In a protracted legal battle, Aya Investment Uganda Limited, led by Muhammed Hamid, has failed to disentangle itself from a sh614 billion legal liability. The latest directive from the Court of Appeal mandates Aya to pay the sum to a South African company, accompanied by additional legal costs imposed by a panel of three judges.
The three judges, consisting of Fredrick Egonda Ntende, Monica Mugenyi, and Oscar Kihika, have rejected all three of Muhammed Hamid’s previous attempts to resolve this issue. This ongoing dispute revolves around financial credit agreements made between Aya and the Industrial Development Corporation of South Africa Limited (IDC) from 2007 to 2017. These agreements aimed to finance the construction of the Pearl of Africa Hotel, now known as Win 5 Hotels and Spa.
Aya’s latest attempt to appeal the sh614 billion arbitral award was deemed untimely by the judges, with Court of Appeal Judge Christopher Gashirabake having previously dismissed the appeal. Consequently, the judges ruled that Aya does not have the right to appeal and subsequently struck out the appeal with associated costs, which are granted to the South African firm.
The ruling emphasized that when parties choose arbitration as a means of dispute resolution, they effectively accept the arbitrator’s award as the final decision. If parties intend to allow for conventional court appeals, it should be explicitly stated in the relevant documents.
Aya’s only recourse in response to an arbitral award is to file an application under Section 34 of the Arbitration and Conciliation Act seeking to set aside the award, according to the judges. A prior application under Section 34 was dismissed by the Commercial Court presided over by Justice Stephen Mubiru.
This legal battle has its roots in a sh614 billion arbitral award issued by a South African tribunal led by Bruce Collins QC on September 11, 2021. The award encompassed the unpaid principal sum of sh305 billion, lent to Aya over a ten-year period.
Following the arbitral award, the South African company sought to register the award as a decree of the High Court in Uganda, a move allowed by Justice Stephen Mubiru. Since then, Aya has been embroiled in a contentious dispute with the South African Company.
The legal documents pertaining to this case reveal that between 2007 and 2017, Aya and IDC entered into various financial credit agreements to support the construction of the Pearl of Africa Hotel, now known as Win 5 Hotels and Spa. The hotel is situated on land encompassing Plots 7A1-9A1 and 10 Lugard Road and M32, Hill Road on Nakasero Hill in Kampala.
According to the court records, the total amount lent under the six financial credit agreements amounted to $81,765,318 (sh305 billion) on various dates. However, by September 13, 2017, the loan’s accumulated interest had elevated the debt to $118,817,012 (sh444 billion). In addition to the financial agreements, the parties had executed various security agreements to serve as collateral. Nonetheless, Aya defaulted on the loan, leading to IDC initiating recovery procedures in accordance with Ugandan law.