconding every month leaving behind unpaid credit card bills.

International debt collectors

But since then many banks have used international debt collectors to help track down the ‘skippers’ and make them pay – often years after they left Dubai.

Standard Chartered says it uses debt collectors in 70 countries where it’s often easier to get repayment than it would be in the Gulf.

Some high profile cases are still due before the UAE courts. In one, British-born businessman Safi Qurashi is awaiting a new trial date after Dubai’s Attorney General found that after a review of the evidence which led to his conviction, the cheques which bounced should not have been cashed and should have been returned to him.

Mr Qurashi, who rose to fame after buying a £37million manmade island shaped like the UK on Nakheel’s ‘The World’, now says that he is disappointed that the British government has failed to support him in fighting the case.