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ARTICLE · 22 OCTOBER 2020

Recent Ugandan Judgement Has Serious Implications For The Region's Banking Sector

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On 7 October 2020, the High Court of Uganda issued a ruling (Decision) in M.A No. 64 of 2020; Ham Enterprises Uganda and Others v Diamond Trust Bank (U) Ltd and Diamond Trust Bank (K) Limited...

UgandaFinance and Banking
Edline Murungi
Edline Murungi
Brian Kalule
Brian Kalule
Dominic Indokhomi
Dominic Indokhomi
William Kasozi
William Kasozi

On 7 October 2020, the High Court of Uganda issued a ruling (Decision) in M.A No. 64 of 2020; Ham Enterprises Uganda and Others v Diamond Trust Bank (U) Ltd and Diamond Trust Bank (K) Limited, which severely affects banking law and business in the country.

Background

Ham Enterprises Ltd, Kiggs International Ltd and Hamis Kiggundu (jointly the Borrowers), Ugandan enterprises and a Ugandan individual, borrowed money from Diamond Trust Bank Kenya Ltd (DTB Kenya).

The lending happened in Kenya and the facility agreement was subject to Kenya law. For purposes of collection, Diamond Trust Bank Uganda Ltd (DTB Uganda) was appointed as Facility Agent with mandate to debit the Borrowers' accounts in DTB Uganda. The lending was secured by mortgages over various properties belonging to the Borrowers in Uganda with DTB Uganda as the Security Trustee.

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