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Supreme CourtDismissedPetition E039 of 2024

Jovet (Kenya) Limited v Bavaria NV

Supreme Court of Kenya
16 May 2025
11,860 words in judgment
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AI-assisted case brief
·~47 min to read original · ~4 min brief

The bottom line

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Goodwill is property under Kenya's Constitution, but only if it can be identified and valued.

What this practically means

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The Supreme Court ruled that goodwill—the reputation and customer loyalty a business builds—can be protected as property under Article 40 of Kenya's Constitution. However, to claim this protection, you must show that the goodwill is clearly identifiable and has a measurable financial value. The Court also said that a sub-distributor cannot claim goodwill from a parent company unless their contract explicitly allows it. In this case, the sub-distributor lost because it had no direct agreement with the parent company and failed to prove its goodwill had a specific value.

Executive summary

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The Supreme Court dismissed an appeal by Jovet (Kenya) Limited against Swinkels Family Brewers NV (formerly Bavaria NV), arising from a dispute over the distribution of beverages in Kenya. The appellant claimed it had built goodwill for the respondent's products and that this goodwill constituted property protected under Article 40 of the Constitution. The High Court and Court of Appeal had both dismissed the appellant's case, finding no contractual relationship between the parties. The Supreme Court first affirmed its jurisdiction under Article 163(4)(a), holding that the appeal involved constitutional interpretation, particularly whether goodwill is property under Article 40. On the merits, the Court held that goodwill qualifies as property under Article 40 only when it is identifiable and has a measurable value. However, the Court found that the appellant could not claim goodwill from the respondent because there was no contractual relationship between them; the distribution agreement was between the respondent and Jovet (Tanzania) Limited, and the appellant was a sub-distributor of that Tanzanian entity. The Court distinguished the Heineken case, noting that an existing distribution agreement was present there. The Court also held that while the superior courts erred in not expressly addressing the constitutional issues, this did not violate the appellant's right to a fair hearing under Article 50, as the appellant's primary grievance was ultimately considered. The appeal was dismissed with no order as to costs, and the security for costs was directed to be refunded to the appellant.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether this court has jurisdiction to hear and determine the appeal?
  2. 2.Whether the superior court below were duty-bound to address all the issues raised by the appellant, and whether their failure to do so amounted to a violation of the appellant’s rights under article 50 of the Constitution.
  3. 3.Whether goodwill is intangible property and ought to be protected under article 40 of the Constitution.
  4. 4.Whether the appellant is entitled to the reliefs sought including costs.

Key legal issues

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01

Whether the Supreme Court has jurisdiction under Article 163(4)(a) to hear the appeal.

Holding

The Supreme Court has jurisdiction because the appeal involves the interpretation and application of the Constitution, specifically whether goodwill is property under Article 40 and whether the failure to address constitutional issues violated Article 50.

Reasoning

The Court applied the principles from Lawrence Nduttu and Gatirau Peter Munya, finding that the appellant consistently raised constitutional questions, including whether goodwill constitutes property under Article 40, from the High Court through the Court of Appeal. The Court held that these issues formed the basis of the appeal, thus satisfying the requirement that the appeal originates from a case where issues of contestation revolved around the interpretation or application of the Constitution.

02

Whether the superior courts were duty-bound to address all issues raised by the appellant, and whether their failure to do so violated Article 50.

Holding

The superior courts erred in not addressing the constitutional issue under Article 40, but this error did not amount to a violation of Article 50 because the appellant's primary grievance was ultimately considered and all parties were afforded ample opportunity to present their arguments.

Reasoning

The Court found that both the High Court and Court of Appeal failed to consider the constitutional issue of goodwill as property under Article 40, adopting an approach of constitutional avoidance without stating their reservations. However, the Court distinguished between the duty to address issues and the right to a fair hearing, concluding that the appellant was heard and its core claim was determined. The Court also noted that it had now examined the constitutional issue in detail and reached its own conclusion.

03

Whether goodwill is intangible property protected under Article 40 of the Constitution.

Holding

Goodwill qualifies as property under Article 40 only when it is identifiable and has a measurable value attributable to it.

Reasoning

The Court reviewed definitions of goodwill from various sources, including Lord Macnaghten's definition in Commissioner of Inland Revenue v Muller & Co, and Kenyan case law such as Bia Tosha and Ramadhan Mohammed Ali. It held that while goodwill is intangible and incidental to tangible property, it can be more valuable than physical assets. The Court concluded that goodwill is entitled to constitutional protection under Article 40, but only when it is identifiable and has a measurable value.

04

Whether the appellant is entitled to the reliefs sought, including a declaration that goodwill is property and compensation for its loss.

Holding

The appellant is not entitled to any relief because it failed to prove a contractual or constitutional basis for its claim against the respondent.

Reasoning

The Court found that there was no contractual relationship between the appellant and the respondent; the distribution agreement was between the respondent and Jovet (Tanzania) Limited. The appellant was a sub-distributor of Jovet (Tanzania) Limited, and the agreement explicitly made the distributor responsible for all legal and financial consequences of sub-distributors. The Court distinguished the Heineken case, noting that there was an existing distribution agreement there. The appellant failed to demonstrate how the respondent was culpable for its loss of goodwill, and the terms of the agreement were not shown to be unconscionable or in bad faith.

