Tycoon defends Sh1.7 billion award against Heinken over breach of contract

Tycoon Ngugi Kiuna has defended his Sh1.79 billion compensations over the breach of contract by Dutch beer maker Heineken Limited.

Kiuna’s company, Maxam Limited, through lawyer Philip Nyachoti, told a three-judge bench of the Court of Appeal that he suffered massive losses following the termination of the exclusive contract to distribute Heineken beer in the country.

“The company lost its investment worth Sh1.79 billion after Heineken East Africa Import Company Ltd and Heineken International B.V refused to supply the beer for distribution, which justified the award as compensation for the losses incurred,” said Nyachoti.

The dispute dates back to 2013 when the Dutch beer maker entered a contract with Maxam Ltd for exclusive distribution of Heineken in Kenya, Uganda and Tanzania.

However, in 2016, the Dutch brewer terminated the deal and gave distribution rights to other companies.

Maxam Ltd challenged the contract termination and in July 2016, High Court Judge James Makau ruled that the termination was irregular and awarded the company Sh1.79 billion as compensation for business losses.

The Dutch company, through lawyers James Singh and Ikoha Muhindi, in their appeal argued that the High Court used a wrong analysis of legitimate expectation to punish the beer maker when the contract was terminated in accordance with the terms of agreement.

They told appellate judges Pauline Nyamweya, Ali Aroni and John Mativo that the High Court relied on the evidence of an expert witness whose opinion was not credible and binding to the court.

But Mr Nyachoti urged the appellate court to uphold the findings of Justice Makau on account that the company had made huge investments and that the contract provided that the parties should have continued with their partnerships even where there was a dispute.

The appellate court will give its verdict on February 9, 2024.