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Court defers execution of Sh1.7b Heineken penalty

By Bernice Mbugua
Friday, November 15th, 2019

The High court has suspended the execution of a judgement ordering Heineken East Africa Company to pay Sh1.7 billion to local distributor, Maxam Ltd in a distribution row.

Lady Justice Wilfrida Okwany issued a stay of execution for 30 days.

 The judge said she had considered Heineken’s attribution of their financial position that they were broke and that she needed to balance the rights of both parties.

Amount awarded

“It is not in doubt that the amount awarded may not be recovered if the appeal succeeds as the respondent is experiencing financial difficulties,” she ruled.

Lawyer Philip Nyachoti acting for Maxam said he would appeal against the stay ruling.

In August, Heineken filed an application to stop the execution of the said judgement as they appeal it, arguing that the company had no assets. “We have filed a notice of appeal and we shall be prosecuting it expeditiously, we ask the court to come at the earliest day to have the matter heard. 

“During that, we pray that a stay be granted and we are ready to provide security,” Heineken had argued in court.

However, Nyachoti, accused  Heineken of deliberately refusing to obey the orders issued by Mr Justice James Makau in July.

Obey orders

“This is impunity by the company. They deliberately decided not to obey the orders issued on July 29. 

“Defendants should comply with the orders before the stay is issued”, Nyachoti had argued.

Justice Makau in July awarded Maxam Sh1,799,978,868 as special damages for loss of business after Heineken East Africa Company Ltd terminated their distribution agreement.

The judge said termination of the distribution agreement dated May 21, 2013 by Heineken East Africa Company Ltd and Heineken International B.V was unlawful, irregular, unprocedural and therefore null and void.

Giving reasons

Maxam Ltd sued the two international beer companies for terminating their agreement without giving any reasons whatsoever.

The beer distributor contended that the agreement had indicated that in case of termination before the end term, then they would discuss and agree fair and reasonable monetary amount for compensation.

The firm accused the international beer companies of blatantly going ahead and acquiring its key customers as sub-distributors which was contrary to an order stopping the same.

The two international companies in response argued that the decision to cancel the distributorship was that they intended to attract more suppliers to expand business.