British American Tobacco Kenya has prevailed in an eight-year legal battle against a distributor in Tanzania, sparing it from paying a TZS3.2 billion ($1.4 million) court award, reports The East African.
The Tanzania Court of Appeal annulled a 2016 decision by a lower court awarding the money to Mohans Oysterbay Drinks as damages after it sued BAT Kenya over the termination of a cigarette supply contract.
Mohans claimed it had the exclusive rights to sell BAT products in Tanzania, which the cigarette maker disputed.
“In our view, there was no evidence to prove the existence of a distributorship agreement between the parties nor its breach,” said the appellant court.
Mohans started importing and supplying BAT cigarettes in Tanzania in 2000. However, in 2014, BAT awarded an exclusive distribution contract to another firm after a review of the cigarette maker’s business model.
Mohans challenged the decision in Tanzania’s high court, saying that BAT had unlawfully terminated a contract. BAT said there was no such contract.
In September 2016, the high court held that an implied contract between the parties existed in their 14 years of engagement and awarded Mohans damages for loss of goodwill and money invested in the business.
In overturning that ruling, the Court of Appeal ruled that the parties’ business relationship was “neither express nor implied agreement.”
Further, the judges said the high court had erred in its decision given that Mohans had rebuffed an attempt by BAT to formalize the distributorship agreement.