The Kingdom of Bahrain is witnessing a new advancement within its judiciary and financial sectors. On 13 April 2025, the Shura Council proposed amendments to Decree Law 7/1987 Issuing the Law of Commerce (Law of Commerce) regarding the provisions regulating cheques, pending the approval of the Council of Ministers and His Majesty King Hamad Bin Isa Al Khalifa.
The proposed amendments represent a significant milestone in the financial sector, aiming to streamline cheque processing while reinforcing protections for cheque bearers and beneficiaries. A key change introduced by the law is that banks will no longer be required to reject cheques due to insufficient funds; instead, they will be obligated to release the available balance in the account. In this update, we will explore the key changes proposed to the Law of Commerce.
Partial Cheque Payments
Following the inclusion of a new article in the draft amendment to the Law of Commerce, partial cheque payments will be allowed in cases where cheques bounce due to insufficient funds. Under this proposed amendment, if the balance in the cheque bearer's account is less than the amount specified on the cheque, the drawee (bank) shall pay the available amount in the account unless the cheque bearer explicitly refuses such payment. The drawee is required to annotate the partial payment on the cheque, return the original cheque to the bearer, and issue a certificate confirming the amount paid.
The drawee may indicate on the cheque their approval to pay the cheque amount in full or in part, and such approval signifies that sufficient funds are available with the drawee. The drawee may not refuse to certify the cheque if requested by the bearer. Following certification, the funds shall remain frozen with the drawee and under their responsibility until the cheque expires.
The Central Bank of Bahrain (CBB) will have the authority to specify alternative mechanisms for verifying such payments and will issue decisions regulating the terms and procedures for implementing these provisions. In coordination with relevant authorities, the CBB will also determine the stages of implementing the partial payment system. Furthermore, the drawee's record will be formally endorsed whenever a cheque is returned due to insufficient funds or partial payment, with the CBB responsible for specifying the cases and procedures governing such endorsements.
Direct Execution
Under the proposed amendment, cheques that are annotated by the drawee as insufficient funds or partial payment shall be considered a writ of execution, which may be executed through the execution court under the Law of Execution in Civil and Commercial Matters, promulgated by Decree No. 22/2021.
Criminalization of Blank Cheques
A proposed amendment to Article 491 of the Law of Commerce seeks to criminalize the use of blank cheques as security or credit instruments. Whoever violates such provision shall be punished by a fine of no less than two hundred Bahraini Dinars (BHD 200) and no more than two thousand Bahraini Dinars (BHD 2,000). If the cheque bearer fills out the details and presents it for payment, he/she shall be punished by a fine not less than ten percent (10%) of the cheque value and no more than twice that value, provided that the value of the fine shall not be less than five hundred Bahraini Dinars (BHD 500) and no more than ten thousand Bahraini Dinars (BHD 10,000).
Concluding Remarks
In conclusion, the proposed amendments are a significant step toward addressing the issue of bounced cheques by introducing practical solutions when full funds are unavailable. These changes not only help reduce bounced cheques but also aim to ease the legal and financial burden on recipients, who often face lengthy and costly legal proceedings to recover their dues.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
