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UK Court of Appeal rules Crane Bank-DFCU dispute can be tried in London

posted onJuly 28, 2023
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UK’s Court of Appeal has decided that the legal dispute between Crane Bank and dfcu should be settled through a trial before the English High Court.

In 2016-2017, the BoU, in exercise of its statutory and regulatory powers, took over management of Crane Bank, then closed it and sold off some of its assets and liabilities to dfcu bank. 

The owners of the defunct Crane bank filed a claim in the English courts in December 2020 challenging the transaction in relation to the sale of some of the assets and assumption of some of the liabilities of Crane Bank to dfcu by Bank of Uganda.

Crane Bank and some of its shareholders contended that this sale, together with various side agreements, was a sale of Crane Bank’s assets and liabilities at a “gross” undervalue in furtherance of a scheme carried into effect by the BoU using its statutory and regulatory powers.

In response, dfcu filed an application challenging the jurisdiction of the English Courts to hear the claim (jurisdiction challenge) on grounds that the actions of Bank of Uganda were an act of the state of Uganda exercised in pursuit of the constitutional and statutory powers of BoU, in respect of which an English Court should not inquire into.

The English court agreed, and ruled that the English Courts did not have authority to hear the claim.

Crane Bank appealed to the English Court of Appeal, which appeal was heard on April 3-5, 2023.

In the court’s judgement delivered this Wednesday, July 26, 2023, the English Court of Appeal held that “while dfcu bank, dfcu Limited and others who challenged the jurisdiction of of the UK courts to try this matter may be right that the English Court does not have authority to consider the claim, however as some of BoU’s acts may be of commercial nature and /or there may be public policy reasons why the English Court should decide the claim, this issue should not be decided at a preliminary stage through a jurisdiction challenge but should instead be determined through a trial.”

Angelina Namakula, chief legal officer for dfcu bank, said “the English Court of Appeal made no decision on the underlying facts or on the merits of the claim as these issues were not before the court.”

She said the “appeal concerned technical legal questions raised at the preliminary stage and did not deal with the claim on its merits.”

Namakula said the “factual allegations will be for the trial judge to determine,” adding, “dfcu reserves the right to appeal to the UK Supreme Court.”

Dfcu has 28 days to appeal the matter. 
Crane Bank’s claims against dfcu are quantified at over £170m (Shs 810bn). 
Dfcu officials said the outcome of the case has no bearing on the bank’s day to day operations, arguing litigation is part of normal business.

The bank further said the decision concerned a preliminary matter and that the Group would continue to vigorously defend itself in the claim.

Dfcu Chief Executive Officer, Charles Mwanyara Mudiwa told the press at the bank’s headquarters in Nakasero, Kampala today that “the bank has a strong financial position with our capital ratios more than 12% above the regulatory thresholds, placing it firmly among the top five most capitalised banks.”

Mudiwa said dfcu was among the first banks to comply with the revised BoU minimum core requirements of Shs 120bn by December 31, 2022.

He added: “The group remains profitable and paid a dividend to its shareholders at the recently concluded annual general meeting.”

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