7. Commitments, Contingencies and Guarantees
ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancellable payment obligations, for which it is liable in future periods. These arrangements can
include terms binding the Company to minimum payments and/or penalties if it terminates the agreement for any reason other than an event of default as described by the agreement.
The Company has a minimum commitment of $2.7 million toward the development, production, post-production and marketing related to certain
film and new content initiatives. As of September 30, 2018, the Company has spent $2.7 million, and does not expect to spend any additional funds during the remainder of the year.
Contingencies and guarantees
The Company is involved in lawsuits, claims, and proceedings, including those identified below, which arise in the ordinary course of business.
In accordance with the Contingencies Topic of the FASB ASC, the Company will make a provision for a liability when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company believes it has
adequate provisions for any such matters. The Company reviews these provisions in conjunction with any related provisions on assets related to the claims at least quarterly and adjusts these provisions to reflect the impacts of negotiations,
settlements, rulings, advice of legal counsel and other pertinent information related to the case. Should developments in any of these matters outlined below cause a change in the Companys determination as to an unfavorable outcome and result
in the need to recognize a material provision, or, should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on the Companys results of operations, cash
flows, and financial position in the period or periods in which such a change in determination, settlement or judgment occurs.
Company expenses legal costs relating to its lawsuits, claim and proceedings as incurred.
(a) On May 15, 2006, the Company initiated
arbitration against Three-Dimensional Media Group, Ltd. (3DMG) before the International Centre for Dispute Resolution in New York (the ICDR), alleging breaches of the license and consulting agreements between the Company and
3DMG. On June 15, 2006, 3DMG filed an answer denying any breaches and asserting counterclaims that the Company breached the parties license agreement. The proceeding was suspended on May 4, 2009 due to failure of 3DMG to pay fees
associated with the proceeding. The proceeding was further suspended on October 11, 2010 pending resolution of re-examination proceedings involving one of 3DMGs patents. Following a status
conference on April 27, 2016 before the ICDR, the ICDR granted 3DMG leave to amend its answer and counterclaims, and subsequently lifted the stay in this matter. In its amended counterclaims, 3DMG sought damages for alleged unpaid royalties,
damages and other fees under the license and consulting agreements, and the Panel also permitted 3DMG to advance new damage theories. The ICDR held a final hearing in July and October 2017, the parties submitted final, post-hearing briefs in
December 2017, and the ICDR held closing oral arguments in March 2018. On July 11, 2018, the ICDR issued a Partial Final Award that found for 3DMG on certain claims and for the Company on other claims. As part of the Partial Final Award, the
ICDR awarded damages in favor of 3DMG in the amount of $8.8 million, which is inclusive of approximately $1.8 million in pre-award interest. On August 13, 2018, 3DMG filed a motion seeking
modification and correction of portions of the award, and on August 23, 2018, 3DMG filed an application for attorney fees and expenses. The Company has opposed both motions, which are currently pending before the ICDR, but no assurances can be
given with respect to how the ICDR will rule on those motions. A charge of $7.5 million was recorded in the nine month period ended September 30, 2018 to the Legal arbitration award financial statement line item.
(b) In January 2004, the Company and IMAX Theatre Services Ltd., a subsidiary of the Company, commenced an arbitration seeking damages before
the International Court of Arbitration of the International Chamber of Commerce (the ICC) with respect to the breach by Electronic Media Limited (EML) of its December 2000 agreement with the Company. In June 2004, the Company
commenced a related arbitration before the ICC against EMLs affiliate, E-City Entertainment (I) PVT Limited (E-City). On March 27, 2008, the
arbitration panel issued a final award in favor of the Company in the amount of $11.3 million, consisting of past and future rents owed to the Company, plus interest and costs, as well as an additional $2,512 each day in interest from
October 1, 2007 until the date the award is paid. In July 2008, E-City commenced a proceeding in Mumbai, India seeking an order that the ICC award may not be recognized in India and on June 10, 2013,
the Bombay High Court ruled that it had jurisdiction over the proceeding filed by E-City. The Company appealed that ruling to the Supreme Court of India, and on March 10, 2017, the Supreme Court set aside
the Bombay High Courts judgement and dismissed E-Citys petition. On March 29, 2017, the Company filed an Execution Application in the