The High Court will on June 9, 2023, make a ruling on whether the dispute pitting former shareholders of Fidelity Commercial Bank against SBM Bank Kenya Holdings should be settled in a tribunal or proceed in court.
Fidelity was taken over by Mauritius’ SBM Holdings for Sh100 in May 2017, with additional payouts that were deferred.
The former shareholders of Fidelity led by Sultan Khimji have sued the local subsidiary SBM Kenya which took over the operations of the institution as well as the Central Bank of Kenya seeking compensation running into hundreds of millions of shillings.
They say that they have not received any of the deferred payments which were capped at Sh600 million according to the share purchase agreement (SPA).
SBM Kenya, which says that the Khimji group has not been paid because Fidelity suffered a substantial capital shortfall, wants the dispute to be settled through arbitration as provided for in the SPA.
The plaintiffs have told the court, which last week outlined the issues that will be determined on June 9, that it has the right to hear the case. They added that the issues raised go beyond the agreement.
“We humbly wish to point out to the honourable court on the onset that the plaintiff’s claims are not solely of a contractual nature or merely related to the SPA but also involve a raft of issues including coercion, misrepresentation, and fraud, restitution and unjust enrichment, breach of constitutional rights and statutory duties which are issues that are beyond the arbitral scope,” Mr Khimji said in a written submission.
Among other issues to be determined is whether CBK should be excused from the dispute.
The regulator says it was not a party to the SPA. The plaintiffs say CBK should be roped in on the basis of the active role it played in shepherding the controversial deal.
They claimed the regulator pressured them to sell the bank on terms that have not been honoured.
