Awatif Mohammad Shoqi Advocates & Legal Consultancy | View firm profile
Introduction:
Intentional signature forgery, particularly concerning cheques, is a serious offence under UAE law. It challenges the trust in financial transactions and causes significant harm to both individuals and businesses. The UAE has stringent legal provisions under the Commercial Transactions Law (Federal Decree-Law No. 50/2022) and the UAE Penal Code (Federal Decree-Law No. 31/2021 on Crimes and Penalties Law) to address such offences, offering both criminal penalties and civil remedies for the victims.
Legal Framework on Cheque Issuance and Forgery
Under the UAE Commercial Transactions Law, specific provisions regulate the issuance and validity of cheques. A cheque must meet certain essential criteria, including the drawer’s signature (Article 627). Failure to meet these requirements can render the cheque invalid.
In cases of cheque forgery, Article 630 stipulates that the drawer must have sufficient funds at the time of issuance. Additionally, Article 631 allows a drawee, typically the bank, to confirm the cheque’s authenticity by verifying that funds are available for payment. If a signature on the cheque is forged, the drawer is in breach of the law, and the bank may refuse to honour the cheque, leading to significant financial and legal repercussions.
Cheque forgery, whether by altering the signature or altering other key details, constitutes a criminal offence under the UAE Penal Code. Specifically, Article 453 criminalizes the falsification, misappropriation, or misuse of documents, including cheques. Presenting a forged cheque can result in the responsible party facing severe penalties, including imprisonment or fines, depending on the nature and scale of the fraud.
Criminal Penalties for Forgery
The UAE Commercial Transactions Law enforces penalties for cheque forgery. Under Article 675 of the Commercial Transactions Law, those found guilty of forgery or fraudulent cheque-related activity may face:
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- Imprisonment: A jail term ranging from 6 months to 2 years.
- Fines: A minimum fine of AED 5,000 or 10% of the cheque’s value (whichever is higher), up to a maximum of double the cheque’s value.
- Double Penalties: According to Article 675, the penalties can be doubled in cases of repeat offences.
Bank’s Role and Liability
Banks also play a crucial role in preventing cheque forgery. Under Article 629, banks are required to verify the drawer’s signature against the specimen signature on record. If a bank fails to detect a forged signature and processes the cheque, it may bear liability for any financial loss suffered by the account holder. Forgery, specifically in the form of signing or writing a cheque in a way that prevents its payment, is strictly prohibited.
Civil Remedies for Victims
In addition to the criminal sanctions, victims of cheque forgery can seek civil remedies to recover their financial losses. Under Article 637 of the Commercial Transactions Law, the drawer of a cheque remains liable for its payment, even in cases of forgery. The drawer guarantees payment, and any attempt to evade this responsibility will be considered null and void. Victims are entitled to file civil cases to claim the amounts owed under the forged cheque.
Furthermore, Article 453 of the UAE Penal Code allows victims to claim damages for financial harm caused by forgery. This enables victims to seek compensation for both the cheque’s value and any additional losses incurred due to the fraudulent act.
Steps to Take Legal Action
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- File a Criminal Complaint: Victims should report cheque forgery to the police, who will initiate a criminal investigation. As per Article 675 of the Commercial Transactions Law, the offender may face imprisonment, fines, or both.
- Present Evidence: It is crucial to provide solid evidence, including the forged cheque, bank records, and any relevant communication, to prove the fraudulent nature of the transaction.
- File a Civil Lawsuit: Victims can pursue a civil lawsuit concurrently or following the criminal proceedings to recover the amount owed. Courts may order the drawer to pay the value of the cheque along with any additional compensation for the victim’s damages.
- Involve the Bank: Banks may play a role in confirming the forgery, blocking payment, and assisting the victim in recovering lost funds.
Conclusion:
Intentional signature forgery, particularly in the case of cheques, is a serious criminal offence under UAE law, carrying both criminal and civil consequences. The Commercial Transactions Law and the UAE Penal Code offer robust legal measures for both preventing cheque forgery and ensuring that victims are compensated for their losses. By filing criminal complaints and pursuing civil claims, victims can fully leverage the legal remedies available to recover the amounts owed to them and prevent future financial harm.