Heineken opposes US$16m compensation bill to Kenyan alcohol distribution firm Maxam Ltd

KENYA – Heineken, Dutch beer marker has challenged the Kenyan High Court’s decision of slapping it with a Ksh. 1.79 billion (US$16m) compensation bill, for terminating a distributorship agreement with Maxam Ltd firm.

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, reports Business Daily.

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

Heineken

Maxam Ltd, an alcoholic beverage distribution company entered into exclusive distribution deals with Heineken in 2013 for Kenya, Uganda and Tanzania.

But according to the plaintiff, the Dutch brewer terminated the deals struck with his firm without giving any explanations.

The beer maker further went ahead and acquired key customers, including Mega Wines and Spirits, Chandarana Supermarkets and Karen provision stores when Maxam had invested heavily in warehouse, delivery and transport system.

To this end the court ruled that the notice of termination dated January 27, 2016, by Heineken International B.V. against Maxam Ltd as unlawful, irregular and void.

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“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,” the Judge said in his ruling.

The brewer has however faulted the Justice’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.

Heineken has maintained that the orders stopping the appointment of other distributors were not reinstated as ruled by the court.

It also argued that Maxam did not prove that any special damages and the orders issued affected third parties who were not part of the case.

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

Meanwhile, Crown Beverages, a subsidiary of Coca-Cola Beverages Africa (CCBA) and one of the most reputable bottlers of natural mineral water in East Africa has announced that it is seeking to exit the alcohol distribution business to focus on its bottled water business.

This comes two year after the company inked a deal with Italian branded beverage firm, Campari Group, to distribute premium alcohol brands in Kenya.

The agreement covered the distribution of Glen Grant Single Malt Whisky, Old Smuggler blended Scotch Whisky, Bulldog Gin, SKYY Vodka and Campari Aperitif among others.

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