MGM has lost its legal battle against the Cecchi Gori Group in a Rome court, according to Italian press reports.

The US studio had accused the Italian group of failing to stand by its production and distribution agreements. As such, MGM sued the Fin.Ma.Vi holding group which controls the Cecchi Gori Group for Euros 1.2m, local news agencies reported.

But the Rome court ruled in favour of the beleaguered Cecchi Gori Group.

"The court ruling confirms that MGM cannot pursue its court case against the Cecchi Gori Group - Fin.Ma.Vi. It also sentences MGM to pay the case's legal fees," the Cecchi Gori Group said in a statement, adding: "This sentence is part of a general, positive legal situation for Vittorio Cecchi Gori."

The Italian press quoted Cecchi Gori's lawyers, Gaetano Franchina and Maurizio Canfora, as saying: "Creditors or those people who have tried to "twist hands" have found themselves standing in front of a solid wall of facts - and the serenity of someone who knows he is right."

MGM broke its contract with Cecchi Gori in 2000 and took the Italian group to court over non-payment on an output deal covering 200 films and television programmes broadcast on Telemontecarlo (TMC) which was then owned by Cecchi Gori.

The Italian company obtained a $233m loan from US bank Merrill Lynch for film and TV programming acquisitions before entering into the $20m deal. However, according to MGM, repayments from Cecchi Gori to the studio stopped in September 1999 leaving $10m of its debt unpaid.

News of Cecchi Gori's victory comes just over two months after the group's flamboyant head, Vittorio Cecchi Gori, announced that production would soon start on movies by comics Carlo Verdone (It Can't Be all Our Fault), Carlo Vanzina (South Kensington),and Vincenzo Salemme - formerly three of the biggest box office draws in Cecchi Gori's close-knit stable of directors.

Other projects on his upcoming slate, the producer said, are films by Ricky Tognazzi (Excellent Cadavers), Gianni Amelio (Open Doors) and animation maestro Enzo d'Alo (Lucky and Zorba).

Cecchi Gori also announced the making of a film about the legal and financial whirlwind that hit him three years ago, eventually forcing him to halt his production and distribution activities.