UAE Bounced Cheque Case Could Affect Expats

Expat Globe

The case of Amanda Allen might not sound unique on first sight but it could be the bounced cheque that reverberates around the expat world.

It is common practise in the UAE to use a postdated or undated cheque as security for a wide range of business transactions including leases and loans.

Amanda Allen wrote just such a postdated cheque to act as security for a loan she took out from a local UAE bank in May 2008. When Ms Allen defaulted on the loan a year later the bank attempted to cash the cheque but it bounced.

In the UAE defaulting on a cheque is treated as a serious criminal offence so the authorities decided to prosecute Ms Allen. She had already returned to the UK by this point so an Abu Dhabi court convicted her in absentia and sentenced her to 3 years imprisonment.

Now the authorities are attempting to extradite her from the UK but the British courts have refused saying that there may be honest reasons why she may have defaulted on a 20 year loan. Magistrate district judge Quentin Purdy ruled that he did not consider that “default in a loan agreement supported by the security of an undated cheque could of itself amount to an offence in the UK”.

The effect on expats was explained in the Telegraph by Craig Shepherd, of London-based law firm Herbert Smith LLP who said “[The banks] may become more reluctant to make loans to people who would be able to depart to a jurisdiction from which they would not be plucked back,”

Omar Rahman of Noor Investment Group told the same newspaper “I think the banks will start doing more innovative things. We are considering getting the expat to provide us with a power of attorney so that we can take immediate steps to at least foreclose on the property”