CL-2024-000186 - [2025] EWHC 1895 (Comm)

Counsel for CPC submitted that it is clear that clause 2.7 is not addressing the transfer of the Option Shares in VSP by CPC to Wanda consequent on the exercise of the Put Option, but rather the allotment (if any) of new shares to CPC as consideration for the exercise of the Put Option pursuant to clause 2.2. On its face, clause 2.7 is simply not engaged in the circumstances that occurred given CPC’s election to receive cash, and not shares, and has no bearing on the actual exercise of the Put Option in this case. Were there to be a requirement for Regulatory Approval in circumstances where CPC elects to receive cash that would be explicit in, for example, clauses 2.1 to 2.4 (dealing with the Put Option itself).

Counsel for Wanda submitted, relying upon factual evidence filed in this Application, that it would have been perfectly obvious to both parties that the performance of the Put Option (and payment of the Sale Price) was conditional upon Wanda first obtaining approval from the PRC governmental authorities which applied strict foreign exchange and regulatory capital controls. Indeed, it was submitted that CPC was clearly of this view, given that it expressly stated in its notice exercising the Put Option that “Completion of the sale and purchase of the Option Shares is conditional on receipt of relevant regulatory approvals”. It was submitted that this statement provides evidence that CPC was aware of the outbound investment regime (and that it applied to the Put Option) at the time it exercised the option. It was submitted that clause 2.7 of the Option Agreement must be construed in that context.

Counsel for Wanda further submitted that a reasonable person with the background knowledge available to both parties (set out above) would have understood clause 2.7 to include permission from the PRC governmental authorities for Wanda to perform the Put Option. Reliance was placed on the reference in clause 2.7 to an application to the “relevant … body” for the “grant of permission to deal in any shares allotted pursuant to any exercise of the SGHL Put Election” (emphasis added). It was said that those words refer both to: (a) an exercise of the “SGHL Put Election” to receive cash only (which is what CPC opted to do); and (b) an exercise of the “SGHL Put Election” to receive an allotment of shares in a “Quotation Entity” (or a mixture of such shares and cash).