Court of Ap­peal de­clines to stop EABL law­suit at the lower court

The Star (Kenya) - - News Business - PETER NG’ETICH @pet­kich

The Court of Ap­peal has de­clined to give or­ders to a sub­sidiary of East Africa Brew­eries, stop­ping the High Court from pro­ceed­ing with any suits on beer dis­trib­u­tor­ship.

The beer maker through United Dis­tillers Vint­ners wanted all the pro­ceed­ings on the dis­trib­u­tor­ship stopped un­til the ap­pel­lant judges make their rul­ing.

Ap­pel­lant judges Hellen Ok­wengu, GBM Kar­iuki and Fa­tuma Sichale said judge Louis Onguto should ex­er­cise his free­dom as he han­dles the case.

Bia Tosha Ltd in June this year moved to the High Court seek­ing to pre­vent EABL from ap­point­ing a new distrib­u­tor.

The com­pany ar­gued that it paid the gi­ant beer maker Sh38 mil­lion in good­will in the last 10 years for ex­clu­sive dis­tri­bu­tion rights in Na­manga, Bis­sil, Ka­ji­ado, Kiten­gela, Athi River, In­dus­trial Area, South B, Nairobi West and Keny­atta mar­ket.

Other routes are Lang’ata, Ron­gai, Kis­e­rian, Ma­gadi, Up­per Hill, Ngong Road, Hurling­ham, Kawang­ware, Satel­lite and Dagoretti.

Bia Tosha was founded by for­mer EABL em­ployee, Peter Bu­rugu, and is one of the brewer’s largest dis­trib­u­tors along­side Rwathia, Kamahuha, Veew and Ishano.

The com­pany ar­gues that the brewer has re­sorted to in­tim­i­da­tion and scare tac­tics meant to dis­suade lo­cal dis­trib­u­tors from sign­ing dis­trib­u­tor­ship agree­ments with EABL ri­vals.

In June this year, Bia Tosha signed an agree­ment with Ke­roche Brew­eries, a ri­val of EABL, to dis­trib­ute some of its prod­ucts. Bia Tosha di­rec­tor Ann-Marie Bu­rugu claims, in a signed af­fi­davit, that Di­a­geo has been in­tim­i­dat­ing them and other sup­pli­ers into ex­clu­sively dis­tribut­ing its prod­ucts.

“The firm has waged a war against us af­ter we sought to work with com­pet­ing al­co­hol man­u­fac­tur­ers,” she said.

Bu­rugu said the scheme has been meant to co­erce them into shun­ning ri­val man­u­fac­tur­ers as part of a scheme to de­feat anti-mo­nop­oly laws en­acted in 2011. She said some of the threat­en­ing mes­sages were racist in na­ture.

Rul­ing in favour of the distrib­u­tor, Onguto is­sued a con­ser­va­tory say­ing the com­pany has ex­clu­sive ter­ri­tory rights as per an agree­ment signed in Fe­bru­ary 2006.

But Di­a­geo, which has some con­trol­ling stakes in EABL, op­posed the Sh38 mil­lion pay­ment for the mo­nop­oly of the routes as good­will on eth­i­cal grounds.

UDV Kenya is owned by Di­a­geo PLC which holds 54 per cent shares, while EABL has 46 per cent.

Is­su­ing the or­ders yes­ter­day, Ok­wengu said they don’t want to look as if they are in­ter­fer­ing with the in­de­pen­dence of the lower court.

“Let the High Court take re­spon­si­bil­ity of its own pro­ceed­ings,” the judge said.

The rul­ing will be de­liv­ered on Novem­ber 9.

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