Case Summary - Finance Bank of Malawi V Reserve Bank of Malawi

𝗜𝗡 𝗧𝗛𝗘 𝗠𝗔𝗟𝗔𝗪𝗜 𝗦𝗨𝗣𝗥𝗘𝗠𝗘 𝗖𝗢𝗨𝗥𝗧 𝗢𝗙 𝗔𝗣𝗣𝗘𝗔𝗟
𝗠𝗦𝗖𝗔 𝗖𝗜𝗩𝗜𝗟 𝗔𝗣𝗣𝗘𝗔𝗟 𝗡𝗢. 𝟮𝟭 𝗢𝗙 𝟮𝟬𝟭𝟲 (𝗕𝗲𝗶𝗻𝗴 𝗛𝗶𝗴𝗵 𝗖𝗼𝘂𝗿𝘁, 𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗶𝗮𝗹 𝗖𝗮𝘂𝘀𝗲 𝗡𝗼. 𝟮𝟬𝟮 𝗼𝗳 𝟮𝟬𝟬𝟴)

𝗕𝗲𝘁𝘄𝗲𝗲𝗻:

𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗠𝗮𝗹𝗮𝘄𝗶 𝗟𝗶𝗺𝗶𝘁𝗲𝗱 (𝗜𝗻 𝗩𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 𝗟𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗶𝗼𝗻) - 𝗔𝗽𝗽𝗲𝗹𝗹𝗮𝗻𝘁

𝗔𝗻𝗱

𝗥𝗲𝘀𝗲𝗿𝘃𝗲 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗠𝗮𝗹𝗮𝘄𝗶 - 𝟭𝘀𝘁 𝗥𝗲𝘀𝗽𝗼𝗻𝗱𝗲𝗻𝘁
𝗔𝘁𝘁𝗼𝗿𝗻𝗲𝘆 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 (𝗠𝗶𝗻𝗶𝘀𝘁𝗲𝗿 𝗼𝗳 𝗙𝗶𝗻𝗮𝗻𝗰𝗲) - 𝟮𝗻𝗱 𝗥𝗲𝘀𝗽𝗼𝗻𝗱𝗲𝗻𝘁

(Hon Chief Justice R. Mzikamanda SC, Hon. Deputy Chief Justice L. Chikopa SC, Hon. Justice of Appeal F. Kapanda SC, Hon. Justice of Appeal M.C.C. Mkandawire SC, Hon. Justice of Appeal S. Kalembera SC, Hon. Justice of Appeal D. Madise SC, & Hon. Justice of Appeal R. Mbvundula SC)

03 February 2026

𝗖𝗔𝗦𝗘 𝗦𝗨𝗠𝗠𝗔𝗥𝗬

𝗕𝗮𝗰𝗸𝗴𝗿𝗼𝘂𝗻𝗱

Finance Bank of Malawi Limited (“FBM”) was at all material times a licensed commercial bank regulated by the Reserve Bank of Malawi (“RBM”) under the Banking Act. In May 2005, RBM suspended FBM’s foreign currency operations. RBM thereafter recommended to the Minister responsible for finance that FBM’s banking licence be revoked, and the Minister revoked FBM’s banking licence.

RBM commenced proceedings in the High Court (Commercial Division) seeking declaratory and related relief arising from its regulatory actions against FBM. FBM resisted the claim and filed a substantive counterclaim challenging, among other matters, the legality of the suspension of its foreign currency operations and the revocation of its banking licence and claimed damages for loss said to have arisen from those actions.

During the proceedings, the parties entered into a consent order intended to regulate interim arrangements between them, including steps towards possible restoration of the Bank’s operations, subject to specified conditions.

After hearing the matter, the High Court dismissed FBM’s counterclaim and upheld the lawfulness of the actions taken by RBM and the Minister. The High Court treated the consent order as barring FBM’s counterclaim and held that the respondents had acted within their statutory mandate. FBM appealed to the Supreme Court of Appeal.

𝗜𝘀𝘀𝘂𝗲𝘀 𝗼𝗻 𝗔𝗽𝗽𝗲𝗮𝗹

1. Whether the suspension of FBM’s foreign currency operations and the revocation of FBM’s banking licence constituted administrative action subject to constitutional standards of lawful and procedurally fair administrative action.

2. Whether RBM afforded FBM procedural fairness before making its recommendation to revoke the banking licence, and whether the Minister was required to afford a fair hearing before deciding to revoke the banking licence.

3. Whether the High Court erred in treating the consent order as a complete bar to FBM’s counterclaim.

4. Whether, if the counterclaim succeeded, FBM was entitled to judgment on liability and to an assessment of damages.

𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗮𝗻𝗱 𝗥𝗲𝗮𝘀𝗼𝗻𝘀 (𝗦𝘂𝗺𝗺𝗮𝗿𝘆)

The Supreme Court of Appeal held that, in the circumstances of this case, the suspension of FBM’s foreign currency operations and the revocation of FBM’s banking licence were administrative action engaging constitutional protections relating to lawful and procedurally fair administrative action (including under sections 43 and 44 of the Constitution). The Court further held that, having regard to the nature and effect of the banking licence and the consequences of revocation, the licence attracted constitutional protection.

The Court construed the revocation process under section 10 of the Banking Act as involving two stages: (i) a recommendation by RBM and (ii) a decision by the Minister. The Court held that procedural fairness was required at each stage. On the facts, RBM did not afford FBM a fair hearing before making its recommendation, and the Minister acted on that recommendation without independently hearing FBM. The Court held that a recommendation made in breach of constitutional requirements could not lawfully found the subsequent exercise of ministerial power.

The Court further held that the High Court erred in treating statutory silence in the Banking Act as excluding the operation of constitutional guarantees, and in equating ongoing regulatory supervision with compliance with procedural fairness requirements.

On the consent order, the Court held that it was interlocutory and conditional in character and did not amount to a final settlement barring FBM’s counterclaim. In reaching that conclusion, the Court considered the terms and intended operation of the consent order and the evidence as to compliance with its conditions.

Accordingly, the Court concluded that the suspension of FBM’s foreign currency operations and the revocation of its banking licence were undertaken in breach of the constitutional requirement of lawful and procedurally fair administrative action and were unlawful.

𝗢𝗿𝗱𝗲𝗿

The Supreme Court of Appeal unanimously allowed the appeal and made the following orders:

1. The judgment of the High Court was set aside.

2. The plaintiff’s claim in the court below was dismissed.

3. The defendant’s counterclaim was allowed.

4. It was declared that the suspension of FBM’s foreign currency operations and the revocation of its banking licence were undertaken in breach of the constitutional requirement of lawful and procedurally fair administrative action and were unlawful.

5. Judgement was entered for the defendant on liability on the counterclaim, with damages to be assessed by the Assistant Registrar of the Supreme Court of Appeal.

6. Interest on any damages awarded shall be payable in accordance with section 65 of the Courts Act.

7. The order for costs in the court below was set aside.

8. The defendant was awarded costs in the court below and in the Supreme Court of Appeal.