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 and awarded damages to the respondent.
The case stemmed from an advertisement 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, the company was informed that its proposal had been successful, subject to meeting various requirements. On March 12, 2013, Uganda Breweries appointed Seroy as distributor for the Najjanankumbi area and said a distribution contract would follow once the respondent proved it had the capacity to deliver on the brewer’s targets.
According to the court record, Seroy said it acted on the brewer’s instructions by opening a Barclays Bank account to give Uganda Breweries direct access to withdrawals. It also said it invested heavily in land, architects, a larger warehouse, and bank loans after the brewer increased capacity demands.
The respondent further alleged that Uganda Breweries withdrew UGX 90,000,000 as security for empties and later withdrew another UGX 58,110,002 from its account, affecting its working capital and ability to meet the brewer’s requirements. Uganda Breweries, however, said 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 each month, 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. It argued that the relationship was terminated on November 20, 2013 because the respondent failed to meet those targets.
The dispute escalated after Uganda Breweries notified Seroy that the agency had been terminated and said an audit would be carried out to determine outstanding balances. Seroy said the brewer then communicated directly with its bankers, called the guarantee, and later took beer, crates and spirits worth UGX 175,056,107 during a partial reconciliation exercise between November 20 and December 3, 2013. It also claimed losses from robberies that were reported to the brewer but not addressed.
The High Court had earlier ruled in favour of Seroy, finding that the 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 there was an agency or distributorship contract and, if so, 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 and similar grounds 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 judge said.
On termination, the court said the High Court was right because the lack of notice deprived Seroy of a chance to wind down operations or reduce its 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 of the agency,” the judge ruled. The court also upheld the damages, saying 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 ultimately failed, while the cross-appeal succeeded. The Court of Appeal, in a judgment delivered by Justice Cheborion Barishaki on August 26, 2026, upheld the lower court’s decision and awarded Seroy additional reliefs, including nominal damages, general damages, special damages and interest, together with costs of the appeal and the lower court.
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