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Customer claim against UAE Bank arising from a lost cheque


A customer of a bank in the UAE  deposited a cheque for SAR 1,000,000 drawn on a bank in Saudi Arabia. The cheque was sent from the UAE to Saudi Arabia for payment; however, it was returned to the Insured unpaid due to insufficient funds being held in the cheque payor’s account.

The cheque was returned by courier to the UAE bank. Unfortunately, the bank then lost the original cheque.

That prompted the customer to issue a complaint and then legal proceedings against the UAE bank for the full value of the lost cheque. The customer alleged that because the bank had lost the cheque, they had lost the opportunity to seek payment of SAR 1,000,000 from the cheque payor.

Risk Features

The bank defended the claim on the basis that the loss of the cheque was not the direct cause of any financial detriment to the customer as it had already been returned unpaid.

Despite the bank’s defence submissions, the Court of First Instance found in favour of the customer. The Court held that because the bank had lost the original cheque, the customer had lost the ability to seek recourse against the cheque payor. This was regardless of the fact that the cheque had bounced due to insufficient funds.

The bank appealed but the Court of Appeal dismissed the bank’s case. The Court of Cassation issued a final judgment upholding the earlier court decisions and ordered the bank to pay the principal sum of the cheque plus interest and costs.


We have seen several such claims recently where civil proceedings have been issued against banks in the Middle East because of lost cheques.

These circumstances are perhaps unique to the Middle East. A similar customer complaint made in the UK or Europe would likely receive short shrift as the proximate cause of the customer’s loss is not the lost cheque.

To avoid such claims against them, banks in the Middle East must be particularly careful when handling cheques. Employees need to reminded of the importance of ensuring the safekeeping of cheques. They should be treated as if they are cash.

January 2023
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