Table of Contents
Key Points
- The Supreme Court of Kenya dismissed Heineken’s appeal to suspend a $13.1 million award to Ngugi Kiuna’s Maxam Limited.
- The ruling is a setback for Heineken, contesting the termination of its distributorship agreement with Maxam Limited.
- Ngugi Kiuna's Maxam Limited significantly contributed to Heineken's growth in Kenya and the East African region since 2006.
The Supreme Court of Kenya has dismissed an appeal by Heineken, rejecting the Dutch brewing company’s attempt to suspend a Ksh1.79 billion ($13.1 million) award to Maxam Limited, a beverage distributor owned by Kenyan businessman Ngugi Kiuna.
The ruling, delivered by a five-judge bench led by Chief Justice Martha Koome, represents a major setback for Heineken, which had contested a May decision by the Court of Appeal that upheld an earlier High Court judgment. Both courts found the termination of Heineken’s distributorship agreement with Maxam to be unlawful.
Court: Termination at the core, not constitutional law
Chief Justice Koome, joined by Deputy Chief Justice Philomena Mwilu and Justices Mohammed Ibrahim, Smokin Wanjala, and Njoki Ndung’u, ruled that the dispute did not qualify as a constitutional matter, which was central to Heineken’s appeal.
The court emphasized that the case revolved around the legitimacy of the termination notice, not constitutional interpretation.
“The distribution agreement’s validity was central to the orders sought,” the judges stated, reaffirming that the focus of both the High Court and the Court of Appeal was the legality of the termination.
Heineken had argued that the agreement included a clause exempting the company from compensating losses arising from termination and stipulated that the two parties must mutually agree on separation. The brewery contended that Maxam acted unilaterally, violating this clause.
Payment risks and uncertainty of recovery
Kevin Santry, a director of Heineken East Africa Import Company Limited, filed an affidavit expressing concerns over the financial implications of the judgment. Santry warned that the Ksh1.79 billion ($13.1 million) bank guarantee held by Equity Bank was at risk of being called.
He cautioned that once the payment is released, retrieving the sum could become legally complicated. “Once the payment is effected, the sum will not be within reach of this Honourable court,” said Fred Ngatia, Heineken’s senior counsel.
Maxam’s role in Heineken’s regional growth
Maxam Limited, founded in 2006 by Ngugi Kiuna, was instrumental in growing Heineken’s presence in Kenya and beyond.
The partnership between the two companies helped the Dutch brewer establish a foothold in East Africa, with distribution networks expanding into Tanzania and Uganda by 2012.
Apart from his role at Maxam, Kiuna also owns an 11.2 percent stake—equivalent to 2,192,926 shares—in BOC Kenya, a leading industrial gas manufacturer based in Nairobi, further cementing his influence in Kenya’s business landscape.
