By Bicholin K Musisi;

KAMPALA – Uganda’s Supreme Court has overturned a landmark Constitutional Court decision that had ordered tycoon Hassan Basajjabalaba and his companies to refund billions of shillings in compensation for terminated city market contracts, ruling that the petition was filed in the wrong court and involved contested facts outside the Constitutional Court’s jurisdiction.

The dispute dates back more than two decades. 

Between 2000 and 2011, Kampala City Council (KCC) granted Basajjabalaba-linked firms — Haba Group, Sheila Investments, Victoria International, and First Merchant International Trading — leases to manage Nakasero, St. Balikuddembe (Owino), Shauri Yako, and Nakawa markets, as well as Constitutional Square. 

When KCC later cancelled the deals citing irregularities, the companies sought compensation. 

The government settled their claims through payments and loan guarantees worth over Shs 142 billion ($37 million), facilitated by Bank of Uganda and commercial banks.

In 2012, rights watchdog Legal Brains Trust petitioned the Constitutional Court, arguing the contracts were unconstitutional because they lacked the Attorney General’s approval under Article 119(5) of the Constitution, and alleging fraud in the compensation process.

In 2020, the Constitutional Court, by 3-2 majority, agreed, nullified the contracts, and ordered the Attorney General to recover the payouts.

Delivering the lead judgment, Justice Monica Mugenyi said the petition did not raise a genuine constitutional interpretation question.

“The Constitutional Court is not a fact-finding court. Allegations of fraud, corruption, or illegal payments require evidentiary proof and must be tried in the High Court or through Article 50 enforcement suits,” she wrote.

The court also clarified that Attorney General approval is not constitutionally required for local government contracts.

“The term ‘Government’ in Article 119 does not extend to local governments such as KCC,” the judgment stated, effectively shielding many past and future municipal contracts from similar constitutional challenges.

The ruling nullifies the refund order and declarations against public officials, including former Finance Minister Syda Bbumba and deceased ex-Attorney General Khiddu Makubuya, who were censured by Parliament in 2012 for their role in approving the payouts. 

It also lifts a major legal cloud over the businessmen, though the government retains the option to sue afresh for recovery under civil law.

Legal analysts say the decision redefines the boundary between constitutional interpretation and enforcement. 

The court declined to award costs, citing the petition’s public importance. The ruling may also have fiscal implications, as the government must now consider whether to pursue fresh proceedings to recover the billions paid out.