British American Tobacco Kenya (BAT Kenya) has won an appeal over a Sh56 million debt owed by distributor M’Big Limited after the Court of Appeal upheld an earlier judgment requiring the company to pay the admitted amount.
In a decision delivered on October 16, 2026, the appellate court dismissed M’Big’s appeal against a High Court ruling that entered judgment on admission in favour of the tobacco manufacturer. The dispute centred on whether the outstanding amount should be paid through the court process or referred to arbitration under the companies’ distribution agreement.
The two companies entered into a five-year cigarette distribution agreement that took effect on June 1, 2015. Under the contract, M’Big was appointed to market, resell and distribute BAT Kenya products.
The disagreement arose after an account reconciliation established an outstanding balance of Sh56,184,300. According to the court records summarised in the judgment, M’Big acknowledged the debt in correspondence in February 2022 and proposed a payment plan, saying it intended to sell a parcel of land to settle the amount.
BAT Kenya subsequently sought judgment for the admitted debt. The High Court granted the application in September 2023 and rejected M’Big’s request to have the dispute referred to arbitration.
M’Big challenged the ruling, arguing that the distribution agreement contained an arbitration clause and that issues surrounding the accounts and alleged misrepresentation required further examination. The distributor also claimed that BAT Kenya had breached the agreement and that the manufacturer owed it money following alleged overpayments.
The Court of Appeal found that the admitted debt was not displaced by the arguments raised in the appeal. It held that an arbitration clause could not be used to delay enforcement where liability had been clearly acknowledged and no genuine dispute remained over the admitted amount.
The judges also upheld the lower court’s reliance on a variation agreement that changed the dispute-resolution terms and conferred jurisdiction on Kenyan courts.
The ruling means the earlier judgment for Sh56 million remains in place, with the appeal dismissed with costs to BAT Kenya. The decision does not mean every aspect of a potential counterclaim was necessarily resolved by the judgment on admission; the court’s decision focused on the debt that had been acknowledged.
The case highlights the importance of clear account reconciliation, contractual obligations and written admissions in commercial disputes. For businesses operating under distribution agreements, it also shows that an arbitration clause may not prevent court enforcement of a debt that has been unequivocally admitted.
