Key Points:
- Heineken contests a $13.1-million court order to Kenyan firm Maxam, challenging an unlawful contract termination ruling.
- Heineken appeals to Kenya’s Supreme Court, seeking to block payment pending appeal and securing a bank guarantee from Equity Bank.
- Maxam Limited, established in 2006 by Ngugi Kiuna, significantly contributed to Heineken’s market expansion in East Africa.
Dutch brewing giant Heineken is contesting a Kenyan court ruling that mandates the company to pay $13.1 million to Maxam Limited, a beverage distribution company owned by Kenyan businessman Ngugi Kiuna. The dispute stems from a terminated distribution agreement that Kenyan courts have deemed unlawful.
In May, Heineken was ordered to pay Ksh1.7 billion ($13.1 million) to Maxam. This follows the Court of Appeal’s upholding of a High Court decision requiring Heineken to compensate Maxam for the unlawful termination of their Kenyan distribution contract.
Heineken East Africa Import Company Ltd., a subsidiary of Heineken, has appealed to Kenya’s Supreme Court in a bid to halt the enforcement of the payment. The company, concerned that Maxam might claim the funds before the appeal’s resolution, obtained a bank guarantee from Equity Bank during the Court of Appeal proceedings.
Change in legal representation
In a move to counter the earlier ruling, Heineken has revamped its legal strategy, enlisting Ngatia and Associates, led by senior lawyer Fred Ngatia. Ngatia argues that due to Maxam’s limited assets, the funds would be “irrecoverable,” highlighting the need for the Supreme Court’s swift intervention to prevent the release of the $13.1-million bank guarantee.
The legal battle centers on a distribution agreement signed on May 21, 2013, where Heineken East Africa appointed Maxam as its exclusive distributor in Kenya. Additionally, Heineken International B.V. appointed Maxam’s subsidiary, Modern Lane Ltd., to manage Heineken Lager distribution in Uganda.
A decade-long partnership
Maxam Limited, established in October 2006 by Ngugi Kiuna, played a crucial role in expanding Heineken’s market presence in Kenya. Under Kiuna’s leadership, Maxam significantly contributed to Heineken’s growth targets, which had been challenging since the brand’s introduction to the Kenyan market in 2004.
By 2011, the partnership extended Heineken’s reach beyond Kenyan borders into the broader East African region. In 2012, distribution channels were established in Tanzania and Uganda, further solidifying Heineken’s market presence.
Kiuna, apart from his involvement in beverage distribution, holds a substantial interest in BOC Kenya, a Nairobi-based gas manufacturer. In 2023, he increased his stake in BOC Kenya by acquiring an additional 93,826 shares, raising his ownership from 8.08 percent to 8.56 percent, reinforcing his influence within the company.
