Can Cheques Be Encashed After Five Years?

Posted by Awatif Mohammad Shoqi Advocates & Legal Consultancy on March 27th, 2022

As much as they are discussed, cheques are also most common mode of payment in UAE. Issuing cheques is uncomplicated, yet can cause a lot of complications if dishonoured by the bank. UAE Federal Law Number 18 of 1993 on Commercial Transactions Law governs the issuance and circulation of cheques within UAE. Cheques are defined as an order issued by the issuer to a bank or financial institute to allow the beneficiary to withdraw money from his account. However, there are certain prerequisites to be mentioned on the cheques which will allow the beneficiary to withdraw money that is date, signature, name of the beneficiary and the amount to be withdrawn.

Date written on the cheques plays a vital role if the cheques are dishonoured by the bank due to insufficient funds. Nevertheless, the questions before Top Lawyers of Dubai is that can a beneficiary encash a cheques post five (5) years of issuing it or can the issuer defend himself on the grounds that the cheques were although undated, yet was issued 5 years ago and the beneficiary intentionally encashed it post five (5) years.

It is significant for all the cheques issuer to be aware of the fact that cheques criminal cases should be filed within five (5) years from the date of receiving cheques if the cheques are undated. This law has also been approved by Court of Cassation under case number 207 of the year 2001 issued on 24 November 2001 and in Court of Cassation case number 177 of the year 2003 issued on 28 June 2003. Notwithstanding the foregoing, it is important to note that the civil case shall be filed within two (2) years from the date the cheques are due.

Concerning the time limitation to file cheques cases, it is of significant importance to note that the time limitation for a criminal case is from the date of delivering the cheques whereas, for the civil case the time limitation starts from the date when the cheques are due. Where the time limit in criminal case is five (5) years and in civil cases it is two (2) years. This is in accordance with Article 638 of the Commercial Transactions Law of the UAE. However, there are certain exceptions to this general time limitation rule which may allow the court to extend the time period for filing such cases or will give the claimant the benefit of the doubt and it is advised to discuss such exceptions with your legal representative during the time of need.