- Kenyan banking multinational DTB Group has won the first round in its bid to enforce the collection of loans amounting to Sh1.2 billion from Ugandan businessman Hamis Kiggundu.
- Kampala’s Court of Appeal Wednesday set aside the High Court’s orders that declared the loans provided to Mr Kiggundu illegal because some of them originated from Kenya.
Kenyan banking multinational DTB Group has won the first round in its bid to enforce the collection of loans amounting to Sh1.2 billion from Ugandan businessman Hamis Kiggundu.
Kampala’s Court of Appeal Wednesday set aside the High Court’s orders that declared the loans provided to Mr Kiggundu illegal because some of them originated from Kenya.
The lender provided several credit facilities denominated in US dollars and Uganda shillings to Mr Kiggundu and his companies Ham Enterprises Limited and Kiggs International (Uganda) Limited.
The loans were provided by DTB’s subsidiaries Diamond Trust Bank (Uganda) Limited and Diamond Trust Bank (Kenya) Limited.
The businessman, however, defaulted and sought protection from Uganda’s High Court which made a shock ruling on October 7, 2020 terming the loans as illegal and effectively giving Mr Kiggundu a free pass.
Justice Henry Peter Adonyo said DTB Kenya was not licensed or regulated in Uganda and the syndicated loans were therefore illegal.
DTB appealed the decision and yesterday got a reprieve after Kampala’s Court of Appeal overturned the orders that were issued by the lower court.
“I would hold that the appellant’s appeal substantially succeeds with an order setting aside the judgement and orders of the learned trial judge with costs,” Christopher Madrama, part of the three-judge bench, said in the judgement issued yesterday.
The High Court is now expected to resolve the dispute between DTB and the businessman.
Justice Madrama said the appeal succeeded because DTB demonstrated that its written statement of defence was unfairly truck out by the High Court.
The findings by the Court of Appeal have given the bank an opportunity to build a strong case against the claim that the loans are illegal and should not be repaid.
“A loan agreement with a foreigner or a foreign entity whether the contract is executed in Uganda or outside Uganda would be enforced by a Ugandan court in accordance with the terms of the agreement between the parties,” Justice Richard Buteera said.
He added that he does not know of any law that makes it illegal for a Ugandan citizen or a foreigner resident in Uganda to borrow or pay back money borrowed from a foreigner or a foreign institution unless the transaction involves the perpetuation of a criminal offence.