Would-be McDonald's owners Grape Bay Ltd. yesterday received the formal go-ahead to ask a top English court for permission to sell McDonald's fast food in Bermuda.

And Mark Diel, lawyer for Grape Bay, won three months in which to prepare his case for the Privy Council -- Bermuda's last resort appeal court.

President of the Court of Appeal Sir James Astwood told Mr. Diel that he had an automatic right of appeal.

Sir James said: "You don't need leave -- you have a Constititutional right of appeal.'' But Sir James added Mr. Diel did have to provide the Court of Appeal with reasons.

Solicitor General William Pearce asked for costs already awarded against Grape Bay for proceedings in Supreme Court and Court of Appeal -- running into tens of thousands of dollars -- to be guaranteed as a condition of the Privy Council hearing.

He said: "It's only a shell company and this is the only opportunity we have to ask.'' But Sir James told the court that the Court of Appeal had no powers to order guarantees for costs above $12,000.

And that is a fraction of the total bill for the Supreme Court hearing, where Grape Bay had the controversial Prohibited Restaurants Act banning fast food with a foreign flavour overturned, and the Court of Appeal, where the Attorney General's Chambers had that decision reversed and costs in both cases awarded in the Crown's favour.

But Sir James said that -- until the law is amended to take account of the increased cost of legal proceedings -- he was stuck with a $12,000 ceiling on costs.

Afterwards, Mr. Pearce, who won the Court of Appeal case with Caribbean constitutional law expert Dr. Lloyd Barnett, said it had yet to be decided who would appear in London.

But it is possible Dr. Barnett will appear again before the Privy Council for the Crown.

The Royal Gazette revealed earlier this week that it could take up to a year for the Privy Council to allot a spot on their calendar for Mr. Diel's appeal.

And that means Government could be stuck with an empty space at the airport where a restaurant should be because Grape Bay holds a lease on the space, although the deal has never been ratified by Parliament.

The Prohibited Restaurants Act -- banning foreign fast food franchises from Bermuda with effect from May, 1996 -- was pushed through the House of Assembly by five rebel Government MPs, led by backbencher Ann Cartwright DeCouto and with support from the Opposition Progressive Labour Party.

Senate, however, used its powers to block the Act for a year -- but Mrs.

Cartwright DeCouto brought the Act back to the House and won another vote.

The Upper House could not delay the Act further and Governor Thorold Masefield signed it into law in August last year -- which triggered Grape Bay's legal challenges.