Kenya Breweries Limited & another v Bia Tosha Limited & 5 others [2020] KECA 522 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that commercial disputes wrapped in constitutional language must still go to arbitration if the contract says so.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction of the High Court in the face of an arbitration agreement
The learned Judge misdirected himself in concluding that the constitutional issues raised were not suitable for arbitration; disputes predicated on agreements containing arbitration clauses should first go to arbitration
The constitutional breaches complained of arose from the distributorship agreements, and the alleged infringement of constitutional rights cannot be divorced from the written agreements in which they are embedded. The Judge also failed to give due consideration to Article 159(2)(c) of the Constitution mandating courts to promote alternative dispute resolution, and did not heed its dictates, thereby wrongly assuming jurisdiction.
Exercise of discretion in granting conservatory orders
The Judge failed to take into account the respective interests of the parties, the availability of damages/restitution as an alternative remedy, and the public interest element; the order was final in effect and conferred rights not established at trial
The conservatory order granted the 1st respondent exclusive control over disputed territories where other distributors had paid goodwill, potentially locking them out of the market contrary to Section 21(3) of the Competition Act. Serious triable issues existed on exclusivity and refundability of goodwill which only a trial could resolve, and the Judge ignored the public interest framework in Gatirau Peter Munya vs Dickson Mwenda Kithinji.
Whether goodwill is property under Article 40
Goodwill is a species of personal property which can be bought, sold, disposed of by will and charged, but the claimant must vindicate exclusive rights by proving ownership and absence of conditions
The Court agreed with the learned Judge that goodwill is private property if proved there were no conditions attached, relying on Inland Revenue Commissioners vs Muller & Co's Margarine Ltd. However, whether the goodwill here was refundable and whether the routes were exclusive were seriously contested issues requiring evidence, so no conclusive determination could be made at the interlocutory stage.
Standard for appellate interference with discretion
An appellate court interferes with a discretionary decision only where the judge misdirected himself in law, misapprehended the facts, took into account or failed to take into account relevant matters, or was plainly wrong
The Court adopted the classic principles in United India Insurance Co. Ltd vs East African Underwriters (Kenya) Ltd per Madan JA. Finding that the Judge misdirected himself on jurisdiction and failed to weigh the parties' respective interests and the public interest, the Court was entitled to interfere and set aside the conservatory order.
Legal principles established
#- Where parties have agreed on arbitration as the mode of dispute resolution and constitutional claims are embedded in the contract, that avenue ought to be exhausted first and the court should stay proceedings under Section 6(1) of the Arbitration Act
- A party claiming goodwill as property must discharge the burden of proving ownership and that no conditions were attached to it
- Conservatory orders in constitutional petitions must be granted bearing in mind the public interest, constitutional values and the respective interests of all affected parties
- A court cannot rewrite a contract between parties by imposing terms pending determination of disputed issues
Court orders
#- 1.The conservatory order made on 29th June 2016 set aside and substituted with an order staying the proceedings before the High Court pending the dispute being referred to arbitration
- 2.The dispute between the 1st appellant and 1st respondent referred to arbitration in accordance with the respective parties' distributorship agreements
- 3.Costs to abide the outcome of the dispute
- On appeal from
- High Court of Kenya at Nairobi
- H.C. Pet. No. 249 of 2016
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over the High Court ruling (the 1st respondent's attempt to invoke Article 163(4)(a) was rejected by the Supreme Court); interim relief had earlier been sought under Rule 5(2)(b) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (5)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- UDV (Kenya) Limited v Bia Tosha Distributors Limited & 3 others (Civil Application E165 of 2025) [2025] KECA 1862 (KLR)[2025] KECA 1862 (KLR)7 Nov 2025applied
- Nanji & 2 others v Exobi (Finance House) Limited (Civil Appeal E434 of 2020) [2025] KECA 1119 (KLR)[2025] KECA 1119 (KLR)20 Jun 2025followed
- Softclans Technologies Limited v Nextgen Mall Management Company Limited & 2 others (Enviromental and Land Originating Summons E004 of 2024) [2024] KEELC 5549 (KLR)[2024] KEELC 5549 (KLR)18 Jul 2024
- Muchura v Safari Collection Limited (Petition E216 of 2022) [2023] KEELRC 1476 (KLR)[2023] KEELRC 1476 (KLR)8 Jun 2023
- Abdiaziz Sheikh Maad & 3 others v Governor, Mandera County & 2 others [2021] KEELRC 1680 (KLR)[2021] KEELRC 1680 (KLR)27 May 2021
Cite this brief
#Cite this brief
Caselaw, "Kenya Breweries Limited & another v Bia Tosha Limited & 5 others [2020] KECA 522 (KLR)", Case Analysis (2020). Civil Appeal No. 163 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/522/eng@2020-07-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.