High Court Erred in the Case of Dubai Bank Receivership – Appellate Court

The Court of Appeal has ruled that the High Court made a mistake in a ruling it made concerning the placing under receivership of Dubai Bank Kenya.

In a ruling dated 18^th November 2015, High Court Judge E.K.O Ogola J ruled that:

• The receivership placed on the DBK would remain in force
• The liquidation of DBK currently underway (then), would be suspended by conservatory and injunctive orders for a period of 60 days from that date; during the 60 day period;
• The KDIC and CBK would take steps to fully consider the proposal by M/s Sovereign Financial Holdings to inject Ksh 2,214,500,000 or thereabouts into DBK, together with any other proposal by the depositors or interested parties herein and report to High Court….

Both KDIC and CBK felt aggrieved by the ruling and went to the Court of Appeal to appeal the decision and the appellate court has ruled on their favor. According to the Court of Appeal, the power to receive, liquidate and wind up an institution is vested in KDCI. The court said that in issuing the orders as it did, the High Court stepped beyond the amplitude of its powers and that it substituted itself in place of CBK. The Court of Appeal says the High Court had no inherent powers to make orders that were outside the purview of its jurisdiction.

The ruling now gives a green light to the Central Bank of Kenya for the liquidation of Dubai Bank Kenya which has been in receivership since August 2015.