Distributors seek Sh5.3b in legal tussle with Heineken

KENYA – Three distribution firms embroiled in a legal battle with Dutch brewer, Heineken, have asked the court to strike out defendants’ amended statements and instead award them Sh5.3 billion in damages.

KENYA – Three distribution firms embroiled in a legal battle with Dutch brewer, Heineken, have asked the court to strike out defendants’ amended statements and instead award them Sh5.3 billion in damages.

In their new application filed by Phillip Nyachoti, Kenya’s Maxam Ltd, Uganda’s Modern Lane Ltd and Tanzania’s Olepasu Ltd argued that the beer maker and its subsidiaries contravened the law in its reply to the case filed in February this year.

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Heineken was sued alongside its affiliates Heineken East Africa Import Company and Heineken Brouwerjen BV.

“The three different and separate amended statements of defence by the defendants respectively were filed without leave of the court as required by order eight of the civil procedure rules and therefore be struck out forthwith before any further proceedings can take place,” the distributors’ court papers filed on August 17, read in part.

The three distributors also asked the court to stop the clock in the case to allow them file their replies.

According to of Maxam, Modern Lane and Olepasu director Ngugi Kiuna, the beer maker was given 21 days to file its defense and a further 31 days to make amendments but it allegedly did not meet the deadline given by the court.

Kiuna stated that due to the late replies, his firm couldn’t file their own as required by the court rules.

The three sued the beer maker, arguing it had no authority to cancel their licenses and that such action would affect their businesses.

The distributors argued that allowing the beer maker to terminate their contracts would also affect other companies from whom they have leased warehouse agreements, hired lorries for transportation and sub-distributors to move the import products.

The distributors have sued Heineken International BV, arguing they were not given reasons why the parent company was terminating its relationship with them.

Heineken’s deal with Kenya’s Maxam was to see the distributor move beer for the Dutch brewer from May 2013 to May 2016, after which the contract would be renewed on a yearly basis.

The court heard that the three companies boosted Heineken’s turnover to Sh1.8 billion in 2015, up from Sh1.3 billion.

In its defence, Heineken East Africa General Manager Ache Unigwe said the deals struck with the firms allowed Heineken to end the agreements without having to explain why and that they would be considered if they applied for the new deal.

Heineken was to pay each distributor Sh51 million in compensation in the event it terminates their contract.

High Court Judge Erick Ogola in February ruled that Heineken should not terminate the deal until the case filed is heard and determined.

“Pending the hearing and determination of this application, the defendants or any other person acting on their instructions are hereby restrained by an injunction from appointing any distributor for Heineken beer brand in Kenya, Uganda and Tanzania,” Justice Ogola ordered.

August 23, 2016: http://www.standardmedia.co.ke/article/2000212877/distributors-seek-sh5-3b-in-legal-tussle-with-heineken

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