DTB Vs HAM CASE: Muwema Advocates Castigate Supreme Court For Siding With DTB Against Kiggundu

In a rare display of displeasure by a lawyer, Muwema & Co. Advocates, the law firm representing Kampala businessman Hamis Kiggundu in his dispute with Dimond Trust Bank-DTB published a full-page advert in two newspapers castigating the Supreme Court for ruling against his client.

In Uganda’s jurisprudence, the Supreme Court is the highest court of judicature and its ruling on any matter are final. Therefore, even when a lawyer disagrees with its decision, they rarely attack publicly.

But in their rebuke, Kiggundu’s lawyers have vowed to challenge the Supreme Court ruling arguing that is dangerous for country like Uganda that is trying to establish an international reputation as a country not condoning illicit money transfers. On June 13th, the Supreme Court held that it was perfectly okay for a foreign bank that is not registered in Uganda to conduct business with Ugandans.

The unanimous decision by five justices who include the Chief Justice Alfonse Owiny-Dollo, Lady Justices, Faith Mwondha, Percy Night Tuhaise, Justice Mike Chibita, and Stephen Musota arise from a series of legal proceedings initiated by Kiggundu and his two companies against Diamond Trust Bank (DTB) Uganda and DTB Kenya. Having settled the legality of syndicated loaning, the Supreme Court then ordered a fresh hearing in a case in which Kiggundu is seeking to recover more than 120 billion Shillings from Diamond Trust Bank Uganda and Diamond Trust Bank Kenya which he said was dedicated from his account without his consent.

But in their advert that ran today in Bukedde and New Vision newspapers, Kiggundu’s lawyers argue that for the Supreme Court to allow banks that are not registered to do business in Uganda is akin to writing a new law governing financial institutions yet the court is not vested with those powers. 

“Under the principle of the sovereignty of laws, a country’s legislature passes laws for the governance and regulation of any matter conducted in that country. If any person, local or foreign is involved in any regulated matter in that country, that person is subject to the laws of that country to the extent that they are involved in the regulated activity. It is therefore repugnant to the sovereignty of our national law for the Supreme Court to have ruled that the Financial Institutions Act, which is the substantive law regulating banking business in Uganda, does not apply to foreign banks conducting the same business in Uganda,” the statement reads in part.

It adds that the Supreme Court had no power to usurp the power of parliament and start discriminating between foreign and local banks in respect of a statute of general application relating to the banking sector. However, it should be noted that in common law practicing countries like Uganda, the Supreme Court and other courts of record such as the High Court and the Court of Appeal can also be source of law in what is known as case law.

The Statement also says that allowing unregulated foreign banks to engage in predatory practices which compete against the regulated banks can only increase the fragility of the financial system. This, they explain it with the argument that the decision can also be used by other foreign money lenders who are not deposit-taking banks in Uganda, to cross the border and just start transacting without obtaining the necessary licenses.

The statement also takes a swipe at Bank of Uganda which during the hearing declared that it does not regulate lending obtained from foreign banks since they do not take deposits from the Ugandan public. 

This Muwema says, is clear abdication of duty. “One of the key functions of the Bank of Uganda is to maintain monetary stability…One wonders how BoU maintains the monetary stability of the country when it refuses to monitor the external cash inflows from foreign sources. Why should BoU as a regulator of the banking industry work so hard to constantly devise means of ensuring that some players in the Banking industry operate outside the rule book? It is the duty of BoU to ensure prudence of the monetary and fiscal policy of the country. It appears however that BoU has joined hands with the Supreme Court to take us in the opposite direction,” the statement reads in part.

Muwema also castigates the Supreme Court for allegedly denying his client the right to fair hearing which is guaranteed by the constitution. They allege that the Supreme Court still allowed DTB to smuggle a ground of foreign loan syndication into Hams appeal which was never part of the grounds of appeal which they say was allowed in violation of the rules of the Court which required DTB to have submitted a cross-appeal or notice of affirmation of the decision of the Court of Appeal before introducing new matters. 

“Whereas the court allowed DTB to flout its rules and seek orders outside the appeal, the same court could not allow Ham’s request to be heard on a formal application for judgment against DTB in respect of the admitted grounds of appeal. It also refused to entertain an application to adduce additional evidence from the Central Bank of Kenya indicating that DTB Kenya had illegally conducted banking business in Uganda. The public policy of Uganda does not allow the courts to selectively apply its rules and the law to favour one party against the other nor does it allow the courts to deny a litigant access to the courts to plead his or her case,” the statement reads in part.

Muwema Advocates vowed to challenge the ruling of the court although they don’t reveal where this will take place.

“No serious court (including the Supreme Court itself) can allow to continue flouting its rules of procedure and the established principles of law. Any court which chooses to do that will cease to function as a court of law…We cannot just mourn the passing of this Supreme Court decision, we shall challenge it.”

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