COURT. The Supreme Court, has overturned a landmark Constitutional Court decision that required Kampala businessman Al-Hajj Hassan Basajjabalaba and his companies to refund billions of shillings in compensation for terminated city market contracts.
In its ruling, the court argued that the petition was filed in the wrong court and involved contested facts outside the Constitutional Court’s jurisdiction.
Available court records show that between 2000 and 2011, the then Kampala City Council (KCC),which morphed into Kampala Capital City Authority(KCCA) granted Basajjabalaba’s companies including Haba Group, Sheila Investments, Victoria International,Yudaya International Ltd and First Merchant International Trading — leases to manage Nakasero Market , St. Balikuddembe (Owino) Market , Shauri Yako Market , and Nakawa Market , as well as the Constitutional Square near Central Police Station in Kampala .
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.
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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.
Supreme Court ruling
But the Supreme Court unanimously quashed that decision.
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,” her judgement reads in part e.
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 late Prof. Khiddu Makubuya, who were censured by Parliament in 2012 for their role in approving the payouts.
The court declined to award costs, citing the petition’s public importance. However, the ruling may also have fiscal implications, as the government must now consider whether to pursue fresh proceedings to recover the billions paid out.