By Our Reporter
The Court of Appeal from the High Court of Justice Business and Property Courts in England issued a judgement quashing earlier decision by the lower court exonerating DFCU-bank and its shareholders from fraudulently taking over Crane Bank.
The Court of Appeal contends with Sudhir Ruparelia, Crane bank limited, Jyotsna Ruparelia, Meera Ruparelia, Rajiv Ruparelia, Tom Mugenga and Sheena Ruparelia that DFCU bank and its 17 shareholders bought Crane Bank Limited [CBL] through a well-crafted corruption scheme involving the officials of Bank of Uganda [BoU]
The Court also recommends that Bank of Uganda officials at the center of the transaction should be prosecuted of corruption and brought into books.
This ruling comes in against a backdrop of a lower court judgement, in which a High Court of Justice of England and Wales on 19th of October, 2022, Lord Pelling KC’s sitting in London absolved both Dfcu-bank and Bank of Uganda [BoU] of wrongdoing in $211 million litigation.
HHJ Pelling KC’s, based the ruling on grounds that, there was no serious issue to be tried, declaring that the Court has no jurisdiction to try the appellants’ claims against the respondents and setting aside service of the claim form on them as stated by the law.
The Judge rejected the appellants’ arguments that their claims, or some of them, fell or [Arguably fell] within one or more of the exceptions to the foreign act of state rule.
Meanwhile, The Judges of the Court of Appeal ruled that the High Court should have found that there was at least a serious issue to be tried which include that the sale by BoU to Dfcu-bank was commercial rather than sovereign in character and all of the executive acts in question engaged the English public policy of combatting and not giving legal protection to bribery and corruption, therefore falling outside the foreign act of state rule, “ I allow the appeal on ground of Public Policy Exception”.
The judges include; Sir Julian Flaux, the chancellor of the high court, Lord Justice Popplewel, and Lord Justice Phillips say’s that, the Appeal raised issues as to the scope and application of the foreign act of state rule and of the limitations and exceptions to which it is subject.
“First appellant, Crane Bank Limited” [CBL], was formerly a major commercial bank in Uganda. The second to seventh appellants are shareholders in CBL. In these proceedings the appellants assert that from about Spring 2016 senior Ugandan government officials and officials of the Bank of Uganda (“the BoU”) engaged in a corrupt scheme to take control of CBL, making improper use of statutory and regulatory powers to do so, and then to sell its assets for the benefit of the parties to the scheme.
The appellants allege that the first respondent [“Dfcu-bank”], another Ugandan commercial bank, joined the corrupt scheme as purchaser of CBL’s assets from the BoU [acting as receiver of CBL], that purchase being at a gross undervalue. Dfcu-bank’s holding company [the second respondent] and certain current and former executives and directors of Dfcu-bank [the third to fifth respondents] are also alleged to have joined the scheme.’
A consequence, the appellants claim damages in excess of £170 million equivalent to Sh795bn for conspiracy to injure by unlawful means and/or an account of profits alleged to have been made by the respondents [and all other defendants] by their dishonest assistance of the corrupt scheme or equitable compensation.
The appellants further claim that Dfcu-bank is liable to account for sums received on the basis of knowing receipt of assets transferred in breach of fiduciary duty. “It is common ground that all these claims are governed by Ugandan laws.”
THE RULING OF UK COURT OF APPEAL IN LONDON
“I would allow the appeal on the ground that there are serious issues to be tried as to whether part or all of appellants’ claims fall within the Commercial Activity Exception and/or the Public Policy Exception.” Lord Justice Phillips agreed and seconded by Sir Julian Flaux, the chancellor of the high court.