Aya Investment Limited, the owner of the Pearl of Africa Hotel, has once again failed in its attempt to halt the execution of an order to auction the hotel due to outstanding loans totaling over US$300 million. The Court of Appeal, composed of judges Fredrick Egonda-Ntende, Monica Mugenyi, and Oscar Kihika, ruled that Aya’s reference filed against its financiers, Industrial Development Corporation Of South Africa Limited, to stay the execution orders became untenable when Aya withdrew the substantive appeal upon which the stay of execution application was based.
The judges found that following the withdrawal of Miscellaneous Application No. 271 of 2023, on which the single judge’s decision was based, Aya’s reference was improperly before the Court. They decided to dismiss the reference and awarded costs to the Respondent.
Aya Investments Limited, owned by businessman Muhammad Hamid, had entered into Financial Credit Agreements and Security Agreements with Industrial Development Corporation of South Africa between 2007 and 2017 to finance the construction of the Pearl of Africa Hotel. Disputes between the parties and an alleged default by Aya led to foreclosure proceedings under Ugandan law as specified in the Security Agreements.
Aya initially opposed these proceedings, choosing arbitration as stipulated in the loan agreements. Restraining orders were obtained against foreclosure proceedings while the arbitration process unfolded in South Africa. Additionally, Aya initiated Civil suit No. 937 of 2017 based on contempt of court and breach of contract. In response, his financiers applied to have all matters in the suit referred to arbitration.
The arbitration process favored the financiers, who then sought High Court orders for execution. Aya challenged this decision, including the closure of the hotel, through an application that was rejected by a single judge of the Court of Appeal. Subsequently, Aya filed a reference to have the matter heard by three judges of the court.
During the court hearing, lawyers representing the Industrial Development Corporation argued that the application for leave to appeal, upon which the stay of execution was built, had been withdrawn, rendering the reference legally baseless. The court upheld this objection.
If the ruling is not appealed in the Supreme Court, Pearl of Africa Hotel, situated on Nakasero Hill on land formerly owned by the Uganda Broadcasting Corporation, may indeed be auctioned to settle the accumulated debts of its owner. Muhammad Hamid has sought the support of President Yoweri Museveni, claiming interference by certain individuals aiming to dispossess him. President Museveni has not publicly commented on the matter.
Previously, President Museveni has provided assistance to businessmen facing financial stress due to loans, with the most recent case being the owner of Protea Hotel, Patrick Bitature, who was on the brink of collapse after a South African financier demanded more than US$30 million in principal and interest from an unpaid loan.
