In the Symposium of Chamber of Commerce and Lawyers' Society

Symposium 5, Dated: 26/01/2003

A heated controversy and legal debate about the amendments of the check without balance:

The controversy the proponents and opponents of the nullification of the criminal protection of the check without balance has broken out in the legal symposium organized by Kuwait Chamber of Commerce and Industry in collaboration with Kuwait Lawyers' Society.

The debate was not settled between the participants in the symposium which changed into a legal fight and the disagreement continued in the meantime the Chamber considered the symposium an initiative from physicians from different specializations to rescue a patient in the Intensive Care Unit.

While some participants considered that the side effects, whether social or political, should not preclude the enactment of law. Others asked for nullifying the punishment of the check without balance on the basis that its sentence its more cruel and severe than encroaching upon honor or money. The assistant undersecretary of the Ministry of Justice, Nasser Al-Nassrallah, has shot out the bomb in the symposium when he said that there are 2099 sentenced cases regarding checks without balance, in which the volume of the amount has reached 59.262 million Kuwaiti dinars, 32 thousand USD and 24 thousand BD, that go back to 381 check prisoners.

He pointed out that thee 4408 non-sentenced cases till now.

The Symposium was started by the speech of Lawyer Hamad Al-Easa who considered any violation of payment through the check is a violation of the national economy. He warned against the exploitation of the check without balance in "cashing transactions". Al-Easa said the legislator is supposed, when nullifying the punishment of the check without balance, to nullify it from the Trade Law as a financial paper.

He reviewed the cases of cashing which represent a dangerous phenomenon due to leniency in enforcing laws. He pointed out that commuting the punishment of the check without balance or nullifying it constitutes a crime in the account of the country. He talked about the cases of bankruptcy of factories and companies which occurred as a result of checks without balance and the harms and damages caused to the economics of countries in which these cases occurred. He set for example the bankruptcy of some commercial establishments and factories in Egypt for the same reason.

He warned against the occurrence of non-benign economic effects due to the nullification of the punishment of the check without balance.

Timing Mistake:

Then, member of the Authority of Kuwait Chamber and Industry Office, Faysal Al-Mutawaa, talked through a worksheet entitled "Nullifying the criminal protection of the check", about the timing mistake, pointing out that the Chamber has paid due attention to the amendment proposal of the punishment of the check without balance, through studying it from the part of Money and Investment Committee and holding meetings with Kuwait Banks Union to get acquainted with the daily information of the subject.

He expressed that that the Chamber appreciates and understands the social and human reasons that led the members of the Nation Council to submit two proposals the first of which is commuting the punishment of the check without balance and the second is nullifying it. Al-Mutawaa recounted some of the statistics mentioned about the Central Bank of Kuwait about the total number of customers whose checks were returned because of having no balance. He said that the number of those customers decreased from 11226 customers in 2000 to 9915 customers in 2001, i.e. at a percentage of 11.6%.

Whereas the number of customers whose accounts were locked at local banks and Kuwait Finance House because of returning the checks is 532 customers in 2000 reduced to 385 customers in 2001, i.e. at a percentage of 26%.

He pointed out that the number of cases of checks without balance, according to the statistics of Public Money Prosecution, reached 6 985 cases in 1998 and reduced to 6322 then reduced to 4419 then to9 4084 cases in the years 1999, 2000, 2001, respectively, i.e. at a percentage of 41% and at an annual average of 14%.

Million Checks Annually:

Al-Mutawaa mentioned that the number of checks submitted to Kuwaiti banks exceeds two million banks annually and that most of the cases that in reach of the court, the perpetrator is exempted from its punishment or the enforcement of the punishment issued is suspended due to repaying the debt. While the number of prisoners in enforcement of the judicial sentences issued in the crimes of issuing checks without balance reached 380 Kuwaiti residents and 100 from other nationalities. He expressed his objection towards what was stated in the memorandum of nullifying the punishment of the check without balance. This memorandum pointed out to dangerous social impacts such as the emergence of the problems of divorce, juvenile deviation, the spread of drug taking, school retardation and failure. He severely criticized what was stated by one of the social activists that 200 thousand families were destroyed by checks without balance, indicating the flexibility with which Article 237 of Kuwaiti Penal Code.

He said that although the check is a part of the works of banks and a tool for accomplishing these works, Kuwaiti banks are not a party in the disputes resulting from checks without balance and will not be harmed by commuting or nullifying the punishment of these checks or make use of it making it stricter.

He went on saying that banks are powerful institutions that can obtain their rights towards the issuers of the checks without balance without a need to a punishment stipulation is an untrue saying. Most of the person harmed by the nullification of the punishment of the check without balance are owners of commercial shops who accepted the check as a mode of payment for the price of goods they sold. Although he admitted the reduction of the criminal protection of the check in some countries. However, Al-Mutawaa pointed out that this procedure has become parallel with the spread of modern modes of payment.

