NASSAU, BAHAMAS — BISX-listed brewer Commonwealth Brewery has been granted leave to appeal to the Privy Council a November 2023 Court of Appeal decision that stated three and a half months was a ‘reasonable’ notice period for American beer manufacturer Anheuser-Busch before terminating its nearly 40-year distribution agreement.
That appellate court ruling set aside an earlier Supreme Court decision favoring the brewery.
Anheuser-Busch, the manufacturer of Budweiser, had appealed a May 2022 ruling that found the company did not provide reasonable notice to Commonwealth Brewery before terminating the distribution agreement on December 1, 2015. That decision noted that, under the circumstances, 15 months’ notice before termination was reasonable, and damages were awarded to Commonwealth Brewery.
Anheuser-Busch and Commonwealth Brewery Ltd, the successor to Burns House Ltd, entered into an informal and unwritten distribution agreement in 1975, allowing the brewery to distribute ABI’s beer products in The Bahamas. Evidence presented in the case indicated that over the 40-year relationship, Commonwealth Brewery fulfilled its obligations by allocating significant resources, including a $250,000 letter of credit, a senior brand manager, and a dedicated team.
In August 2015, Anheuser-Busch unexpectedly terminated the agreement, citing a business decision unrelated to Commonwealth Brewery’s performance, and initially provided a notice period of only three months. This was later extended by one additional month.
Commonwealth Brewery argued that the reasonable notice period should have been 3.5 years, given the longstanding nature of the agreement.
Anheuser-Busch subsequently entered into a distribution agreement with the Freeport-based Sands Beer manufacturer. Commonwealth Brewery filed a wrongful termination claim against Anheuser-Busch, seeking $145,000 for marketing expenses and $2.3 million for lost profits.
In response, Anheuser-Busch countered with a lawsuit for unpaid invoices totaling $598,000. Commonwealth Brewery further alleged that the abbreviated notice period constituted a breach of contract and claimed that ABI violated an implied duty of good faith by assigning the agreement to its subsidiary.
In its ruling, the Court of Appeal sided with Anheuser-Busch, noting that three and a half months’ notice fell within the range of reasonableness and that the Missouri-based company was not in breach of the distribution agreement.
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