Pearl of Africa Hotel, a five star establishment owned by AYA Investment Uganda Limited has been flagged for sale over an unpaid loan.
The hotel is located at Nakasero Hill Road Kampala. The owners AYA Investment have just 30 days to save it or else it will go by public auction.
In a public notice on Monday, September 25, Armstrong Limited, government Court Bailiffs, auctioneers, and debt collectors on orders of M/S MMAKS Advocates and ENSafrica Advocates representing Industrial Development Corporation of South Africa Ltd have put Pearl of Africa Hotel up for auction over a UGX 611 billion debt it owes to a South African firm.
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Property already flagged for sale by public auction is comprised in LRV 3556 Folio 8 Plots 7A1-9A1 & 10 Lugard Road, and Plots M32, M183 & 2E Nakasero Hill Road Kampala measuring approximately 5.975 Hectares.
“Upon instructions from the High Court of Uganda (Commercial Division) in Execution Misc. Application No. 275 of 2023 (arising from Arbitration Cause No. 12 of 2021 and High Court Misc. Cause No. 58 of 2021) Industrial Development Corporation of South Africa Ltd (Judgment Creditor) vs AYA Investments (U) Limited (Judgment Debtor), and M/S MMAKS Advocates and ENSafrica Advocates, Counsel for the Judgment Creditor, we shall proceed to sell the Property below together with all developments thereon by public auction pursuant to a Warrant of Attachment and Sale issued by the High Court of Uganda (Commercial Division) unless the Judgment Debtor pays to us the entire outstanding decretal sum (including interest) and our fees and costs before the fall of the hammer at the auction,” auctioneers said in an advertisement on Monday.
Pearl of Hotel spans 32,000 square meters and comprises 23 floors, 296 rooms, 37 suites, 2 restaurants, 3 bars, 9 meeting rooms, 15th-floor executive lounges, and a business center with all top-class 5-star amenities.
The sale by public auction comes after the Court of Appeal in Kampala directed AYA Investment Uganda to pay UGX 611 billion debt it owes to the Industrial Development Corporation (IDC), a South African firm.
In its ruling, the Court of Appeal directed that the struggling businessman cannot appeal the decision reasoning that courts of law cannot meddle in lawful arbitration processes.
The ruling means that Aya Investment Limited is restricted from appealing to any higher Court in the matter where the commercial endorsed the payment of UGX 611b arbitral award to IDC of South Africa Limited.
The Bruce Collins QC Tribunal of South Africa on September 11, 2021, ordered Aya to pay the amount to IDC as an arbitral award. It comprises a UGX 305b unpaid principal sum that the South African firm passed to the Ugandan businessman 10 years ago according to available documents.
Documents on the court record show that the IDC had applied to the Commercial Court to have the award registered as a decree of the High Court in Uganda. The development was allowed by Justice Stephen Mubiru, locking the Ugandan businessman in the dispute with the South African company.
The latest court ruling inflicted a fresh setback on the Ugandan tycoon after the Court of Appeal dismissed an application in which he sought to block the payment of the arbitral award.
In his ruling, Justice Christopher Gashirabake dismissed the application, reasoning that the Arbitration and Conciliation Act limits the intervention of courts in matters of arbitration.
“Having found that this court has limited jurisdiction to intervene in arbitral awards, which has an effect on the likelihood of the success of the appeal, the preliminary objection is upheld. The application to stay execution is not granted,” Justice Gashirabake ruled.
The judge added: “Where the jurisdiction of the court is questionable, it casts doubt on the possibility of the success of the intended appeal. Lack of jurisdiction is lack of everything”.
According to the judge, section 34 of the Arbitration and Conciliation Act provides that recourse to the Court against an arbitral award can only be by way of an application for setting aside the award.
Gashirabake made the ruling in the presence of a lawyer representing Aya, Gibson Munanura. Also in court were the lawyers representing the respondents Timothy Lugayizi, Hussein Gulamu, Emmanuel Ankunda, and Nzuza Nzuza, senior legal advisor to the South African Company.
Court documents indicate that between 2007 and 2017, Aya and IDC entered into various financial credit agreements to finance the construction of a hotel known as the Pearl of Africa Hotel (now Win 5 Hotels and Spa).
The hotel is located on land comprised of Plots 7A1-9A1 and 10 Lugard Road and M32, Hill Road situated at Nakasero Hill, in Kampala.
According to court documents, the total sum lent on various dates under the six financial credit agreements was $81,765,318 (about shillings 305 billion). However, the loan stood at $118,817,012 (about shillings 444 billion) in accumulated interest, as of September 13, 2017.
The parties also executed various security agreements that were collateral to the financial credit agreements during that period.