Limitation of the Bounced-Cheque Action Under the Law
Limitation periods for a bounced-cheque action
A general summary under Egyptian law (Commercial Code No. 17 of 1999 and the Code of Criminal Procedure). The case: a cheque presented to the bank within six months and refused for lack of funds.
The criminal action (the misdemeanour of issuing a cheque without funds)
It is a misdemeanour under Article 534 of the Commercial Code, and the rules on the limitation of criminal actions in Article 15 of the Code of Criminal Procedure apply to it, that is, three years. According to the rulings of the Court of Cassation, the action is extinguished after three years from the time the crime was committed (the date the cheque was issued), unless something interrupts the limitation period. This action is usually initiated by filing a complaint or a police report against the drawer.
The civil action (recourse against the drawer for the value of the cheque)
This is the shortest period, since the holder’s actions of recourse against the drawer are time-barred after one year from the date the cheque was presented for payment or from the date the time limit for presenting it expired (Article 531 of the Commercial Code).
Since the cheque was presented to the bank within the legal period (six months) and was refused, the year is usually counted from the date it was presented to the bank.
Even after this action lapses, Article 532 allows the holder to claim from the drawer who did not provide the funds, or who withdrew them, the amount by which he was unjustly enriched.
An important note
Some judges and lawyers confuse the two periods, and this confusion has led to judgments that were later overturned on appeal. The one year applies specifically to the civil action on the negotiable instrument, while the criminal action is three years.