Agribusiness firm ordered to pay sh600m for unpaid drug supplies

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The Commercial Court has ordered MTK Uganda Limited, a private veterinary company in Uganda, to pay Ceva Sante Animale $175,018.85, equivalent to about sh600 million.

Justice Stephen Mubiru, on May 26, 2026, also ordered the company to pay interest at the contractual rate of 10.11% per annum on the outstanding amount, calculated from August 27, 2021, until full payment is made.

“An award of interest recognises that there exists a loss of return opportunity between the time of breach and the time of judgment. Secondly, borrowers that retain and use the money owed to the lender during the resolution of the dispute enjoy an unfair benefit and therefore should be held liable for at least the reasonable cost they would have incurred in borrowing the amount in question for the relevant period," said Justice Mubiru.

In November 2018, Ceva Sante Animale, a supplier of veterinary drugs, entered into a verbal agreement with MTK Uganda Limited to supply veterinary drugs and related products on credit. Under the arrangement, MTK Uganda Limited would place orders from time to time, while Ceva Sante Animale issued invoices for each delivery, payable by the dates indicated on them.

The management of Ceva Sante Animale argued that it supplied the products as agreed, but the defendant only made partial payments despite receiving the goods. Court documents indicate that the last payment was made on September 13, 2019, leaving an outstanding balance of US$175,018.85 (about sh600 million), which remains unpaid to date.

In its written submission, MTK Uganda Limited stated that it had operated a distributorship arrangement in Uganda with the plaintiff for veterinary products since 2008, but the agreement expired in 2014. Although the parties attempted to renew the contract, they reportedly failed to sign a draft agreement prepared in May 2017.

MTK Uganda Limited maintained that, in the absence of a formal written agreement, the two parties continued conducting business on an ad hoc and order-by-order basis. It argued that the proforma invoices and invoices issued by Ceva Sante Animale between November 14, 2018, and April 23, 2019, were generated under that arrangement.

MTK Uganda Limited further claimed that the arrangement was based on a manufacturer’s authorisation granted to it by the Government. However, it alleged that Ceva Sante Animale later established another company, Veribrand Uganda Limited, to take over the business activities previously handled by the defendant, a move it said led to the revocation of its manufacturer’s authorisation.

The defendant, MTK Uganda Limited, also contended that the products invoiced by Ceva Sante Animale had been imported specifically for supply to the Ugandan market.