The Court of Appeal has dismissed an appeal by Jovet (Kenya) Limited in a long-running legal dispute with a Dutch brewer, Bavaria NV, over a terminated distribution agreement.
The decision upholds a previous ruling issued by the Supreme Court, which ruled that there was no valid contractual relationship between the two companies.
In making its decision, the Court of Appeal said that the High Court judge correctly found that Govit (Kenya) had a special arrangement with Govit (Tanzania) Limited to distribute Bavaria products in Kenya on behalf of the Tanzanian company, and that there was no direct contract between Govit ( Kenya) and Bavaria NV, which means that no agreement can be violated.
“It was therefore the position that at no time at all did the respondent appoint the appellant as a distributor of its products or all of them; Justices Gatembo Kairu, Sankali Uli Kantai and Ali Aroni said in their judgment of October 11, 2024: ‘The record shows that the appellant had a distribution relationship With its major shareholder, Govit (Tanzania) Limited.”
Jovet (Kenya) originally petitioned the High Court, claiming that Bavaria NV had unlawfully terminated its exclusive distribution agreement, under which Jovet was responsible for marketing Bavaria products in Kenya.
Although there was no written contract, the distribution arrangement was established through behavior and mutual understanding, Govett said. The company said it has significantly expanded Bavaria’s market presence in Kenya, investing heavily in warehouses, delivery vehicles and other infrastructure.
The dispute arose when Bavaria NV terminated its dealings with Jovet (Kenya) through a letter addressed to Jovet’s Tanzanian counterpart, which was the official party to the 2011 distribution agreement with Bavaria.
Govett (Kenya) argued that the termination was invalid, asserting that it had acted independently and was entitled to compensation for goodwill and damages amounting to Sh1 billion (€7.3 million).
Bavaria NV responded in its defense that Jovet (Kenya) was not a party to the 2011 distribution agreement. According to Bavaria, the contract was exclusively with Jovet (Tanzania) Limited, which was permitted to operate in both Kenya and Tanzania. Bavaria said that Govit (Kenya) acted as a sub-distributor under an internal arrangement with Govit (Tanzania) and not as an independent agent directly linked to Bavaria.
Bavaria also argued that the dispute was commercial rather than constitutional, and that Govett’s claims for damages, including compensation for good faith, were unjustified. Furthermore, the brewery said that the governing law of the agreement is Dutch law, and that disputes are subject to arbitration in the Netherlands.
The Court of Appeal ruled that the only valid agreement was between Bavaria and Govett (Tanzania) Limited, which expired at the end of 2015. The judges confirmed that by referring the case from the Constitutional and Human Rights Division to the Commercial and Admiralty Division, the High Court indicated that the matter was a commercial dispute and not Constitutionally.