Fast food giant McDonald's and Irish Life have agreed to mediation in a bid to resolve a bitter row over the lease of a McDonalds branch at the Ilac Centre.

The Irish contingent of the global fast-food restaurant launched a High Court legal action against property developer Joe O'Reilly and Irish Life - owners of the Ilac Centre - because of the "unacceptable conditions" at the branch.

The case was due to be heard at the High Court yesterday, however Mr Justice Peter Kelly was told that the parties had agreed to a mediation process.

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McDonald's claims that its lease with Irish Life entitles it to have a shop directly visible and accessible from Parnell Street.

However, the fast food chain says that access to the Ilac Centre branch from Parnell Street can only be achieved via a plywood tunnel walkway and that the shop front is completely obscured.

Also, McDonalds claim that in 2003 it reached an agreement with Mr O'Reilly and Firmount Ltd for refurbishment work on the unit. Whilst that development is now complete, McDonald's says that the results have not been satisfactory.

The company has estimated that the situation has cost some €839,000 in profits to date, as well as a loss of brand presence and a predicted €2m loss of future profits.

(VB/JM)