Counties

8 beverage firms suffer blow in Sh90m plastic garbage suit

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Summary

  • Eight beverage firms among them Coca Cola affiliated companies have lost a bid to reverse a decision requiring them to pay more than Sh91 million to a plastic recycling firm for wastes collected about a decade ago.
  • Justice Francis Tuiyott dismissed the appeal by six Coca Cola affiliated firms as well as Safepak Ltd and the Highlands Mineral Water Company saying there were no inconsistencies as alleged in the tribunal ruling made in April 2016.

Eight beverage firms among them Coca Cola affiliated companies have lost a bid to reverse a decision requiring them to pay more than Sh91 million to a plastic recycling firm for wastes collected about a decade ago.

Justice Francis Tuiyott dismissed the appeal by six Coca Cola affiliated firms as well as Safepak Ltd and the Highlands Mineral Water Company saying there were no inconsistencies as alleged in the tribunal ruling made in April 2016 directing the firms to pay GreenPlast International Ltd the amount.

“This Court is unable to say that those inconsistencies, if any, demonstrate bias on the part of the Tribunal. The Tribunal gave its reasons for reaching the conclusions it did,” the judge said.

In the deal signed in 2011, Coca Cola, along with two companies involved in the beverage industry — Safepak and the Highlands Mineral Water Co. — formed a new company called PET Recycling Co. of Kenya to manage the PET plastics recycling project.

The goal of the project was to recycle 70 percent of the plastics containers sold by 2015. The main objective was to promote better waste management and recycling of PC-PET products.

Before the incorporation of that special vehicle company, the Coca Cola and Greenplast International agreed to work together in collecting and recycling of plastic waste.

In June 2011, just two months after the signing of the MoU, a dispute arose over the price payable to Greenplast for PET wastes collected as well as the actual quantity collected and exported by Greenplast International.

Greenplast took the position that it was a fixed sum of $ 350 (about Sh38,378 at the current exchange rates) per metric tonne irrespective of the international market price of PET waste.

The matter was referred to a tribunal and after hearing the case, A.B. Shah and Tom Macharia directed Coca Cola to pay US $898,042 (Sh98.4 million) minus $ 65,000 (Sh7.1 million) which had already been paid.

The tribunal also directed that the amount would attract interest of 14 per cent per annum since April 2012.



until payment in full.

But Coca Cola firms moved to the High Court arguing that the award was erroneous, had inconsistencies and the Tribunal dealt on issues that were not contained in the MOU.

The firms faulted the tribunal saying while it found that Greenplast was entitled to payment for PET Flakes collected, processed and exported, it proceeded to order payment for plastic scraps amounting to US $ 391,582.30, which was not contemplated in the agreement.

The firms also argued that they were condemned to pay VAT of Sh15.7 million, yet it was not part of the claim, thus shifting the tax burden to the firms.

But the Judge said since Greenplast made a claim on the basis of the contracted rates, an auxiliary relief would be for payment of VAT that would accompany the principal sum payable.

“The claim for VAT would have to be in the contemplation of the parties and the award would not be commercially efficacious if the element of statutory Tax that was agreed would be added to the rates was excluded,” the Judge said.