Case Summary: Ham vs DTB

ALERT: Supreme Court holds that syndicated lending transactions between foreign banking/non-banking institutions and Ugandans is legal. It is not illegal for foreign financial institutions to extend credit facilities to any financial institution or person in Uganda and such credit agreements are legal and enforceable.




Hamis Kiggundu and his companies, Ham Enterprises Ltd and Kiggs International Ltd (Ham), took credit facilities from DTB Uganda (DTB-U) and DTB Kenya (DTB-K) which they failed to pay back. These facilities were secured by mortgages over various property[1], in addition to personal and corporate guarantees. As a result, DTB-U commenced a recovery process for the money in early 2020. At this point DTB-K was owed USD $4,014,444 while DTB-U was owed USD $6,974,600.

In response Ham filed Civil Suit No 43 of 2020 in the High Court against DTB-U and DTB-K claiming unfair contractual terms and illegal deductions from his accounts. Ham also sought an order directing a full account reconciliation of all financial transactions between the parties. DTB agreed to appointment of an auditor by court and an order to that effect was made by the trial judge, Justice Henry Adonyo. On 10th August 2020, Ham amended his claim and introduced a new claim that the loan agreements were illegal and unenforceable, as DTB-K did not have a Financial Institutions license in Uganda. Ham now asked court for a declaration that the credit facilities given by DTB were illegal, null, void and unenforceable. He also sought:

  1. a declaration that DTB’s demand for repayment of USD $4,014,444 and USD $6,974,600 is illegal and unenforceable;
  2. an order for DTB-U and DTB-K to instead pay Ham 34,295,951,553/= and USD $23,467,670.61 as money that he said was unlawfully deducted from Ham’s accounts;
  3. the unconditional removal of mortgages on Ham’s properties and discharge of all corporate and personal guarantees issued to secure Ham’s borrowings

Ham then applied to court to stop the appointment of an auditor and for summary judgment on the premise that the defence by DTB-U and DTB-K was a perpetuation of illegalities (lending by a foreign bank without a license). Justice Henry Adonyo of the High Court issued an order stopping the appointment of an auditor and made a summary judgment as follows:

  1. by their illegal lending, DTB-K with the help of DTB-U had breached the law and therefore the credit facilities taken by Ham from DTB-K in the sum of USD $4,014,444  should not be repaid; DTB-U was also to forfeit  USD $6,974,600  that it had lent to Ham.
  2. DTB-U and DTB-K were ordered to pay Ham the sums of 34,295,951,553/= and USD $23,467,670.61 being money Ham alleged was unlawfully appropriated from his accounts;
  3. Ham’s properties and all corporate and personal guarantees issued to secure his borrowings were to be unconditionally released

The judge also made far-reaching findings on foreign lending and syndicated loans which he found to be illegal and he directed the Bank of Uganda to take the necessary measures to stop such lending. DTB being dissatisfied with the ruling of Justice Adonyo filed an appeal in the Court of Appeal against the decision. On 5th May 2021, the Court of Appeal delivered its judgment, setting aside the orders of Justice Adonyo and ordered that the matter be sent back to the High Court for hearing before another judge. Ham then filed an appeal to the Supreme Court challenging the decision of the Court of Appeal.

Decision of the Supreme Court

In deciding in favour of DTB-U and DTB-K, the Supreme Court (Owiny-Dollo CJ; Mwondha JSC; Tuhaise JSC; Chibita JSC; Musota JSC) in the lead judgment of the Chief Justice, the Hon. Owiny-Dollo today (13.06.2023) held:

  • The trial judge, Justice Henry Adonyo, erred in law in finding that the credit transactions were illegal. In any event, he ought to have accorded DTB-K and DTB -U a hearing to establish the parties’ contributory liability and determine the fate of the monies advanced under the illegal credit facilities, and not determine the matter summarily, as he did.
  • The trial judge, having ordered for an audit of the transactions for ascertainment of the status of the loans between the parties, was under a duty to determine the aspects of the dispute between Ham and DTB-U, over which the issue of illegality had not arisen. The omnibus finding of illegality of all the transactions was a miscarriage of justice.
  • It is incumbent on a superior court, before which any question or issue strictly of law is raised, to exercise prudence and pronounce itself thereon; instead of referring the question of law back to a lower court for determination. This is because the superior court has the overriding competence to make an authoritative and binding decision on the matter. The Court of Appeal ought to have determined the issue of legality of foreign credit facilities and erred in failing to do so.
  • The determination of whether one is carrying out a financial institution business lies in establishing whether one is “lending or extending money held on deposit or any part of that money …”. It is clear from the the Financial Institutions Act that key to the determination of financial institution business is the holding of money on deposit, from which money is extended or lent out to borrowers. DTB Kenya is not a deposit taking institution in Uganda and did not lend money held on deposit in Uganda, thus taking DTB-K out of the ambit of the Financial Institutions Act.
  • The transactions were not governed by the Financial Institutions (Agent Banking) Regulations either. DTB-K is not the type of principal bank envisaged under the Regulations, since it is not licensed to carry out financial institution business in Uganda. Similarly, DTB-U is not the type of agent envisaged under the said Regulations; which only provide for humans operating outlets as agents of financial institutions licensed to carry out banking services in Uganda.
  • Accordingly, the relationship between these two banking institutions (DTB-U and DTB-K), and between them and Ham, with regard to the financial credit transactions, were neither governed by the Financial Institutions Act, 2004, as amended, nor the Financial Institutions (Agent Banking) Regulations, 2017. This was a syndicated agency relationship between DTB-U and DTB-K.
  • There is no law that forbids the creation of the syndicated agency relationship entered by DTB-U and DTB-K. Similarly, no law forbids foreign financial institutions from extending credit facilities to any financial institution or person in Uganda. If anything, in furtherance of international trade and investment, financial institutions the world over are known to engage in global financial business transactions by dealing with, or through, financial institutions based in other jurisdictions. In the case of Uganda, such international financial business transactions are certainly neither governed by the Financial Institutions Act, 2004, as amended, nor the Financial Institutions (Agent Banking) Regulations, 2017. The trial judge therefore erred in holding that the credit agreements between the parties were clothed with illegality.
  • The issue of illegality having been conclusively resolved in this appeal, High Court Civil Suit No. 43 of 2020, between the parties, which was the genesis of the appeal to the Court of Appeal, and ultimately to the Supreme Court, is remitted back to the High Court for trial before another judge; basing only on issues of fact.
  • The Supreme Court upheld the Court of Appeal finding that the High Court awards to Ham were without legal basis (ie. payment to Ham in the sums of 34,295,951,553/= and USD $23,467,670.61; the order releasing Ham’s properties and all guarantees issued to secure his borrowings from DTB; and orders to the effect that the DTB-U loan in the sum of USD $6,974,600 and DTB-K loan of USD $4,014,444, should not be repaid by Ham).


By:   Edwin Karugire, Usaama Sebuufu and Richard Bibangambah

K&K Advocates | www.kandk.co.ug

Counsel for DTB Uganda and DTB Kenya


Ham Enterprises Ltd, Kiggs International (U) Ltd, Hamis Kiggundu Versus Diamond Trust Bank (U) Ltd and Diamond Trust Bank (K) Ltd Supreme Court Civil Appeal No. 13 of 2021

[1] Kyadondo Block 248 Plot 328 land at Kawuku, FRV 1533 Folio 3 Plot 36 – 38 20 Victoria Crescent II Kyadondo and LRV 3176 Folio 10 Plot 923 Block 9 Land at Makerere Hill Road

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