A distributor has been awarded Sh1.7 billion compensation for loss of business and special damages following a legal battle with Dutch brewer, Heineken.
Judge James Makau said that the pricing models imposed on Maxam Limited Company by Heineken without consultation are exploitative, oppressive and unfair.
“Special damages for loss of business as more specifically tabulated in paragraph 12 in the plaint of Sh1,799,978,868 is awarded to the above distributors,” ruled Judge Makau.
Heineken International was also directed to take accounts in respect of loss of profits occasioned to the distributor by reason of reduced volumes of sales as well as reduced profit margins from September 2017 until the date of the judgement.
Judge Makau also ordered the renewal of contracts for the distribution Company.
Makau declared the conduct of Heineken International of offering lower market prices to a distributor of the Heineken Larger Beer, approving higher market prices on the same products and reducing their approved margins is discriminatory and is against the Constitution.
The judge added that the actions of Heineken have infringed on the distributor rights as protected by Article 19 of the Constitution.
The court also declared that the Kenyan Distribution Agreement dated May 21, 2013 between Heineken and Maxam is in full force as per the terms and conditions set out.
Maxam was directed to submit its distributorship agreement dated March 21, 2013 to the Stamp Duty Collector for assessment within 7 days of the judgement.
Heineken was at the same time restrained from terminating the distribution agreement dated May 21, 2013 between Maxam Company and Heineken East Africa relating to the distribution of Heineken Larger beer brand in Kenya contrary to the terms of agreement.
The company was also barred from appointing any other distributor for the distribution of the Heineken larger beer brand in Kenya contrary to the terms of agreement.
Maxam Limited was seeking orders restraining Heineken from terminating the distribution agreement dated May 21, 2013 between them relating to the distribution of the Heineken larger beer brand in Kenya.
It wanted the court to also bar Heineken from appointing any other distributor for the distribution of the Heineken larger beer brand in Kenya.
Through lawyer Phillip Nyachoti, Maxam Ltd wanted a declaration that the notice of Termination dated January 27, 2016 from Heineken International B.V relating to the distribution of Heineken larger beer brand in Kenya is unconstitutional.
He said his clients wanted a declaration that Heineken actions have infringed on their rights as protected by Article 19 of the Constitution.
Nyachoti added the distributor is seeking a declaration that the pricing models imposed on Maxam without their prior consultation which models were issued subsequent to the court order of August 28, 2017 are exploitative and oppressive.
It was also seeking special damages for loss of business as more special damages amounting to Sh1,799,978,868.
Maxam was seeking an order of the court directing the taking of accounts in respect of loss of profits occasioned to Maxam by the reason of reduced volumes of sales as well as reduced profit margins from September 2017 until the hearing and final determination of this suit
It had told the court that on January 27, 2016 Heineken International issued a termination notice informing it that that the agreement would be terminated on May 1, 2016 in accordance with the agreement.
Heineken had contended that Maxam moved to court prematurely and in breach of dispute resolution mechanism under distribution agreement.
It wanted the court to award it special damages for loss of profits.
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