KBL, UDV barred from ending beer distributors contracts
East African Breweries Limited (EABL) CEO Jane Karuku during the release of the brewer’s half-year to December on January 27, 2023. Looking in is the EABL chairman Martin Oduor-Otieno. PHOTO | DIANA NGILA | NMG
Two firms have sued beer makers Kenya Breweries Ltd and UDV (Kenya) over fears that the duo might terminate their distributorship agreements.
Ngong Matonyok Wholesalers Ltd and Manara Ltd claim that KBL and UDV (Kenya) Ltd wrote to them last week stating an imminent plan to cancel the distributorship contracts, and grant them to a third party.
Last week the Supreme Court ruled in favour of Bia Tosha, a former distributor who sued the brewer for terminating its agreement.
Some of the routes that were repossessed from Bia Tosha in 2016 were offered exclusively to Ngong Matonyok Wholesalers Ltd and Manara Ltd.
Justice Alfred Mabeya certified the case as urgent and directed the traders to serve the court papers to the two beer makers.
The court also suspended any plans by KBL and UDV (K) Ltd of terminating the contracts, pending the determination of the case.
“An injunction is issued restraining the defendants and their respective servants, agents… from terminating, suspending or in any way whatsoever interfering with the applicants’ rights to distribute the defendants’ products in the regions covered,” said the judge.
The two companies said they have been distributing KBLs’ products, under various agreements, for 55 years and seven years, respectively.
Ngong Matonyok Wholesalers Ltd says it has exclusive rights to distribute the products in Kiserian, Ngong, Wangige, Magadi and Dagoretti regions.
Manara Ltd, on its part, has been a distributor of the products in Kitengela, Kajiado, Athi River, Machakos, Bissil, Namanga and Maili Tisa.
They told the court that they have signed multibillion shilling investments and entered into contracts with third parties, to enable them to carry out the job.
They said cancelling the agreements would trigger breaches of contracts between them and numerous third parties including contracts relating to leases, hire purchases and purchase of distributorship trucks and other motor vehicles.
The court also heard that they have leased warehouses and storage facilities and taken loans which are now under threat if the contract is cancelled.
They also fear terminating contracts with employees, a move that might expose them to lawsuits.
Other than stopping KBL from terminating the contracts, they want the court to order KBL to indemnify and keep them fully indemnified for any losses, including loss of profits, which may arise from granting exclusive distributorship rights to third parties over the territories they cover.
