In a major legal shake-up, Bahrain has amended its Commercial Law to ban the issuance and circulation of “guarantee cheques” making it clear that cheques are strictly instruments for the immediate payment of debts, not guarantees for future transactions.

Under the new law, issuing or circulating a guarantee cheque constitutes a criminal offense, punishable by up to 6 months in prison, a fine between BHD 1,000 and BHD 2,000, or either of these two penalties. The prohibition applies broadly to all forms of guarantee cheques, including post-dated cheques and incomplete cheques – blank cheques – which were commonly used in the past to secure civil or commercial obligations.

The legislation goes beyond merely imposing criminal liability. It introduces a series of reforms aimed at reinforcing the cheque’s role as a reliable and legally binding financial instrument while restoring confidence in commercial transactions. Under the new provisions, Banks are now required to pay whatever funds are available if an account does not have a sufficient balance to cover the cheque, and they must issue a certificate showing the unpaid amount. This ensures that the cheque holder retains their partial entitlement and does not lose access to available funds. Additionally, cheques returned for insufficient funds are now granted executive force, enabling holders to recover the money directly through the Execution Court without the need to file a separate lawsuit. This makes the process faster, simpler, and more efficient.

The legislative intent behind these amendments is to reaffirm the cheque as a trusted and enforceable financial instrument, after years of misuse of guarantee cheques that weakened confidence and generated widespread disputes. The reform sends a clear and firm message to the business community that cheques are not tools of pressure or instruments of future guarantees. They are legally binding means of payment, and any misuse exposes the issuer to criminal prosecution.

Lawyer Amal Rasool – Ebtisam Alsabbagh Attorneys