Legal principles established

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  • Goodwill is property under Article 40 only when it is identifiable and has a measurable value.
  • A sub-distributor cannot claim goodwill from a parent company unless the distribution agreement explicitly says so.
  • Courts should address every constitutional issue raised, but failing to do so does not automatically violate the right to a fair hearing.
  • Transferring a case from the Constitutional Division to the Commercial Division does not remove the court's power to decide constitutional issues.
  • The Supreme Court has jurisdiction to hear appeals involving interpretation of the Constitution, even if the lower courts did not fully address those issues.

Court orders

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  1. 1.The petition of appeal dated November 22, 2024 and filed on December 25, 2024 is hereby dismissed.
  2. 2.There shall be no orders as to costs.
  3. 3.We hereby direct that the sum of Kshs 6,000= deposited as security for costs upon lodging of this appeal be refunded to the appellant.

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Martha Karambu Koome
M. K. KoomeCJ
Currently serving
majority

Wrote the judgment

Philomena Mbete Mwilu
P. M. MwiluDCJ
Currently serving
majority
Smokin Charles Wanjala
S. C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
Isaac Lenaola
I. LenaolaSCJ
Currently serving
majority
On appeal from
Court of Appeal at Nairobi
Civil Appeal No 158 of 2019
Jurisdiction invoked
Article 163(4)(a) of the Constitution

Relief refused

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Setting aside of the Court of Appeal judgment and the High Court judgment

The appellant failed to demonstrate a violation of articles 10, 19, and 27 of the Constitution, and the issue of goodwill cannot arise in the present case.

Remittal of the matter to the High Court for a merit determination on the pleaded constitutional questions

The factual issues are not contested, and the court found it appropriate to determine the issues itself rather than remit.

Declaration that the appellant has exclusive distributorship of the respondent's products in Kenya

No contractual relationship existed between the appellant and the respondent.

Declaration that the respondent's terms of trade are arbitrary, unfair, unconscionable, discriminatory, and violate public policy

The terms of the Distribution Agreement were unambiguous, and the appellant was fully aware of them.

Damages

No breach of contract or constitutional violation was proved.

Costs

There shall be no orders as to costs.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

we hold that goodwill qualifies as property only when it is identifiable, whether independently or alongside other assets, and when a measurable value can be attributed to it. Accordingly, this form of goodwill is entitled to protection under Article 40 of the Constitution
p. 23 Goodwill as constitutional property
A sub- distributor cannot therefore claim goodwill from the parent company unless explicitly stated in the agreement
p. 25 Privity of contract and goodwill claims
it remains prudent for a court-especially at the trial level- to expressly consider and make a finding on each ground raised unless there is good reason not to do so and the reason ought to be given to the parties in any event
p. 17 Duty of court to address pleaded issues
the transfer of the dispute from the Constitutional and Human Rights Division to the Commercial and Admiralty Division did not divest the court of its jurisdiction to hear and determine the constitutional issues raised in the matter
p. 3 Jurisdiction of High Court divisions
The petition of appeal dated November 22, 2024 and filed on December 25, 2024 is hereby dismissed.
p. 27 Final order dismissing the appeal
There shall be no orders as to costs.
p. 27 Costs order

Key timeline

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2024-11-22
Petition of appeal lodged at the Supreme Court.
2024-12-25
Petition of appeal filed.
2025
Supreme Court dismisses the appeal and affirms lower court decisions.

Practical implications

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For lawyers

Prove goodwill's identity and value

When advising clients on constitutional claims for goodwill, ensure you gather evidence that the goodwill is separately identifiable from other assets and has a measurable financial value. Without this, Article 40 protection will not apply. Also, check distribution agreements carefully: sub-distributors cannot claim goodwill from a parent company unless the contract explicitly allows it.

For businesses

Review your distribution contracts

If you operate as a sub-distributor, your contract must clearly state any rights to claim goodwill from the parent company. Without such a clause, you have no legal basis to seek compensation for lost goodwill. For parent companies, this ruling limits liability to direct contractual partners only, so ensure your agreements define responsibilities for sub-distributors.

For individuals

Know your property rights

If you own a business, your goodwill—like customer loyalty and reputation—can be protected as property under Kenya's Constitution. But to enforce this right, you must be able to show exactly what that goodwill is and how much it is worth. Keep records of your business's reputation and financial value to support any future claims.

Frequently asked questions

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Is goodwill considered property under Kenya's Constitution?+

Yes, the Supreme Court ruled that goodwill can be property under Article 40 of Kenya's Constitution, but only if it is identifiable and has a measurable value. This means you must prove the goodwill exists separately and can be assigned a financial worth.

Can a sub-distributor in Kenya sue a parent company for lost goodwill?+

No, unless the distribution agreement explicitly allows it. The Supreme Court held that a sub-distributor cannot claim goodwill from a parent company because there is no direct contract between them. The claim must be based on the specific terms of the agreement.

What happens if a Kenyan court fails to address a constitutional issue in a case?+

The Supreme Court said courts should address every constitutional issue raised, but failing to do so does not automatically violate your right to a fair hearing under Article 50. You must show that you were not heard or that your core claim was ignored.

Does transferring a case to a different division of the High Court in Kenya affect its jurisdiction?+

No. The Supreme Court confirmed that transferring a case from the Constitutional and Human Rights Division to the Commercial and Admiralty Division does not remove the court's power to decide constitutional issues. The court retains jurisdiction over all matters raised.

Later judgments citing this (5)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Jovet (Kenya) Limited v Bavaria NV", Case Analysis (2025). Petition E039 of 2024. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2025/27/eng@2025-05-16

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.