Kenya Breweries Limited (KBL) has suffered another blow after the High Court gave the brewer the freedom to terminate distributorship deals for 22 routes claimed by a rival firm.
High Court judge Josephine Mong’are yesterday dismissed a petition by two traders—Ngong Matonyok Wholesalers Limited and Manara Limited—that had sought to block KBL and UDV Ltd from terminating their distributorship contracts.
The two distributors moved to court last year seeking to block the beer manufacturer from terminating its contracts for beer distribution in the 22 routes exclusively protected for Bia Tosha, that KBL has sought to block from the routes.
KBL removed Bia Tosha from the routes in 2016 and offered the distributorship deals to their firms including Ngong Matonyok Wholesalers Limited and Manara, sparking a court fight between the brewer and the ousted firm.
In court, KBL has maintained that it would be difficult to reinstate Bia Tosha in the route, arguing that it has inked deals with other firms.
Justice Mong’are reckoned that an earlier court order had blocked KBL from terminating the Bia Tosha distributorship deal pending the determination of a dispute between the brewer and the distributor.
“The court cannot therefore injunct the defendants (KBL and UDV) from interfering with the Agreements in the presence of the conservatory orders preserving the exclusivity of Bia Tosha’s routes,” the judge added.
Justice Mong’are also lifted an injunction issued last year blocking KBL and UDV from terminating the contracts with Ngong Matonyok Wholesalers Limited and Manara Limited.
“In summary, I find and hold that the Plaintiffs (distributors) have failed to demonstrate a prima facie case with a probability of success, and the odds are stacked against them from obtaining injunctive orders,” the judge said.
The judge added that following a recent Supreme Court decision, it was improper for the KBL and UDV to enter into agreements with the two distributors over the same routes that had been exclusively protected in favour of Bia Tosha.
“The court cannot therefore injunct the Defendants (KBL and UDV) from interfering with the Agreements in the presence of the conservatory orders preserving the exclusivity of Bia Tosha’s routes,” Justice Mong’are said.
The Supreme Court ruled that terminating the Bia Tosha partnership was in contempt of court.
Ngong Matonyok said he had been a distributor of the beer makers for 55 years while Manara Ltd had been a distributor for seven years and that they have signed multibillion investments and entered into contracts with third parties, to enable them carry out the job.
He said his firm 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.
KBL did not dispute the agreements between itself and the two firms.
However, KBL stated that Bia Tosha, also a distributor of its products, moved to court in 2006 claiming certain exclusive distributorship rights over specific territories.
The beer maker said the High Court issued conservatory orders preserving Bia Tosha’s territory which includes Namanga, Bissil, Kajiado, Kitengela, Athi River, Industrial Area, South B, Nairobi West, Kenyatta, Langata, Rongai, Kiserian, Magadi, Upperhill, Ngong road, Hurlingham, Kawangware, Satellite, Dagoretti, UDV A, UDV B and UDV C.
KBL said the two firms as well as Bia Tosha hold documents that allow them to effectively operate within overlapping territories.
Bia Tosha argued that the agreements between the two firms and KBL and UDV were entered into in defiance of existing orders.
The distributor submitted that the court cannot issue an injunction in respect of a decision of the Supreme Court and as such, any interim orders issued last year, ought to be lifted and the judgment of the Supreme Court honoured in its entirety.
The judge said the conservatory orders were never varied from the time they were issued in 2016 up to the time of the Supreme Court’s judgment in February 2023 and there is no indication that the said orders have ever been set aside.
