• Maxam sued two international beer companies for terminating agreement without reason.
• Judge agrees that ending the contract was unlawful.
Image: FILE
Two international beer makers have been ordered by the High Court to pay Maxam Limited, a Kenyan distributor, Sh1.7 billion compensation.
Justice James Makau 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 Company Limited and Heineken International B.V was unlawful, irregular, unprocedural and therefore null and void.
“A declaration is issued that the Kenyan distribution agreement between the plaintiff and the defendants is in full force and effect as per the terms and conditions set therein,” the judge ruled.
Maxam sued the two international beer companies for terminating their agreement without reason.
Through lawyer Philip Nyachoti, Maxam contended the agreement indicated that in case of termination before the end term, then they would discuss and agree fair and reasonable monetary amount for compensation.
It contended 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 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 because they intended to attract more suppliers to expand business.
The beer manufacturers claimed the distributor was not entitled to any explanation and that failure by the local firm to register and have the agreement stamped was contrary to the provisions of Stamp Duty Act.