The drama will be set around a weekend in the early 1990s when Diana decided to separate from Prince Charles. Larrain will direct the film from a script by Steven Knight. The production is expected to begin in early 2021, reports deadline.com.

The drama takes place over three days, in one of her final Christmas holidays in the House of Windsor in their Sandringham estate in Norfolk, England.

"Kristen is one of the great actors around today. To do this well, you need something very important in film, which is mystery. Kristen can be many things, and she can be very mysterious and very fragile and ultimately very strong as well, which is what we need. The combination of those elements made me think of her. The way she responded to the script and how she is approaching the character, it's very beautiful to see. I think she's going to do something stunning and intriguing at the same time. She is this force of nature," Larraín said of casting the "Twilight" star.

The film won't deal with Diana's death after she left the palace life, but will examine the fading bond with her husband, and her love for her sons.

"I've always been intrigued and fascinated by the Royal Family and how things are in that culture, which we don't have where I come from," Larraín said, adding: "Diana is such a powerful icon, where millions and millions of people, not just women, but many people around the world felt empathy toward her in her life. We decided to get into a story about identity, and around how a woman decides somehow, not to be the queen. She's a woman who, in the journey of the movie, decides and realises that she wants to be the woman she was before she met Charles."

"It is about finding herself, about understanding that possibly the most important thing for her is to be well, and to be with herself and by herself. That's why the movie is called 'Spencer', which is the family name she had before she met Charles. It's very contained, set over a few days in Sandringham. They spent Christmas there for many years and that's where we set the movie in the early '90s, around 1992, we're not specific. It's Christmas Eve, Christmas and Boxing Day, three days, very contained. We get to understand what it is she wants and what she will do," Larraín explained.

"We believe that this is a movie that could create interest around the planet," Larraín said.