The High Court in Nairobi has ordered Total Kenya Limited to pay more than Sh139 million to its former distributor, Argwings Twin Services, for breach of contract, fuel under delivery, and system manipulation losses.
Justice Alfred Mabeya ruled that Argwings Twin Services had sufficiently proved its case against the oil marketing company, while Total Kenya’s counterclaim failed due to lack of evidence.
“Accordingly, I find that Njane t/a Argwings Twin Service Station and Twin Buffalos Safaris Limited have proved their case on liability to the required standard,” said Justice Mabeya.
Court Finds Total Kenya Liable for Breach
The court held that Total Kenya breached its contractual obligations under a distribution agreement signed with Argwings Twin Service Station, which operated as a licensed fuel distributor at Total’s Hurlingham station in Nairobi.
The agreement, signed in 2008, granted Argwings Twin Services the right to distribute petroleum products — including motor fuels, kerosene, lubricants, greases, and LPG gas — exclusively from Total.
Under the deal, Argwings was required to:
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Maintain a working capital of Sh12.5 million.
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Provide a bank guarantee, which was later secured by Co-operative Bank.
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Pay monthly royalties of Sh950,000 in advance for the use of the station and Total’s trademarks.
The distributor was also expected to maintain minimum monthly stock levels, including 250,000 litres of petrol and 90,000 litres of diesel.
Evidence of Manipulation and Underdelivery
Argwings accused Total Kenya of manipulating its fuel supply system, resulting in product shortages and unaccounted losses, which led to substantial financial harm.
Court documents indicated that Total recalled a bank guarantee and paid itself in full, prompting Argwings to sue for recovery of losses and breach of contract.
Justice Mabeya dismissed Total’s counterclaim, saying the company had failed to provide evidence of wrongdoing on the part of its former distributor.
“It is not in dispute that Total recalled the guarantee and paid itself in full. That is why the suit against the Co-operative Bank was compromised,” ruled the judge.
Background of the Dispute
The business relationship between the two firms began on February 1, 2008, when Argwings commenced operations as Total’s appointed distributor.
The company operated under Total’s trade name and trademarks, managing additional facilities such as a tyre center, car wash, garage, and convenience store at the Hurlingham outlet.
The court noted that the dispute escalated after Total allegedly supplied less fuel than invoiced and tampered with the station’s automated systems, leading to mounting losses for Argwings Twin Services.
Court Decision and Impact
In his ruling, Justice Mabeya found Total Kenya fully liable and directed the company to compensate Argwings Twin Services a total of Sh139 million, covering losses and breach of contract.
The court also affirmed that the counterclaim filed by Total Kenya was baseless, emphasizing that the evidence presented overwhelmingly supported the distributor’s case.
The decision marks one of the largest court-ordered compensations against an oil marketing company in recent years, highlighting the growing scrutiny of corporate contract enforcement and dealer protection in Kenya’s petroleum sector.