He called for determining the degree of check protection in the light of the important role it plays as a mode of payment, pointing out that the check is still the most important mode of non-cash payment in Kuwait and the most widely spread mode, where it reaches a percentage of  80% of the cases non-cash payment. He considered that the nullification of this protection suddenly and with one step without gradation is a hasty matter that is against objective circumstances. He pointed out to the deviation of some people using the check out of its sole function as a mode of payment in another function as a mode of credit and guarantee, specifically in transactions of selling in installment and installment borrowing in particular. He expressed his belief that this phenomenon is very socially and economically dangerous and that there are other more effective modes than reducing the criminal protection of the check if the concerned official authorities have seriously attempted to enforce laws, implement resolutions, stop the express and implied advertisements of "cashing" in some newspapers.

Defense:

Dr. Fayez Abdullah Al-Kandari has defended the nullification of the law of incriminating the issuance of a check without balance because it is possible to do without it to create a fair society and from his point of view it is an evil in itself.

He called for striking the balance between incrimination, punishment, protection of rights and liberties especially that the policy of incrimination is based upon the balance between social philosophical thinking that delineates the right of the State and a constitutional thinking that delineates the value of rights and liberties.

He considered that both poles of that equilibrium contribute to protecting society and guaranteeing the constitutional protection for rights and liberties. He said that the public order necessitates restricting the individual's freedom through incrimination and punishment. This is achieved if necessitated by social necessity; in contrast, it is not possible that the required equilibrium be a means of blowing away rights and liberties, where there should be some proportion between the amount of violation for these rights and protected rights and interests and relating these principles to the crime of issuing a check without balance. He considered that there is equilibrium between the incrimination of issuing a check without balance and protecting the rights of individuals and their liberties. There is no social necessity to justify the incrimination of this behavior depending on the availability of other modes of payment in financial and commercial transaction, effective modes of payment in the check, high rates of check crime in addition to the non-incrimination of issuing a check without balance in the legislations of developed countries.

Al-Kandari pointed out to the possibility of payment in such an equivalent mode by "K-Net", other credit cards, banking transfers also by electronic check "Online", telegraphic check and ordinary check transfer into an electronic check. He said that there are effective alternatives for protecting the rights of the drawer to pay the value of the check such as the certified check and other modes.

He called for not exaggerating in incriminating the check, meaning the imprisonment of the owner of the check without balance for 5-7 years because it is possible to compensate for the harms resulting from delaying payment in civil case and ban the debtor from traveling, considering that the procedures followed in Kuwait are rarely present in another country.

Al-Kandari said that there is no real strict supervision on banks to implement the instructions of Kuwait Central Bank; he denied that there are requirements of imposing a punishment of incriminating the check meant to protect society. He called for suspending the punishment when paying the value of the check.

Requirements:

Ex-minister of planning, Ali Al-Mousa, said that dealing with the criminal protection of the check requires taking the conditions and variables into consideration, which were not present when this protection was added to the check other than other commercial papers.

He pointed out that there are political risks with the increase of the impression that the government, especially some of its ministers who took a biased attitude at the expense of justice and at the expense of objective manipulation and balancing between special conflicting interests.

He said that available facts and information made it important to reconsider the subject of the criminal protection of the check for the purpose of nullifying it.

Al-Mousa defended his point of view saying that when the criminal protection of the check was enhanced in 1978 and when the punishment of issuing is without balance was made stricter were alternatives for money as extended modes of payment. The check was about to be the only alternative for cash and issuing it without balance was closely similar to counterfeiting banknotes.

He indicated that the crime of issuing a check without balance was more dangerous than the crimes of using violence and deliberate encroachment upon honor, soul and money.

He pointed out that it is possible to use the check as a mode of guaranteeing the payment of legal, artificial or illegal debts, indicating that the legal position of the check led to the presence of loopholes exploited by many people in using the authority of the State and its authorities in matters not intended by law. The legislator did not bear these matters in mind, which are using the check as a mode of credit and guarantee for the debtor for getting his debt through ways other than the Commercial and Civil Law.

He considered that the present situation has harmed the reputation of the check and it is no longer a protection; rather, it facilitated its use in the purposes of trickery and blackmail.

He stressed that nullifying the penal protection of the check does not mean changing its nature or disparaging its importance. Commercial transactions will not be confused by the national economy being influenced, the increase or decrease in the number of frauds due to this. Rather, the number of usurers and bloodsuckers will continue their activity. The difference is that they will not be able to use the authorities, laws and systems of the State to obtain their commercial rights.

No Unfavorable Consequences:

Al-Mousa excluded the occurrence of unfavorable consequences; this is proved by the evidence of the contradiction of this matter with the conditions of the countries in which there is no penal protection for the check.

He concluded that the use of physical difficulty is no longer an acceptable orientation and is not in compliance with the civilized development. In addition, it will pave a big way for tarnishing the image of business sector in Kuwait in such a way that it does not accept and it may lead to hampering the enactment of legislations that are important for the private sector.

The lawyer Nawaf Al-Mutairi demanded updating Kuwaiti law which is characterized by rigidity, pointing out that this update can facilitate commercial transactions. He talked about the places for collecting the rights of creditors through civil courts in case of nullifying the punishment of the check without. Al-Mutairi agreed to a great extent with what was presented by Fayez Al-Kandari due to its social and political impacts.