Kenya, Uganda, and Tanzania: Heineken appeals Sh1.79 billion compensation bill

Dutch beer maker Heineken has appealed a Sh1.79 billion compensation bill slapped on it for terminating a distributorship agreement with tycoon Ngugi Kiuna’s firm Maxam Ltd.

In the appeal pending before the Court of Appeal, Heineken East Africa Import Company Ltd and Heineken International B.V. said it was dissatisfied with the High Court’s decision issued in July last year.

The brewer has faulted Justice James Makau’s decision, arguing that the judge failed to consider the terms of the distributorship agreement.

Further, the alcohol maker said it was wrong for the judge to rule that Maxam Ltd had a legitimate expectation that the agreement would not be terminated.

“The learned judge erred by holding that the appellants constructively terminated the distribution agreement by appointing additional distributors despite injunctive orders,” the application reads.

Heineken maintained that the orders barring the appointment of additional distributors were not reinstated as ruled by the High Court. The firm further said Maxam did not prove any special damages and the orders issued affected third parties who were not involved in the case.

In a judgment last year, Justice Makau ruled that Mr Kiuna demonstrated that Heineken was in breach of the contract by constructively terminating a 2013 distributorship agreement by deliberately appointing other distributors, without a termination notice and a court order barring such deals.

On legitimate expectation, the judge said, “I find the promise and arrangement of automatic extensions served as motivation for the plaintiff to keep performing in accordance with the assigned obligations resulting to investing heavily in the business.”

Maxam Ltd said they entered the deal in 2013 for exclusive distribution deals in Kenya, Uganda and Tanzania. But the Dutch brewer terminated the deals struck with his firm without giving any explanations.

The Dutch company also went ahead and acquired key customers, including Mega Wines and Spirits, Chandarana Supermarkets and Karen provision stores yet Maxam had invested heavily in warehouse, delivery and transport system.

The court declared a notice of termination dated January 27, 2016, by Heineken International B.V. against Maxam Ltd as unlawful, irregular and void.

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