Rwf 6bn BCR case settled out of court
Rwanda Commercial Bank (BCR) and an investment firm, Establisse Ramnik, have settled a 23 year case out of court.
Establisse Ramnik is an investment group created by the late businessman, Ramnik Jobanputra, whose family controls a chain of businesses in East Africa.
The out of court negotiations began on November 24, 2011 when a judge at the commercial court in Kigali advised that the court could drop the case if the parties agreed an out of court settlement.
The case finally ended yesterday after both parties agreed to drop the case before Justice Minister Tharcisse Karugarama.
In October 1988, Ramnik dragged BCR to court alleging the bank had wrongly confiscated its property after it defaulted on a loan advanced to the company.
In 1990, the former Court of First Instance in Kigali ruled in favour of Ramnik, but BCR appealed in another court in Ruhengeri.
Since then, the case has gone back and forth in various courts and had received over 10 rulings.
In a meeting yesterday, at the Ministry of Justice, the widow of the late businessman, Shakuntala Jobanputra, signed on behalf of Ramnik, while Sajeev Anand, Managing Director of BCR, represented the bank. Minister Karugarama signed on behalf of the government.
According to Karugarama, either party risked losing Rwf6 billion if they lost the case.
Yesterday’s dramatic ending, quashes the latest appeal filed by Ramnik that was pending before the Commercial High Court.
“BCR counterclaimed that Establisse Ramnik failed to comply on terms of repayment of the loan they received; as a result, the bank confiscated some of the company’s assets,” Karugarama explained in an interview.
“However, through the power of negotiation, both parties have agreed to withdraw from court all claims and settle their disputes amicably, once and for all without wasting any more time.”
As part of the deal to privatise BCR in 2004, government agreed to settle arrears amounting to US$50,000 (Rwf30m) that the bank owed its debtors.
As a result the government enjoined the case as a BCR guarantor.
Karugarama said such cases are a disincentive to foreign investments and called upon other companies with similar cases to consider an out of court option.
“No one can invest in a country with such delays and this case clearly indicates the gaps that existed within the old legal system,” Karugarama said.
“We have put in place legal systems and arbitration courts to create a legal climate where commercial settlements can be reached through proper negotiations and where court case decisions can be reached without wasting a lot of time.”
According to the agreement, BCR waives the repayment of its debt and interests arising under the loan agreement totalling Rwf6 billion.
The bank also lets go of Ramnik’s property held in relation to the same loan.
A joyous Jayant Jobanputra, the Family Representative of Establisse Ramnik, thanked the government and BCR for opening a new chapter in their relations.
“By signing this agreement, we are burying a 23-year old hatchet. I believe that from today onwards, both parties will work together to contribute to their growth and the economic development of Rwanda,” he said.
By signing the agreement, Ramnik relinquished any present and future right to introduce any legal action in respect to claims relating to the 1988 loan agreement.
The BCR Managing Director, Sajeev Anand, said he was glad to close a case that had consumed much of the bank’s time and negatively affected its operations.
“Through this negotiation, we get what we want and Ramnik also gets what they want. In the end, we do not lose much but gain by saving time,” Anand said.
The government through Karugarama also accepted the out of court settlement.
Contact email: ivan.mugisha[at]newtimes.co.rw