Court rules in favor in multibillion-dollar stock option argument.
High Court Grants Summary Judgment in Favour of Columbia Pictures Corporation in Share Purchase Dispute
In a significant ruling handed down on 23 July 2025, the High Court in London granted summary judgment in favour of Columbia Pictures Corporation (CPC) in its claim against Hong Kong-based Wanda Kids Cultural Development (Wanda) over a USD 49 million share purchase obligation.
The dispute stems 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. In 2021, SGHL assigned its rights under the option agreement to CPC. However, completion of the share purchase was scheduled for 8 February 2024, but Wanda failed to attend or pay.
CPC brought the claim against Wanda for its refusal to complete the purchase of shares in VSP under a 'put option' mechanism. The option, exercised in October 2021, required Wanda to buy out CPC's 49% stake in VSP at a minimum price of USD 49 million.
The court granted CPC's application for summary judgment in full, finding that Wanda's arguments had no realistic prospect of success. Sir Nigel Teare, the judge, agreed with CPC's interpretation of the parties' option agreement and dismissed Wanda's defence, both on the construction of the contract and its alternative case based on an implied term.
Wanda attempted to imply a term into the option agreement to the effect that its obligation to pay cash was conditional upon PRC regulatory approval. However, the judge was not persuaded by this argument, emphasizing that contractual payment obligations are often unconditional and not necessarily subject to such regulatory approvals unless explicitly stated in the contract. The court rejected the interpretation that payment under a share option agreement must be contingent on local regulatory approval.
The dispute also touched upon Outbound Direct Investment (ODI) rules, which regulate outbound investments by domestic companies in foreign assets/shares. These rules may require government approval or compliance before certain transactions can proceed. In share option agreements, obligations to pay or issue shares might be argued by companies to depend on ODI approvals.
However, the court emphasized that courts tend to enforce unconditional payment obligations strictly unless the contract expressly conditions performance on such regulatory approvals. Implied terms inserting ODI conditions can be rejected if they conflict with the contract’s clear risk allocation or business logic. Thus, companies must draft share option agreements with clear terms concerning regulatory conditions like ODI rules to avoid disputes and ensure clarity on when contractual obligations arise and what regulatory approvals, if any, must be secured beforehand.
Tamara Oppenheimer KC and Kit Holliday of Fountain Court Chambers represented CPC, while Tom Foxton of One Essex Court represented Wanda. Dentons and Travers Smith were the respective instructing solicitors for CPC and Wanda.
The court's ruling underscores the importance of clear and precise contractual language in share option agreements, particularly when it comes to regulatory conditions and payment obligations. It also highlights the court's reluctance to imply terms that contradict the parties’ agreed risk allocation or business logic, even in the context of complex regulatory frameworks such as ODI rules.
[1] These points are based on the provided bullet points discussing the implications of ODI rules in the context of share option agreements.
In the aftermath of the High Court's decision, industry experts have emphasized the necessity of clear contractual language, particularly in share option agreements, most notably concerning regulatory conditions and payment obligations. This ruling serves as a reminder for businesses in the finance sector to carefully draft share option agreements to avoid disputes arising from ambiguous terms, especially when dealing with Outbound Direct Investment (ODI) rules. Furthermore, the court's decision underscores its reluctance to imply terms that contravene the agreed risk allocation or business logic, even in complex regulatory frameworks such as ODI rules.
