Heineken appeals Sh1.7bn bill in distribution deal row

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

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

The brewer has faulted Justice James Makau’s decision, arguing that the he failed to consider the terms of the distribution 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 was not reinstated as ruled by the High Court. The company further said Maxam did not prove any special damages and that the orders issued affected third parties, who were not involved in the case.

In a judgment issued last year, Justice Makau ruled that Mr Kiuna had shown that Heineken had breached the contract by constructively terminating a 2013 distributorship by deliberately appointing other distributors without a termination notice.

Irregular and void

Maxam Ltd said it entered the deal for exclusive distribution in Kenya, Uganda and Tanzania, but the Dutch brewer terminated it without giving any explanation.

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