Privy Council Judgment in the Battle of the Brewers

The Privy Council has recently handed down judgment in long-running litigation between a Heineken subsidiary (Commonwealth Brewery) and Anheuser-Busch International, a subsidiary of the brewing conglomerate that manufactures Budweiser and other products.

Commonwealth Brewery was for over 40 years the exclusive distributor in the Bahamas for Anheuser’s products including Budweiser. The distribution agreement had no fixed term but was subject to an implied term that it was terminable on reasonable notice. Anheuser sought to terminate the distribution agreement by giving 3 1/2 months’ notice.

The issue in the litigation was whether this was a reasonable notice period. The judge at first instance held that it was not and that a minimum of 15 months was required. This was overturned on appeal. Commonwealth Brewery then appealed to the Privy Council.

Lord Hodge, giving the judgment of the Board, conducted a detailed review of the relevant case law on distribution agreements for the purposes of identifying the principles to be applied by a court when assessing whether a period of notice for termination is reasonable. Lord Hodge identified a non-exhaustive list of seven relevant factors from the case law.

Applying these factors to the case before it, the Privy Council upheld the decision of the appeal court and dismissed the appeal.

Alan Gourgey KC, leading Christopher Jenkins KC and Chizelle Cargill of Lennox Paton (Bahamas), acted for the successful respondent to the appeal.

Read the full judgment