Whyte & Mackay is locked in a potentially costly court battle with the distributor of its John Barr blended Scotch whisky in the US, Capstone International.

Capstone is attempting to sue Whyte & Mackay for up to US$10m in damages after accusing the Scotch whisky group of breaching the terms of the two companies’ exclusive distribution agreement for John Barr in the US.

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Whyte & Mackay moved to terminate the 16-year-old agreement earlier this year after accusing Capstone of operating without the necessary US Federal licences. Whyte & Mackay claimed that it has discovered gaps in Capstone’s paperwork after starting talks to acquire the Capstone business in early 2010.    

The case, which is pending in Scotland’s Court of Sessions, threatens to disrupt supplies of John Barr whisky ahead of the important Christmas trading period in the US.  

Whyte & Mackay is seeking court backing for its decision to terminate the Capstone contract and also GBP240,000 (US$373,000) in unpaid distribution fees from Capstone. However, Capstone has shot back with a counterclaim for GBP10m in damages.

Last month, Lord Menzies, who is overseeing the case in the Court of Sessions, ruled that Whyte & Mackay could not begin a distribution deal for John Barr with any other company in the US until proceedings have been concluded.

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His ruling came after it emerged that Whyte & Mackay signed a deal in June with Southern Wine & Spirits of America, to appoint the distributor as its exclusive agent for John Barr in the US.

Capstone has agreed to pay the GBP240,000, according to Court of Session records. A Whyte & Mackay spokesperson told just-drinks today (20 September) that the company was standing firm in its argument that Capstone was “in material breach of the distribution agreement”.

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