Banks should not undermine the independence of the judiciary

  • Oct 17, 2020
  • Nile Post

Commercial banks have reacted to the Commercial Court ruling in the Ham Kiggundu’s case by threatening to down tools for the syndicated US$3.55 bn financing for East African Crude Oil Pipeline.

Also at risk is the syndicated portfolio currently seated with commercial Banks running over Shs5.7 trillion across various sectors of the economy including real estate, road construction, energy covering hydro electric power, oil and gas and manufacturing.

Other projects are the Kibaale international Airport, the proposed oil refinery, Kampala Oil storage Terminal, East African Crude Oil Pipeline, and Kampala-Jinja Expressway.

The country is put on notice that financing will be halted awaiting the result of the appeal. Obviously unless the judgement is reversed, the consequences for the Uganda economy will be dire.

The impunity and arrogance of holding the judiciary and the country at ransom in this manner is amazing. Justice is not delivered under threats of sanctions or blackmail.

Judges’ judicial oath is to do justice to all manner of people, without fear or favour, affection, or ill will. In this contest courts are influenced uniquely by the law and evidence adduced in a judicious process.

The judiciary has no eyes to see, nor hears to hear, the weight of the estate of the litigant-but only the law and the evidence touching on the matter being adjudicated upon.

The issues before court in the Ham Kiggundu case were allegations of illegal conduct by the DTB (K)/DTB (U) doing financial institution business in Uganda without following the rules and procedures laid down in the Financial Institutions Act (as amended).

This Act is the principal law providing for the regulation and control of the entire financial institution business in Uganda. The Financial Institutional Act applies to any Bank doing financial institution business in the Country, be it local, or foreign, syndicated or otherwise.

This Act is a tool which enables Bank of Uganda to carry out its constitutional mandate set out under article 161 and 162 of the Constitution including, among other things, regulating and controlling the financial sector. The Act is also the basis for the Country to earn tax and non tax revenue from the operations of financial institutions.

Uganda taps financing of its domestic debt mostly from commercial Banks, and other bilateral creditors such as China, Saudi Arabic, Kuwait, the United Kingdom, Austria, India, Germany, France and Japan.

Other multilateral creditors, are World Bank’s International Development Association and the African Development Fund, and multilateral development partners including Islamic Development Bank and Arab Bank for Economic Development in Africa

In this scheme of things the Court in the Ham Kiggundu case could not have been a ruling against syndicated or multilateral lending in Uganda.

The issue in the Ham Kiggundu case is about two Banks i.e. DTB (K) and DTB (U) indulging in financial institutions business contrary to the Financial Institutions Act.

The decision of court was based on the finding that, the contract on which the two Banks relied for its case was ex-facie illegal, and no court of law can enforce an illegality.

Courts exercise their jurisdiction to administer the law of the land, and not to help a party or parties profit from an illegality.

The action of the thirty five financial institutions which are reported to be seeking to join the appeal of the Ham Kiggundu case is puzzling.

They were not party to the suit and have not been accused of conducting financial institution business outside the law. Appeals, and indeed all cases before Courts, are determined on the merits of the points of law and facts adduced and not on multiplicity of parties.

The instant case is a matter where, one party lost on ground of illegality. The trail was conducted in open Court, under a judicious process.

This surely cannot be a muddling of Uganda’s International image as an investment distinction, a ground to malign judicial independence or the sovereignty of a nation, but depicted what Uganda has to offer to the world-a stable democracy where independence of the judiciary is respected.

It is trite law, that when illegality is brought to the attention of Court, that illegality vitiates all pleadings, including consents. The Court having found on the facts and law that there was an illegality, could not give a ruling in favour of the Banks.

The way forward is for the banks to appeal the Judgement pointing out the errors of law and or fact on which the trial judge erred and seek the appellate Court to reverse the judgement which as of today stands as good law until reversed on appeal.

Sir Thomas More, the legendary jurist is reputed to have stated: “I will stick to what is legal-for my safety’s sake”.

The safety of all citizens and Banks alike, singly or in syndicate, local or international, find their safety in the thickets of the judicious processes of the law which is guaranteed under the constitution.

The author is a senior partner at Kampala Associated Advocate