Bacardi, the Bermuda-based drinks maker, is at the centre of the latest trade clash between the United States and the European Union over the ownership rights to a brand name.

The world's largest rum producer and privately-held spirits company is in a dispute with the French distillery Pernod-Ricard SA over the "Havana Club'' trade mark in the US that both companies claim to own. The EU has backed the French company, while Bacardi is supported by the United States, where it controls half of the $1.5 billion rum market.

Bacardi acquired rights to the trademark from the Cuban Arechabala family, who had the trademark confiscated by the Cuban government. The 1998 US Omnibus Appropriations Act prevents trademarks confiscated by the Communist government after the 1959 revolution from being used by other companies without the permission of the original owner.

In 1996, Bacardi began selling Bahamian rum under the Havana Club name.

Meanwhile, Pernod-Ricard had set up a joint venture with a Cuban rum company in 1993 to market Havana Club rum worldwide. US courts blocked a 1996 trademark infringement suit by Pernod-Ricard, citing the 1998 act.

In February, a US appeals court in New York upheld Bacardi's right to use the Havana Club label in the United States.

In July of last year, EU asked the World Trade Organisation Dispute Settlement Body to probe the US law, saying that the legislation is protectionist and breaches international trade law. WTO consultations with the United States in September and December 1999 -- the first step in the WTO's disputes settlement procedure -- made no progress. The panel will convene on July 27.

According to a Reuters source, the EU's executive Commission argues that the act violates a WTO agreement on intellectual property by treating some foreign right-holders with Cuban assets less favourably than US right-holders.

It said in a statement that the law also broke international trade mark rules since the registration of a trade mark "cannot be made conditional on the consent of a trade mark owner who has abandoned his rights''.

And Cuba has applauded the EU's stance. President Fidel Castro has threatened to escalate the dispute by taking reprisals against U.S. brands registered on the island.

Bacardi last year called the EU's complaint "an unwarranted and reckless intrusion into a civil dispute between two business competitors''.

The trans-Atlantic dispute follows arguments between the two trading blocs over European banana importations and the Europe's ban on genetically-modified beef.