Harvey and Bob Weinstein filed a motion to suspend the arbitration initiated by Warner Bros. over ‘The Hobbit’ profits dispute. The movie moguls sued Warner Bros. earlier this month, claiming an entitlement to a percentage of revenue from the second and third Hobbit films. The Weinsteins are hoping to nix the arbitration in favor of a trial.
The issues between the two parties arose out of a 1998 agreement, at which time the Weinsteins controlled the film rights to ‘The Hobbit’ via Miramax. Allegedly the deal promised five percent of gross receipts of the “first motion picture” based on the books. Unlike ‘Lord of the Rings’, ‘The Hobbit’ was just one book and Warner Bros. made the unilateral decision to split the book into three films, much to the dismay of the fans and obviously the Weinsteins. The Weinsteins argue that the decision to make three films in lieu on one, should not affect their compensation or limit it to just the first film. The plaintiffs also contend that the MFN (most favored nations) provision in the contract strengthens their arguments regarding the interpretation of the contract because it purports to pay them no less favorable than the director Peter Jackson. Warner Bros. defends that the contractual language of “first motion picture” is plain and unambiguous.
The second issue with the 1998 agreement deals with the forum selection and arbitration provisions. The forum selection provision asserts that disputes arising from the enforcement or interpretation of the agreement shall be heard in New York court while disputes over definitions, computations and contingent compensation are to be heard in arbitration. Needless to say, the parties are not in agreement about the type of dispute they are having.
Do you think the Weinsteins are entitled to compensation from the second and third “Hobbit” films under these circumstances?