Uganda’s Supreme Court on 13th June 2023 dismissed an application in which businessman Hamis Kiggundu and his companies, Ham Enterprises Ltd and Kiggs International Ltd sought to wiggle out repayments of approximately USD11 million to two banks, claiming the lending was done without license.
In the much-anticipated ruling, a Coram of 5 judges⏤Owiny-Dollo CJ; Mwondha JSC; Tuhaise JSC; Chibita JSC; Musota JSC) emphasised that the syndicated lending between Diamond Trust Bank Uganda (DTB-U) and Diamond Trust Bank Kenya (DTB-K)is legitimate and enforceable. It also ruled that foreign lenders who do not mobilise deposits domestically are not bound by the Financial Institutions Act, 2004, as amended nor the Financial Institutions (Agent Banking) Regulations, 2017, and therefore do not require a license to lend locally. The Supreme Court justices also quashed earlier orders by the High Court absolving Hamis Kiggundu of responsibility and upheld an earlier Court of Appeal finding that the High Court awards to Ham were without legal basis (i.e. payment to Ham in the sums of UGX34,295,951,553 and USD23,467,670.61; the order releasing Ham’s properties and all guarantees issued to secure his borrowing from DTB; and orders to the effect the DTB-U loan in the sum of USD6,974,600 and DTB-K loan of USD4,014,444 should not be repaid by Ham).
The Supreme Court then ordered that High Court Civil Suit No. 43 of 2020, between the parties, which was the genesis of the appeal to the Court of Appeal, and ultimately to the Supreme Court, is remitted back to the High Court for trial before another judge; basing only on issues of fact. DTB-U and DTB-K’s win is a strategically important ruling not for just the two banks but the entire financial services industry as it restates the legality of syndicated and other foreign borrowings.
The High Court ruling by Justice Adonyo, which had declared syndicated lending as illegal had sparked international concerns in the lending community. The ruling implied that multilateral lenders to the government such as the World Bank, IMF, ADB and well foreign financiers of foreign investments in Ugandan subsidiaries all require licensing from the Central Bank. The ruling also had far-reaching consequences on syndicated loans as well as private project finance by foreign lenders, but more importantly paused serious challenges to the enforcement of existing obligations since it would for example mean that all such loans including the national debt are null, void and irrecoverable? There were also concerns that if sustained, the ruling would have deeper repercussions on Foreign Direct Investments as well as the credit rating of the country as a whole.
But who are the lawyers who successfully defended this strategically important case?
DTB-U and DTB-K were represented by K&K Advocates one of Kampala’s leading corporate and Commercial law firms. Founded in 2001, the law firm has cut out a niche for itself, especially in commercial law, energy law, public law and regulation as well as dispute resolution. The firm has been recognised by Chambers & Partners, a London-based legal ranking firm that identifies and ranks the most outstanding law firms and lawyers in 70 countries and 200 jurisdictions throughout the world. The firm’s prowess in Project Development and Financial & Corporate law has been severally recognised by the International Financial Law Review (IFLR) 1000, an international guide to the world’s leading financial and corporate law firms and lawyers.
K & K Advocates provides a full range of legal services from transactional advisory to litigation. The Firm has established a niche of vast experience in legal practice with a strong focus on commercial and corporate law. The firm is well known for its strong expertise in Commercial Law, Energy law, Public law and Regulation and Dispute Resolution.
Edwin Karugire (Partner), Usaama Sebuufu (Senior Associate) and Richard Bibangambah (Associate) have been central to the case.
The firm’s other Partner, Kiryowa Kiwanuka, was also central to the case before he got appointed the Attorney General in the Ugandan Cabinet and therefore had to take a sabbatical from the law firm, leaving Karugire to lead the team.
Edwin Karugire, Partner, K&K Advocates
Edwin is a founding partner of the firm and heads the firm’s vibrant transactions department.
Edwin has over 20 years of experience in both international and domestic corporate and commercial practice. He has acted for clients in all aspects of corporate law, including but not limited to Mergers & Acquisitions, Joint Ventures, Banking & Finance, Technology, Media & Telecommunication, Private Equity, Energy, Taxation, PPPs and Insolvency.
Edwin has successfully structured, negotiated and executed some of the most complex commercial transactions in the industry. He has led the K&K transactions team in some of the biggest telecommunication acquisitions in Uganda and has also handled several notable cross-border Joint Venture transactions in the Technology, FMCG, Pharmaceuticals, Media, Security Printing, Agriculture and Manufacturing sectors.
From Luuka to the Netherlands: The Rise of a Farmer Redefining Agribusiness in UgandaEdwin possesses an in-depth knowledge of the TMT sector and has been retained as lead counsel by some of the biggest telecom operators as well as the industry regulator in Uganda.
Edwin, whose craft has also been recognised by Chambers And Partners, holds a Master of Laws in Commercial and Corporate Law from the University of London (Queen Mary and University College London), a Post Graduate Diploma in Legal Practice – Law Development Centre and a Bachelor of Laws (LLB) (Honours) Degree – Makerere University Kampala.
Usaama Sebuufu (Senior Associate)
Usaama is a Senior Associate at K&K Advocates and is a senior member of the firm’s Litigation Department.
Usaama has focused his practice on dispute resolution, particularly on commercial and property litigation where he has successfully defended and prosecuted major litigation claims. Usaama is also an active member of the Public Law and Regulation desk and he has garnered vast experience in navigating complex regulatory compliance and dispute resolution issues.
Usaama has served as legal counsel for several regulators and statutory bodies in the country in matters of national and international consequence.
His key areas of practice include Dispute Resolution, Public Law and Regulation, Property Law and Conveyancing as well as Electoral Law.
He holds a Post Graduate Diploma in Legal Practice from the – Law Development Centre and a Bachelor of Laws (LLB) (Honours) Degree – Makerere University Kampala.
Richard Bibangambah E.K, Senior Associate
Richard is a Senior Associate at the firm and a member of the K&K litigation team as well as the firm’s commercial and tax law practice. Richard specializes in commercial litigation, tax law, energy law and alternative dispute resolution.
Richard has also acquired experience advising public corporations, and regulators and handling procurement disputes; and is an important contributor to the firm’s Public Law and Regulatory practice.
Richard has handled and advised on some of the most complex and high-value commercial disputes across the continent. His excellent research skills and expertise in the law have made him a fast-rising member of the profession.
He holds a Post Graduate Diploma in Legal Practice – Law Development Centre and a Bachelor of Laws (LLB) (Honours) Degree from the Uganda Christian University, Mukono.
