Dutch Company Challenges $13.1M Award to Kenyan Tycoon Ngugi Kiuna

Heineken is challenging a Kenyan court order to pay $13.1 million to Maxam Limited, a beverage distribution company owned by Kenyan businessman Ngugi Kiuna. The case originates from the termination of a distribution deal, which Kenyan authorities ruled illegal.

In May, Heineken was required to pay Ksh1.7 billion ($13.1 million) to Maxam. This comes after the Court of Appeal upheld a High Court verdict forcing Heineken to compensate Maxam for the wrongful termination of its Kenyan distribution contract.

Heineken East Africa Import Company Ltd., a Heineken affiliate, has filed an appeal with Kenya’s Supreme Court seeking to block the payment’s enforcement. Concerned that Maxam would claim the cash before the appeal was resolved, the company sought a bank guarantee from Equity Bank throughout the Court of Appeal proceedings.

In response to the previous verdict, Heineken has changed its legal strategy, employing Ngatia & Associates, led by top lawyer Fred Ngatia. Ngatia claims that due to Maxam’s minimal assets, the cash would be “irrecoverable,” emphasizing the importance of the Supreme Court’s immediate involvement to prevent the delivery of the $13.1-million bank guarantee.

The legal case revolves around a distribution deal signed on May 21, 2013, in which Heineken East Africa named Maxam as its exclusive distributor in Kenya. Furthermore, Heineken International B.V. has hired Maxam’s subsidiary, Modern Lane Ltd., to manage Heineken Lager distribution in Uganda.Ngugi Kiuna founded Maxam Limited in October 2006, and it played an important role in boosting Heineken’s market presence in Kenya. Maxam greatly helped to Heineken’s growth ambitions, which had been hard since the brand’s entry into the Kenyan market in 2004.

By 2011, the cooperation has expanded Heineken’s presence beyond Kenya’s boundaries to include the entire East African area. In 2012, distribution channels were built in Tanzania and Uganda, strengthening Heineken’s market position.

Aside from his participation in beverage distribution, Kiuna owns a significant stake in BOC Kenya, a Nairobi-based gas plant. In 2023, he boosted his investment in BOC Kenya by purchasing an additional 93,826 shares, bringing his ownership from 8.08 percent to 8.56 percent and strengthening his position within the company.

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