KBL dismisses distributor’s take on Court of Appeal order

Beer maker Kenya Breweries Limited (KBL) said on Friday that the Court of Appeal directive that the parties maintain the status quo as their case contesting conservatory orders issued by the High Court is heard and determined had effectively frozen the contractual relationship with its estranged distributor Bia Tosha.

KBL said its understanding of the court order was that its dealings with the distributor — whose contract expired on August 2 — was no longer tenable.

“There could have been no other interpretation because by the time the order to maintain the status quo was issued on August 11, there was no contractual relationship between us and the distributor,” KBL said.

When the matter came for hearing before judges Martha Koome, Festus Azangalala and Fatuma Sichale last Thursday, the parties agreed to focus on speedy hearing of the appeal to solve the dispute.

“In the interim as the parties have been trading and have a special relationship we order that the status quo obtaining as at today be maintained pending the hearing and determination of the appeal,” the judges ordered.

The brewer had filed an application seeking to have the Court of Appeal quash High Court orders that it continues dealing with the distributor, arguing that the directive had put it at the risk of being sued by third parties.

The High Court had issued an order barring KBL from appointing other suppliers to service areas where Bia Tosha has been operating.

Bia Tosha claimed that it had paid KBL more than Sh38 million in goodwill for exclusive control of the 22 routes. The KBL has, however, denied the claims, arguing that the brewer only appointed other distributors to the 22 routes in dispute after evaluations revealed that Bia Tosha was unable to adequately service the areas.

The judges ordered KBL and its subsidiary United Distillers Vintners to file and serve written submissions of its appeal within 14 days, noting that “fast-tracking of the appeal would resolve the dispute”.

Written submissions

Bia Tosha and Cogno Ventures — one of the suppliers appointed to some of the former’s routes — are also expected to file their response 14 days after they are served.

KBL maintains that Bia Tosha’s distribution agreements with the brewer and its subsidiary were not exclusive. They say the same expired on August 2 and have since not been renewed.

The appeal will be heard on a priority basis once the parties have filed their written submissions.