An Accra High Court has delivered a significant ruling regarding the revocation of the license of CDH Savings and Loans Company Limited by the Bank of Ghana (BoG). The court, presided over by Mr. Justice Sam Brew, quashed the BoG’s decision to revoke CDH’s license and ordered the parties involved to resort to arbitration for resolution. This ruling is grounded in Article 23 of the 1992 Constitution of Ghana, which mandates that administrative bodies must act fairly and reasonably in their decisions. The court emphasized that CDH was unfairly treated by the BoG, particularly in terms of the short notice given for asset disposal, which was deemed unreasonable.
The BoG had previously issued a notice on August 16, 2019, declaring that CDH Savings and Loans was no longer fit to operate as a specialized deposit-taking institution due to alleged insolvency. The central bank cited CDH’s failure to sell repossessed collaterals, which led to liquidity issues and an inability to meet depositors’ withdrawal requests. This notice not only affected the company’s operations but also put numerous depositors in a precarious position, resulting in a lawsuit initiated by CDH Financial Holdings Limited, the entity that oversees CDH Savings and Loans, against the BoG.
In their court action, CDH requested the revocation of the BoG’s declaration of insolvency and the accompanying cessation of its operating license. The company sought a writ of certiorari, which would allow the court to review the lawfulness of the BoG’s decision. Additionally, CDH requested an interlocutory injunction to prevent BoG and its affiliates from disrupting the operations of their institution while the legal proceedings were underway. Furthermore, CDH requested that the court refer the dispute to arbitration, indicating a preference for resolving their issues outside of a formal court setting.
Justice Brew’s ruling highlights the specific protections under the Ghanaian Constitution for entities that may be unfairly impacted by administrative actions. The court’s decision reinforces the notion that regulatory bodies must adhere to principles of fairness and reasonableness, especially when such decisions can have far-reaching implications for businesses and their stakeholders. By ordering arbitration, the court has also facilitated a potential pathway for both CDH and the Bank of Ghana to negotiate a resolution that is satisfactory to both parties, without the prolonged complexities of further litigation.
The ruling came against a backdrop of significant scrutiny regarding the regulatory practices of the BoG, particularly in how it manages and oversees financial institutions under its jurisdiction. Given the implications of the court’s decision, there may be broader consequences for how the Bank of Ghana approaches similar cases in the future, particularly regarding its communication and procedural practices when dealing with financial institutions facing liquidity crises or other operational challenges.
In summary, the Accra High Court’s ruling is a pivotal moment in the ongoing dialogue about the balance between regulatory oversight and fair treatment of financial entities in Ghana. It not only reinstates the operational capability of CDH Savings and Loans but also serves as a reminder of the legal frameworks that govern administrative actions in the country, marking a crucial intersection between law, finance, and the rights of businesses.
