Judicial verdict in favor of summary judgment in a significant financial dispute over stock options.
High Court Rules in Favour of Columbia Pictures in Multi-million Dollar Dispute
In a landmark ruling, the High Court in London has decided in favour of Columbia Pictures Corporation (CPC) in a claim against Hong Kong-based Wanda Kids Cultural Development (Wanda) over a USD 49 million share purchase obligation. The ruling, handed down by Sir Nigel Teare on July 23, 2025, resolves a long-standing commercial dispute concerning Wanda's failure to perform its contractual obligations under a 2017 option agreement.
The court granted CPC's application for summary judgment in full, as Wanda's arguments, whether based on construction or implication, had no realistic prospect of success. Sir Nigel Teare dismissed Wanda's defense, both on the construction of the contract and its alternative case based on an implied term.
The ruling has significant implications for cross-border commercial contracts, particularly regarding conditionality on regulatory approval. Key implications include strict enforcement of contractual obligations despite regulatory conditions, limitation on using regulatory approval as a defense, consequences for multinational corporate transactions, and judicial support for summary judgment in commercial disputes.
The dispute stemmed from a 2017 transaction in which Wanda's affiliate, Wanda Kidsland (Hong Kong) Co, acquired 51% of Vampire Squid Productions (VSP) from Silvergate Group Holdings (SGHL) for USD 38.25 million. As part of that transaction, the parties entered into a put and call option agreement. The option agreement in question required Wanda to buy out CPC's 49% stake in VSP at a minimum price of USD 49 million.
In 2021, SGHL assigned its rights under the option agreement to CPC, and on October 27, 2021, CPC exercised the put option. Disputes over the calculation of the sale price ensued, but were eventually resolved when CPC agreed to accept the contractual floor price of USD 49 million.
Despite Wanda's argument around Chinese regulatory approval, the court upheld CPC's claim fully. Wanda had argued that its obligation to complete the transaction was conditional upon receiving regulatory approval from Chinese authorities under outbound direct investment (ODI) rules. However, Sir Nigel Teare found that Wanda's attempt to imply a term into the option agreement to the effect that its obligation to pay cash was conditional upon PRC regulatory approval was not permissible, as it contradicted the parties' allocation of risk in the option agreement.
The judge concluded that a reasonable person would understand clauses 2.7 and 2.2 of the Option Agreement to have the meaning for which CPC contends, as the word "allotment" in clause 2.2 applies solely to the issue of new shares and not to the transfer of existing option shares pursuant to a cash transaction.
The case was represented by Dentons and Travers Smith for CPC, and Tom Foxton of One Essex Court for Wanda. Tamara Oppenheimer KC and Kit Holliday of Fountain Court Chambers represented CPC, while Tom Foxton of One Essex Court represented Wanda in the case.
This ruling underscores the importance of precise contractual language regarding conditions precedent and risk allocation in complex international transactions. It clarifies that courts may not be willing to imply regulatory hurdles as grounds to avoid contractual obligations, potentially leading to heavy financial liabilities if parties fail to meet their agreed commitments.
- In the ruling, the High Court emphasized the importance of precise contractual language within the industry, particularly in international business transactions, highlighting that courts may not be willing to imply regulatory hurdles as grounds for avoiding contractual obligations, which could result in significant financial consequences for parties who fail to meet their agreed commitments.
- The court's decision in the dispute between Columbia Pictures Corporation and Wanda Kids Cultural Development has significant implications for finance, highlighting the strict enforcement of contractual obligations despite regulatory conditions, and limiting the use of regulatory approval as a defense in cross-border commercial contracts.
