Key Points:
- Kenyan court upholds ruling requiring Heineken to pay $13.1 million to Maxam for illegally terminating their distribution contract.
- Court agrees Maxam deserves compensation for lost business and legal fees, highlighting importance of contract enforcement.
- Ruling strengthens Kenyan businessman Ngugi Kiuna’s position in both beverage distribution and his fight to protect BOC Kenya.
Dutch brewing company, Heineken, has been ordered to pay Ksh1.7 billion ($13.1 million) to Maxam Limited, a beverage distribution company owned by Kenyan businessman Ngugi Kiuna. This follows the Court of Appeal’s ruling that upheld a High Court order for Heineken to compensate Maxam for the unlawful termination of their distribution contract in Kenya.
Heineken’s appeal dismissed, must pay legal fees
The ruling, delivered by Justices Pauline Nyamweya, Abida Ali-Aroni, and John Mativo, dismissed Heineken’s appeal and mandated that the company cover the legal costs associated with the case. The appellate judges concurred with the High Court’s assessment, stating that the awarded amount was reasonable and necessary for Maxam to recover its expenses and preserve its business goodwill.
“Once goodwill legally vested, it could not be unilaterally annulled. In our view, given the loss and damage arising from the circumstances of the breach by Heineken EA and Heineken BV, the projection of profits by PW2 for the period 2017 to 2021 was reasonable and adequate to enable Maxam Ltd to recoup its expenditure and goodwill,” the bench, led by Justice Nyamweya, affirmed in their ruling.
Heineken’s growth in East Africa bolstered by Maxam Limited
Founded in October 2006 by Ngugi Kiuna, Maxam Limited served as the exclusive distributor of Heineken beer in Kenya. Under Kiuna’s leadership, Maxam played a pivotal role in expanding Heineken’s market presence in Kenya. The partnership was instrumental in achieving the growth targets that had previously eluded Heineken since its introduction to the Kenyan market in 2004.
By 2011, the partnership extended beyond Kenyan borders, enhancing Heineken’s footprint in the broader East African region. In 2012, distribution channels were established in Tanzania and Uganda, further cementing Heineken’s brand presence across these markets.
Ngugi Kiuna boosts BOC Kenya holdings
Apart from his ventures in the beverage distribution sector, Ngugi Kiuna also holds a significant interest in BOC Kenya, a Nairobi-based gas manufacturer. In a strategic move to solidify his influence, Kiuna in 2023 increased his stake in BOC Kenya by acquiring an additional 93,826 shares, raising his ownership from 8.08 percent to 8.56 percent.
This acquisition is aligned with Kiuna’s strategic opposition to the proposed takeover of BOC Kenya by fellow Kenyan businessman Baloobhai Patel and his investment firm, Carbacid Investments Plc. A stake nearing 10 percent would grant Kiuna the power to block the delisting of BOC Kenya from the Nairobi Securities Exchange, a maneuver enabled by Kenya’s capital market regulations.
Win for Maxam Limited in Kenya
The Court of Appeal’s decision marks a significant victory for Maxam Limited and underscores the importance of honoring contractual agreements in business operations. As Heineken navigates the legal and financial implications of this ruling, the case sets a precedent in the enforcement of distribution rights and the protection of business goodwill in Kenya.
