Uganda Breweries Limited has lost an appeal in a long-running commercial dispute with Seroy Airport Hotel Ltd after the Court of Appeal upheld findings that the brewer unlawfully terminated a distributorship arrangement without notice.
The case stemmed from an advert Uganda Breweries placed in the New Vision on January 14, 2013, calling for additional beer distributors in several areas, including Najjanankumbi.
Seroy Airport Hotel responded and on March 6, 2013 was informed that its proposal had been successful, subject to meeting various requirements. On March 12, 2013, Uganda Breweries appointed Seroy as distributor for Najjanankumbi and said a formal distribution contract would follow once the company proved it could meet the targets.
According to court records, Seroy acted on the brewer’s instructions by opening a Barclays Bank account to give Uganda Breweries direct access to withdrawals. The company said it invested heavily in land, architects, a larger warehouse and bank loans after the brewer increased capacity demands.
The distributor further alleged that Uganda Breweries withdrew UGX 90 million as security for empties and later withdrew another UGX 58.1 million from its account, affecting its working capital.
Uganda Breweries, however, argued that the arrangement was limited and that no formal distribution contract was ever executed. It told court that Seroy was expected to distribute 30,000 crates of beer and 5,000 cartons of spirits monthly, maintain stock levels of 5,000 crates of beer and 1,000 cartons of spirits, and have a warehouse large enough to accommodate prime mover trucks loading 1,300 crates.
The brewer said it terminated the relationship on November 20, 2013 because Seroy failed to meet those targets.
The dispute escalated after Uganda Breweries notified Seroy that the agency had been terminated and that an audit would be carried out to determine outstanding balances. Seroy said the brewer then contacted its bankers directly, called the guarantee, and took beer, crates and spirits worth UGX 175.05 million during a partial reconciliation exercise between November 20 and December 3, 2013.
The High Court had earlier ruled in favour of Seroy, finding that termination without notice was unlawful and awarding special and general damages, interest and costs.
Dissatisfied, Uganda Breweries appealed, but the Court of Appeal held that the key issue was whether a distributorship contract existed and whether it was unlawfully terminated.
“In my view and as rightly pointed out by the learned trial Judge, the determination of this ground of appeal is primarily rooted in the question as to whether there was an agency or distributorship contract between the parties and if yes, whether it was unlawfully terminated,” the court observed.
On termination, the court agreed with the High Court that lack of notice deprived Seroy of a chance to wind down operations or mitigate losses.
“The learned Trial Judge was right to find that the termination was unlawful, as the absence of notice deprived the respondent of the opportunity to wind down operations or mitigate damages. This Court therefore finds no reason to interfere with the findings of the trial Judge on the issue of termination,” the judgment reads.
The court also upheld the damages, ruling that Uganda Breweries remained liable for the breach.
“Consequently, this Court upholds the finding of the trial Judge that the appellant was liable for the breach and the damages flowing therefrom. The award of general damages of UGX 345,000,000 stands as decreed by the lower court and I find no reason to interfere with the same,” the court held.
The appeal failed while the cross-appeal succeeded. In a judgment delivered by Justice Cheborion Barishaki on August 26, 2026, the Court of Appeal upheld the lower court’s decision and awarded Seroy additional reliefs, including nominal damages, special damages and interest, plus costs of both the appeal and the lower
