LONDON/KAMPALA – The International Chamber of Commerce Court of Arbitration in London, United Kingdom, has ordered Ugandan businessman Patrick Bitature, his wife Carol Nzaro and four of their companies to pay South African lender, Vantage Mezzanine Fund, $65.7m (about Shs244b), for defaulting on a loan.
In the ruling issued by Prof Fidfelis Oditah, the arbitrator, on July 31, the court observed that it had taken note of Mr Bitature’s “obstructive and unreasonable” approach to the arbitration, by raising several frivolous issues regarding its legality and merits of the claim.
Prof Oditah then ordered Mr Bitature in his individual capacity to pay $25.4m for breach of contract to the South African company.
He also ordered Bitature’s companies Simba Telecom, Linda Properties and Elgon Terrace Hotel to jointly pay $35m (about Shs132b) to Vantage as outstanding loan balance as of February 2023, and another $4m (about Shs15b) for breach of contract. They were also ordered to pay $115,591 as arbitration legal fees, and another $241,727 (about Shs899m) as stamp duty for transfer of shares by Bitature’s companies with interest at 13 percent per annum from the date of the award.
Bitature also was ordered to refund $257,000 advanced on costs by the South African company plus 6 percent interest per annum.
The dispute, court records show, arose from a 2014 transaction when Vantage Capital provided $10m or Shs36.6b, at the current exchange rate, to Simba Properties Investment Company, the property investment arm of Simba Group.
At the time both the Skyz Hotel and Moyo Close Apartments were still under construction and were set to be completed in 2015.
In 2014, Mr Bitature, the founder and chairman of Simba Group, in a press statement issued in December 2014, welcomed the deal, noting that “Vantage brings an important and exciting new model of financing to the East African region. Simba Group is pleased to have found a strong mezzanine financing partner who provides medium-term growth capital but does not want to take our hard earned equity”.
Bitature who has made a name for himself over the years as an entrepreneur, businessman and motivational speaker owns a series of companies under the Simba Group and has interests straddling telecommunications, energy, agriculture, and mining.
By 2014, his properties included Protea Hotel Kampala, the five-storey office block occupied by China National Offshore Oil Corporation (CNOOC), Elizabeth Royal Apartments, Simba Telecom, Electro-Maxx and True North Power, Simba Farms, Simba Electronics, Simba Travel Care and Zuku TV among others.
The investment in Simba Properties was Vantage’s first investment in Uganda.
Subsequently, the two parties fell out over the alleged failure by Bitature’s empire to pay back the monies owed to the investor. Through his lawyers, Mr Bitature then challenged efforts to have him pay back on grounds that Vantage, among other things, is not legally registered entity in Uganda.
The other contention was that Vantage conducted lending business in Uganda without a license in contravention of the Financial Institutions Act 2004 and that they conducted venture capital business without a license.
Describing as “feeble” the argument by Bitature’s lawyers that he had agreed to arbitration through duress and undue influence, High Court judge Boniface Wamala on June 16, 2021 ruled that Bitature had not been disadvantaged and was “well and independently” advised by senior and prominent legal professionals in Uganda.
“Faced with such facts, my view is that a feeble claim of duress and/or undue influence of the nature as this one amounts to an insult of own intelligence on the part of the Respondents and their advocates,” he ruled.
“Having found that the impugned arbitration agreement exists, is valid, operative and capable of being performed, and that there is an arbitrable dispute between the parties herein, it is ordered that this matter be and is accordingly referred to arbitration in accordance with Section 5 of the ACA. Accordingly, Civil Suit No. 988 of 2019 and all legal proceedings and orders thereunder are dismissed and/or vacated, or set aside, by the Court. Costs of this application, of HCCS No. 988 of 2019 and the proceedings thereunder are awarded to the Applicant against the Respondents [Bitature],” he ruled.
The South Africans then went to the International Chamber of Commerce Court of Arbitration in London, United Kingdom, hence the ruling.
