Summary:
- The UK Supreme Court has rejected efforts by Uganda’s dfcu bank and its shareholders to block a £170 million lawsuit brought by the former Crane bank. The case involves allegations of collusion, unlawful seizure, and undervalued asset sales. The ruling paves the way for the main case to proceed, seeking the recovery of over $220 million, with potential additional damages that could exceed $500 million.
The UK Supreme Court has rejected attempts by Uganda’s dfcu bank and its shareholders to block a £170 million (approximately Shs 825 billion) lawsuit filed against them by the former Crane bank. Justices Lord Lloyd-Jones, Lord Leggatt, and Lord Burrows determined that dfcu’s appeal did not present a valid legal point for consideration before the trial.
The lawsuit originated from Crane Bank Limited shareholders accusing dfcu, its management, directors, and shareholders of colluding with the Central Bank to unlawfully seize, underprice, and fraudulently sell off Crane bank. Allegations included a corrupt scheme by former Bank of Uganda officials to take control of Crane bank and sell its assets at a substantial undervalue.
Dfcu acquired Crane Bank and its assets for Shs 200 billion in January 2017 after it was put up for sale by the Bank of Uganda due to financial troubles in October 2016. The court ruling marks the end of Crane bank, previously considered too big to fail.
The former Crane bank, along with its shareholders, contends that dfcu and other defendants participated in the scheme and purchased Crane bank’s assets at a significant undervalue. The Supreme Court’s decision clears the way for the main case to proceed.
In a previous High Court ruling in 2022, the matter was deemed bound by the foreign act state of rule, providing a temporary victory for dfcu bank. However, Crane bank shareholders successfully appealed the decision in a unanimous ruling on July 26, 2023, arguing that the claim is not barred by the foreign act of state doctrine.
Dfcu and its shareholders attempted to challenge the jurisdiction, arguing that the sale of Crane Bank Limited’s assets to dfcu by the Central Bank was an act of the Ugandan government, and UK courts had no jurisdiction. This argument was rejected by the UK Court of Appeal, compelling them to file defenses and proceed to trial in the UK High Court.
The UK Supreme Court’s dismissal of their application means that dfcu, dfcu Bank Limited, and its shareholders must now pay costs and file their defenses within 21 days. The ongoing case in the UK seeks the recovery of over $220 million, with potential additional damages that experts estimate could surpass $500 million.
