High Court Orders Company to Pay Sh14 Billion in Landmark Loan Dispute Ruling
In a significant legal decision, the High Court’s Commercial Division has mandated East African Fossils Company Limited to repay a substantial loan debt exceeding Sh14 billion to the financial institution.
The comprehensive judgment, delivered on August 18, 2025, explicitly ordered the defendants to jointly and severally settle outstanding credit facilities, default interest, penalties, and associated charges totaling Sh14.038 billion.
The loan dispute originated from credit facilities issued between 2014 and 2016, secured through various assets including properties, vehicles, cotton ginning machines, and a ship. Despite the company’s arguments about business disruptions due to civil unrest in their operational region, the court firmly rejected these claims.
Notably, the court emphasized that potential civil conflicts were foreseeable when the contracts were initially signed. The ruling highlighted that the situation represented contractual hardship rather than absolute performance impossibility.
The court also made critical observations about loan repayment obligations, stressing that borrowers must honor their financial commitments. In a nuanced decision, the court reduced the contractual default interest rate from 19 percent to 10 percent per annum.
This landmark ruling provides significant insights into Tanzania’s commercial lending landscape, reinforcing the legal framework surrounding loan agreements and the responsibilities of borrowers and guarantors.
The judgment serves as a crucial precedent, underscoring the importance of contractual obligations and the judicial system’s approach to resolving complex financial disputes.
