In Kuwait, issuing a cheque without sufficient funds can still be a crime, and a holder who misses the short deadlines can lose rights. The criminal rule is Article 237 of the Penal Code (Law No. 16 of 1960), in the form Law No. 84 of 2003 gave it. The holder's rights as a payee sit in the Commercial Code (Decree-Law No. 68 of 1980). This guide sets out the deadlines and the steps. We assist clients with Kuwait from our office in Kuwait. This guide is limited to bounced cheques. Related guides are linked at the end of this article.
When a bounced cheque is a crime (Article 237)
Article 237, as amended by Law No. 84 of 2003, punishes with imprisonment of up to three years and a fine of up to 500 dinars, or either penalty, anyone who acts in bad faith in one of these ways:
- issues a cheque with no existing and available funds behind it;
- withdraws all or part of the funds after issuing the cheque, so that what is left does not cover its value;
- orders the bank not to pay the cheque;
- deliberately writes or signs the cheque in a way that prevents payment; or
- endorses a cheque to another person, or delivers a bearer cheque, knowing that the funds do not cover its full value or that it cannot be paid.
Without prejudice to Article 532 of the Commercial Code, criminal protection begins only from the date written on the cheque. A post-dated cheque is therefore not protected until its date arrives. A repeat offender faces the heavier penalty the Penal Code sets for repeat offenses. The last paragraph of Article 237 gives the court a discretion: it may exempt the offender from the penalty if he proves he paid the cheque value before the final judgment. If he proves payment after the judgment, the court that issued it may stay execution of the sentence on his request or his representative's. Payment does not end the case automatically.
Cheques of companies (Article 237 bis)
A person who commits one of these acts on the account of a legal person is not criminally liable if he acted on an order from the legal person's representative despite warning him that the act falls under Article 237. In that case, criminal liability falls on the person who gave the order.
The deadline for the criminal complaint (Article 237 bis (a))
No criminal case is brought unless the victim files his complaint with the Public Prosecution within:
- four months of the date written on the cheque as its date of issue, if it is drawn in Kuwait; or
- six months, if it is drawn outside Kuwait and payable in Kuwait.
Who handles the case (Article 237 bis (b))
The Public Prosecution alone investigates, decides and prosecutes in all Article 237 offenses.
Present the cheque on time (Commercial Code)
The holder's civil rights also depend on timing:
- A cheque drawn in Kuwait and payable there must be presented for payment within one month. If it is drawn outside Kuwait and payable in Kuwait, the period is three months. The periods run from the date on the cheque as its issue date (Article 533).
- A cheque is payable on sight. If it is presented before the date written on it, it must be paid on the day of presentation (Article 532).
- The refusal to pay must be proved in the way Article 546 describes, before the presentation period ends. If the cheque is presented on the last day, proof may be made on the next working day (Article 548).
- A holder who presents on time and proves refusal may claim against the drawer, the endorsers and other obligors (Article 546).
- A holder keeps the right to claim against the drawer even if he did not present the cheque or prove refusal on time, unless the drawer provided funds and they stayed with the bank until the presentation period ended, and then disappeared through no fault of the drawer (Article 547).
- Article 510 applies the bill of exchange rules to cheques, to the extent they do not conflict with the nature of a cheque.
Civil recovery
A holder can claim the cheque amount from the drawer through the civil courts. The Commercial Code gives the holder recourse rights against the drawer and endorsers, with the limits above. We have not read the Procedure Law provisions on payment orders and enforcement for this guide, so check whether your cheque qualifies for a payment-order route and for enforcement before you choose it. Special cheque recourse claims against the drawer, endorsers and other obligors are generally time-barred six months after the presentation period ends (Article 550, with the qualifications in Articles 551 to 553), and presentation and proof periods can be extended in the circumstances Article 549 sets out. Claims on the underlying debt need separate analysis, so do not assume every civil claim ends after six months. A criminal complaint and a civil claim can run side by side, but the criminal complaint has the short deadline in Article 237 bis (a).
A step-by-step plan for the holder
- Check the date on the cheque. The presentation and complaint periods in this guide are counted from the date written on the cheque as its issue date, not from the day it was handed over, subject to the rule for each period and to proof and extensions. Write down that date and count both the one-month presentation period and the four-month complaint period (or three and six months for a cheque drawn abroad) before you do anything else.
