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Beer makers, Heineken East Africa Company Ltd and Heineken International B.V have suffered a big blow after the High Court ordered them to pay Maxam Ltd,  a local distributor, Sh1.7 billion.

Justice James Makau awarded Maxam Ltd, a distributor of Heineken beer brand lager products in Kenya, Sh1,799,978,868 as special damages for loss of business after Heineken East Africa Company Ltd terminated their distribution agreement.

The judge said the termination of the distribution agreement dated May 21, 2013 by Heineken East Africa Company Ltd and Heineken International B.V was unlawful, irregular, unprocedural and therefore null and void.

“A declaration is issued that the Kenyan Distribution Agreement between the plaintiff and the defendants is in full force and effect as per the terms and conditions set therein,” ruled the judge.

Giving any reason

Maxam Ltd sued the two international beer companies for terminating their agreement without giving any reason whatsoever.

The beer distributor contended that the agreement had indicated that in case of termination before the end of term, then they would discuss and agree fair and reasonable monetary amount for compensation. 

It contended that it stands to lose the over Sh1.7 billion of its business if the Kenyan Distribution Agreement is allowed to terminate without compensation.

In response, the two  companies argued that the decision to cancel the distributorship contract with the firm was on the basis that it intends to attract more suppliers to expand its business.

The international beer manufacturers claimed that the distributor was not entitled to any explanation and that failure by the local firm to register and have the agreement stamped was contrary to the provisions of Stamp Duty Act.