Federal Supreme Court, Commercial Appeal No. 50 of 2021, judgment of 31 August 2021
A cheque is in principle an instrument of payment and, at the least, a debt instrument entitling the holder to collect its value from the drawee bank. If it is returned unpaid, the signatory and the person from whose account it was drawn remain jointly liable for its amount without the holder having to prove why it was issued: its cause is presumed lawful unless the debtor proves payment, extinction of the debt, or that the debt is not owed or not yet due. Experts deal only with technical and factual matters; legal questions are for the court, which must weigh all the evidence, including the cheque's evidential force, instead of deferring to an expert.
A company engaged a management consultancy and an individual to supervise the building of a water park on an island for a fixed fee of USD 10,000 a month, including paying the project's contractors from funds the company transferred. Alleging that the contractors had not been paid and the project had stalled, the company sued in Sharjah for an engineering expert's assessment of the money paid and of its losses. The consultants counterclaimed for amounts due under cheques signed by the company's representative, saying they paid for work under a second agreement of August 2014. That agreement, separate from the first agreement of August 2013 for administrative and technical supervision at a monthly fee, had made them directly responsible for completing and delivering the project. They produced documents signed by the company showing settlements and renegotiations with earlier contractors, and a statement by the project's consulting engineer approving the work done until January 2015. A first cassation judgment had stressed the need to examine that evidence, but the remand court again decided on the basis of the expert reports alone. The Federal Supreme Court held this to be wrong in law and inadequately reasoned. A cheque is a payment instrument whose signatory and account holder are jointly liable for it when it bounces, without the holder proving its cause; legal questions cannot be handed to experts; and the court must deal with the parties' evidence and defences. The remand court had ignored the converging indications that the cheques were issued for work under the second agreement, disregarded the cheques' evidential force, and overlooked that the successive expert reports showed the company had not proved any other reason for issuing them. The judgment was quashed. As this was a second appeal, the Court decided the merits itself: the counterclaim concerned services under the August 2014 agreement, the AED 2.3 million already paid was part of the consultants' dues, and the seven remaining cheques, worth AED 3.7 million, had been given for work done, with a lawful cause the company had not disproved. It set aside the first-instance judgment and ruled afresh on both claims.
The ruling restates, at federal level, the strong position of the holder of a dishonoured cheque: the person who signed it and the account holder answer for it jointly, and the drawer bears the burden of proving a different cause. It also limits how far courts may leave disputed commercial questions to experts. It was decided under the 1993 Commercial Transactions Law, since replaced by Federal Decree-Law No. 50 of 2022.
| Federal Law No. 18 of 1993 (Commercial Transactions Law), provisions on cheques (the judgment cites no article) Decided under this law; it has been replaced by Commercial Transactions Law. |
“الأصل في الشيك أنه أداة وفاء وفي أضعف حالاته سند دين يخول لحامله اقتضاء قيمته مباشرة من البنك المسحوب عليه”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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