The High Court of Justice Business and Property Courts of England's Court of Appeal overturned a lower court decision absolving DFCU Bank and its shareholders of wrongfully acquiring Crane Bank.
Sudhir Ruparelia and seven other petitioners claim that DFCU Bank and its shareholders acquired Crane Bank Limited (CBL) via the use of Bank of Uganda employees in a sophisticated corruption scheme. Additionally, the court suggested that Bank of Uganda employees engaged in the transaction be charged with corruption.
The outcome follows a lower court ruling in which Lord Pelling QC, sitting in London and presided over by the High Court of Justice of England and Wales, exonerated both DFCU and BoU of wrongdoing in a $211 million dispute on October 19, 2022.
Judge Pelling determined that the Court lacked jurisdiction to hear the appellants' claims against the respondents and dismissed service of the Claim Form on them on the grounds that there was no material issue to be tested.
The Judge rejected the appellants' argument that all or part of their claims fell under one or more of the foreign acts of state exclusions.
The sale by BOU to DFCU was not sovereign in nature, and all of the executive acts in question engaged the English public policy of combating and not providing legal protection to bribery and corruption, thus falling outside the foreign act of state rule ("the Public Policy Exception"), according to three Court of Appeal judges who ruled that the High Court should have found at least a serious issue to be tried.
The appeal raised issues about the reach and applicability of the foreign act of state norm as well as the limitations and exceptions that apply to it, according to the three justices who considered it.
The first appellant at the time was Crane Bank Limited ("CBL"), a significant commercial bank in Uganda. Investors in CBL make up the second through ninth appellants. The appellants contend in these proceedings that, starting around Spring 2016, senior Ugandan government officials and Bank of Uganda ("the BoU") officials conspired in a corrupt scheme to seize control of CBL by abusing statutory and regulatory powers, and then sell its assets to benefit the scheme's participants.
The first respondent ("DFCU Bank"), a different commercial bank in Uganda, is accused by the appellants of taking part in the fraudulent plan by buying CBL's assets from the BoU (as receiver of CBL) at a significant discount. Additionally charged with engaging in the conspiracy are DFCU Bank's holding company (the second respondent), a number of current and former DFCU Bank employees, and directors (the third through fifth respondents).
The appellants thus ask for fair reparation, an accounting of profits allegedly made by the respondents (and all other defendants) by their dishonest facilitation of the corrupt plot, and damages above £170 million for conspiracy to harm by unlawful means. Additionally, the appellants claim that DFCU Bank is required to account for any monies it receives as a consequence of knowing receipt of assets transferred in breach of a fiduciary duty. All of these claims are governed by Ugandan law, it is acknowledged.
Verdict
On the basis that there are important questions to be resolved about whether any or all of the claims made by the appellants fit under the Commercial Activity Exception and/or the Public Policy Exception, I would grant the appeal. Lord Justice Philips made a ruling.