UK Appeal Court rules on dfcu-Crane Bank case
One of the branches of Crane Bank before it was closed. PHOTO | FILE
What you need to know:
- In 2016, BoU placed Crane Bank under receivership for being undercapitalised, with some of its assets and liabilities sold to dfcu Bank. In the following two years, there was a court battle between Crane Bank in receivership and BoU, which ended the court condemning BoU to legal costs for being behind the Crane Bank suits.
The Appeal Court in United Kingdom (UK), has ruled that the multibillion commercial dispute between Crane Bank and dfcu Bank can be heard by a court in the same foreign jurisdiction.
A panel of three justices, unanimously agreed that the acts of the sale of Crane Bank to dfcu involved acts of “commercial nature”, which can be tried in the UK.
“I would allow the appeal on the ground that there are serious issues to be tried as to whether part or all of appellant’s claim fall within the commercial activity Exception and or the Public Exception,” ruled lord Justice Phillips, who wrote the majority decision.
Lord Justice Popplewell and Sir Julian Flaux were the other justices who agreed with Lord Justice Phillips’ decision.
The court also ordered dfcu to pay legal costs of 700,000 pounds (about Shs2.8 billion).
The ruling of the English Court of Appeal arose from an October 2022 English High Court that decided in favour of dfcu Bank, its directors and shareholders in a case filed against them by defunct dfcu Bank and its directors, including businessman Sudhir Ruparelia, seeking Shs816b (about 170 million pounds).
In the same suit, the businessman and group had claimed that Bank of Uganda (BoU) unlawfully, seized their bank and grossly undervalued it and also fraudulently took some of its assets and liabilities to dfcu Bank through a sham bidding. Dfcu Bank lawyers had argued before the English High Court judge Mark Pelling KC that the said transaction had no international dimension and BoU’s actions during the takeover and disposal of Crane Bank, were lawful.
They had also argued that the UK High Court had no jurisdiction to entertain the case under the Foreign Act of State Doctrine, which forbade courts in England from inquiring into sovereign acts by states that are lawful within their territories such as Uganda.
“In my judgement, the applicants (dfcu Bank directors and shareholders), are entitled to succeed on the Act of State Issue (Foreign Act of State Rule),” Lord Pelling KC ruled in October last year.
But dfcu Bank in its statement on Wednesday said they were dissatisfied with the decision of the English Court of Appeal and that they are to appeal before the highest court in the UK, the Supreme Court.
“The Court of Appeal did not make any findings on the allegations raised by Crane Bank Limited and others against dfcu and others. The appeal concerned technical preliminary legal questions relating to the ability of UK courts to decide a claim based on actions exercised by BOU in exercise of its Constitutional and Statutory mandate,” the dfcu Bank statement read in part.
Adding: “At this stage, the court has not made a decision on the merits of the claim. dfcu reserves its right of appeal to the UK Supreme Court against the Court of Appeal’s decision. dfcu has consistently maintained that the claim is without merit. If the claim does go to trial, it will be robustly defended.”
By press time, it remained unclear when the English High Court would hear the same suit by Crane Bank and it also remained unclear when dfcu Bank was to appeal.
