HAMILTON, Bermuda (AP) _ Favoring property rights over propriety, Bermuda's Supreme Court has overturned a law banning McDonald's and other fast-food restaurants from setting up in this British colony.

``We are very pleased,'' said attorney Mark Diel, after the Tuesday night decision which overruled the ban of his client, former Premier Sir John Swan.

Justice Vincent Meerabux found the act failed to respect a previous contract between Swan's Grape Bay Ltd. and the U.S. fast-food giant, thus violating Swan's constitutional property rights.

``No one, not even the legislature, can disobey the constitution with impunity,'' Meerabux said.

Gov. Thorold Masefield, who approved the law in August despite Senate opposition, is expected to appeal the decision.

Supporters of the legislation argued it would safeguard the tourist appeal of the island, where gambling is prohibited, the top speed limit is only 20 mph and tourists must rent bicycles and mopeds instead of cars.

The issue came up in February 1996, when the finance minister gave Swan permission to set up the holding company with the sole purpose of bringing McDonald's into Bermuda. Swan put down $3 million to guarantee sites at the airport and in downtown Hamilton, the capital.

Legislators fought back, drafting a bill banning all restaurants with ``a foreign flavor'' from setting up in Bermuda.

However, a Cabinet committee set up to hear public opinion on the law found the community ``on the whole is not overly concerned'' about having McDonalds and other fast-food establishments set up on the island.

Some residents of Bermuda, 600 miles east of North Carolina in the Atlantic Ocean, had developed a taste for Big Mac hamburgers when a McDonald's operated here on a U.S. military base. That closed in 1995.