- Heineken says it is broke and has no assets
- Maxam was awarded Sh1.7 billion as special damages for loss of business after its distribution agreement was terminated
The High Court has temporarily stopped a directive to Heineken East Africa Company to pay Sh1.7 billion to local distributor Maxam Limited in a distribution row.
Justice Wilfrida Okwani ruled that she had considered Heineken’s submission that they were broke.
The company had provided securities in court.
“I temporarily allow the stay of execution in the judgement for 30 days pending the appeal”, the judge ruled.
She added that she needed to balance the rights of both parties.
“It is not in doubt that the amount awarded may not be recovered if the appeal succeeds as the respondent is experiencing financial difficulties”, Okwani said.
However, lawyer Philip Nyachoti acting for Maxam said he would appeal the ruling.
In August, Heineken filed an application seeking stay orders pending their appeal. They stated 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 period, we pray that a stay be granted and we are ready to provide security," the company said.
Nyachoti had argued that Heineken had deliberately declined to obey the orders issued by Justice James Makau in July where he awarded Maxam Sh1,799,978,868 as special damages for loss of business after its distribution agreement was terminated.
The judge ruled that termination of the contract dated May 21, 2013 by Heineken East Africa and Heineken International B.V was unlawful, irregular, unprocedural and therefore null.
“A declaration is issued that the Kenyan distribution agreement between the plaintiff and the defendants is in full force as per the terms and conditions set therein,” the judge ruled.
Maxam sued the two international beer companies for terminating their agreement without reason.
Maxam contended the agreement indicated that in case of termination before end of term, they would discuss and agree to a fair and reasonable monetary amount for compensation.
It argued that it stood to lose over Sh1.7 billion of business if the agreement was allowed to end without compensation.
The firm accused the international beer companies of blatantly acquiring its key customers as sub-distributors contrary to an order stopping the same.
The two international companies in response argued that the decision to cancel the distributorship was because they intended to attract more suppliers to expand their business.