- Present the cheque to the bank within the period. Under Article 533 of the Commercial Code, a cheque drawn and payable in Kuwait must be presented within one month. Presenting it to a recognized clearing house counts as presentation.
- Get proof of refusal. Article 546 ties recourse against the drawer and endorsers to proving the refusal to pay. Ask the bank for a dated, signed statement on the cheque itself, recording the day it was presented and the refusal to pay, and keep the original cheque. Article 546 also permits protest or the prescribed clearing-house statement. Article 548 allows proof on the next working day if you presented on the last day of the period.
- Decide on the criminal complaint. Article 237 bis (a) closes the door on a criminal case if the complaint reaches the Public Prosecution after four months (six for a foreign cheque payable in Kuwait). Do not wait for settlement talks to finish before you count this period.
- Prepare the civil claim. Collect the cheque, the bank statement, the underlying contract or invoice, and any messages that show why the cheque was given.
Which of the five acts is it? Why the facts matter
Article 237 is not triggered by a bounced cheque alone. The prosecution has to fit the facts into one of five acts and show bad faith. Holders strengthen a complaint by collecting the facts that match the act:
- No funds when issued: the bank statement for the date of issue.
- Funds withdrawn afterward: the account movement between the issue date and the presentation date.
- Stop-payment order: the bank's note that the drawer instructed it not to pay.
- Signature or writing that prevents payment: the bank's reason for refusal, such as a signature that does not match.
- Cheque endorsed, or bearer cheque delivered, with knowledge: proof of who endorsed or delivered it and what that person knew.
Post-dated cheques
Kuwaiti practice often uses cheques as a payment promise with a future date. Article 532 of the Commercial Code says a cheque is payable on sight, so a bank must pay it if it is presented before the written date. Article 237, however, gives criminal protection only from the date written on the cheque. A holder who presents early gets the payment right, but should not treat an early bounce as the start of the criminal case.
Companies and signatories
When a company's cheque bounces, the first question is who gave the order. Article 237 bis protects a person who acted on the representative's order after warning him that the act falls under Article 237, and places liability on the person who gave the order. A holder should therefore identify the signatory and the company representative at the time of issue and keep the evidence of who gave the order, so the complaint names the right people.
Cheques drawn abroad
For a cheque drawn outside Kuwait and payable in Kuwait, the periods are longer: three months for presentation (Article 533) and six months for the criminal complaint (Article 237 bis (a)). These longer periods do not apply to a cheque drawn in Kuwait. The place where the cheque was drawn decides which category it falls in, and the date written on it sets when the complaint period starts.
How we can help
From our office in Kuwait, we review the cheque and the bank's statement, calculate every deadline, prepare the Public Prosecution complaint and the civil claim, and follow the case through to recovery. Send us a copy of the cheque and the bank's statement of refusal as early as you can, because the periods are short.
Common mistakes by holders
- Waiting past four months, or six if drawn abroad, before filing the criminal complaint.
- Accepting a post-dated cheque and assuming criminal protection starts on the day it is signed. It starts on the date written on it.
- Failing to obtain proof of refusal in the form Article 546 requires.
- Presenting the cheque late, which can cost recourse against endorsers.
Read also: Kuwait Commercial Contracts: What a Foreign Party Must Check | Enforcing Foreign Arbitral Awards in Kuwait: Step by Step | Debt Recovery in Kuwait for Businesses
Frequently asked questions
Is a bounced cheque still a crime in Kuwait?
Yes. Article 237 of the Penal Code, as amended by Law No. 84 of 2003, punishes the listed acts with up to three years in prison and a fine of up to 500 dinars, or either, when done in bad faith. We have not confirmed that no later amendment changed this, so check the latest amended text before quoting the amount.
What is the deadline for the criminal complaint?
Four months from the date written on the cheque if it is drawn in Kuwait, and six months if it is drawn abroad and payable in Kuwait (Article 237 bis (a)).
Who prosecutes?
The Public Prosecution alone (Article 237 bis (b)).
How long do I have to present a cheque?
One month for a Kuwait cheque payable in Kuwait, three months for a foreign cheque payable in Kuwait (Commercial Code Article 533).
How can you help?
From our office in Kuwait, we prepare the complaint, check your deadlines and pursue recovery.