Summary of the Court’s Judgment on SME’s cases

Originally Posted on February 23, 2011 by dctvxqgall

Basically, we just took some of the major points from the judgment for those of you who were daunted by the length of the full document. This should answer some of the questions that “certain people” might have about the lawsuit. The Judge’s answers are exact quotes from the DNBN’s translation of the court’s judgment (regarding SM’s objection). As for the second judgment (for application of provisional injunction to terminate the validity of the contract), I couldn’t find an English translation, so we translated.

Seoul Central District Court’s Judgment on SM’s Objection to Judgment for Injunctive Relief – Summarized

<A kind two line summary from the Judge>

– “The Judgment for Injunctive Relief granted by this court on October 27, 2009….is reaffirmed.”

– “The Debtor [SM] shall bear the cost of this Objection.”

(**Note: In the judgment, Creditors refer to Kim Jaejoon, Park Yuchun and Kim Junsu and Debtors refer to SM)

1. Which specific part of the contract, other than 13-year term of the contract, is unfair?

The Judge says:

-”[T]he duration of 13 years of the current Contract is not a cause for invalidity simply because the duration is long, but rather combines with many provisions that strengthen the subjugation by the Debtor company of the Creditors to become a cause for invalidity for excessively violating the personhood and freedom of the Creditors.”

– “According to the current Contract, the Creditors cannot in their personal capacity contract or make commitments with regards to their activities, and are bound to receive and to carry out orders from the Debtor company, not only on making appearances in broadcast programs or holding performances, but also for any and all entertainment activities including on the preparations for the above. Further as the relationship entrusts the Debtor company with full powers on the managements of schedules, the Creditors are burdened with the duty to obey without any limitations of work hours with regards to performances, broadcast appearances, and similarly all other schedule commitments as unilaterally decided by the Debtor company…A contract in the form of the current Contract in which the entertainer does not have a right to independent decision-making with regards to his entertainment activities and is made to obey the unilateral orders by the entertainment company can be categorized as a “Subjugating Contract.”

-Such clauses that strengthen the company’s power of subjugation includes “…company exercises all decision rights regarding the Creditors’ entertainment activities and schedules…that the Creditors must diligently carry out the tasks decided through the judgment of the Debtor company…and that the Debtor company can use as a basis to exercise right to control and supervise the Creditors’ every movement the provisions that forbid the Creditors from acting freely.”

-”Furthermore, the current Contract does not have any provisions on the right of the Creditors to terminate upon the Debtor company’s violation of the contract, but on the violation of the Creditors of the contract, provides that they must compensate by paying the immense sum of an amount equal to the sum of three times the total investment and two times the expectation damages for the remainder of contract duration. Such damages provision also thoroughly blocks the Creditors from breaking away from the contractual relationship with the Debtor company for the 13 years of its duration and functions to strengthen the subjugation by the many provision already explored above, and likewise qualifies as a unilateral disadvantage for the Creditors.

2. Why is 13 year contract term a problem?

The Judge says:

-”…[T]he duration of the current contract is 13 years and exceeds the above-mentioned [3 years or 1 year] maximum duration of employment contracts or labor contracts by a staggering 10 years. Not only that, there is no mechanism whatsoever that enables the Creditors to resolve the contractual relationship in the middle in accordance to their personal needs or wishes. As shown above, the current Contract and its extreme length of duration, even when accounting for the differences between an exclusive contract and a typical employment or labor contract, fall below the minimum floor of reasonableness and are unilaterally unfavorable to the Creditors.”

-”according to the records and the hearing in its entirety, for so-called ‘idol stars’ like the Creditors who make their main fan base the youth, to extend their existing popularity beyond their thirties seems extremely difficult”

-”The entertainer, even if the profits from his entertainment activities fall below his expectations, in bound to obey the schedule the entertainment company decides. Therefore it is almost impossible for him to pursue other profit-making activities…the period in which an entertainer can work as an entertainer, especially the period in which great popularity can be enjoyed, is relatively short…Upon reflection of above facts, an unfairly-long contract duration can strip from the entertainment the opportunity to obtain a fitting reward for his unique talents and the ceaseless efforts he invested until he achieved success in the industry and can function for all practical purposes no differently from a lifetime contract.”

-”In putting together the different considerations as put forth above, in the case of a Subjugating Contract like the current case in which the entertainment company can exert complete control over the entertainer’s activities, it is necessary to limit the contract duration to fall within a reasonable range in order to protect the entertainer’s personhood and freedom of occupation and to minimize the side effects from (being coerced to perform) activities against his will, by allowing him to make a choice on whatever he wishes to continue the contractual relationship when a certain period of time has passed.

3. Isn’t it true that long term of contract can’t be helped considering the invest risks the company has to take and overseas activities of the artists?

The Judge says:

– “It cannot be denied that generally even though it takes much expense and time to raise newcomers, the number of entertainers among them who eventually achieve commercial success is low, and that because of this in order for the entertainment company to survive as a for-profit enterprise it needs to obtain profits from the few successful entertainers that will more than offset the costs it invested into the failed ones. However, it is not the case that the above necessities of the entertainment company, a unilateral party to these exclusive contracts, diminish the necessity to limit the contract durations to a reasonable range in order to guarantee the minimum freedoms of the entertainers, the other party, and to prevent the evils of forced labor and the like.”

– “As for the problems incurred due to the investment risks of entertainers, they must be solved by improving the abilities of the entertainment companies or by making efforts to reform their nature, such as by reducing the initial investment costs that the entertainment companies themselves bear and so increasing the efficacy of their investment…The solving of these problems shall not be attempted through means that sacrifice the freedoms of the individual entertainers and the like and so are contrary to public policy.”

– “The entertainment companies’ preparations for their artists to enter the overseas market are also, in the end, for the aim of reaping the maximum investment profits. These also shall be propelled in a direction that does not coerce the sacrifice of the individual entertainer.”

4. Hadn’t they signed the contract voluntarily having checked its contents, and couldn’t they have revised it when they gained popularity?

The Judge says:

– “According to the records and the hearing in its entirety, at the time of entering into the exclusive contract with the Debtor company, the Creditors [Kim Jaejoong, Kim Junsu, and Park Yuchun] were merely entertainer-hopefuls with no popular recognition. In contrast to this, the Debtor company was one of the few large-scale entertainment companies that shared the entertainment industry and had power of market-control, and the form of the exclusive contract entered between the Creditors and the Debtor company was entirely a standard from that had been prepared in advance by the Debtor company in order to contract with numerous entertainers of their hopefuls. Following these facts establishes the fact that the Creditors only passively signed the form of the exclusive contract presented by the Debtor company and had not been involved in deciding the contents of the contract through negotiation with the Debtor company and the like.”

– “[T]he fact that the Creditors’ popularity and their influence in the entertainment industry rapidly increased after their debut is established…[However] even if the Creditors had wished to shorten the duration of the contract at the time they entered into the Sub-Amendments, because the existing contract had not ended, the Debtor company could keep the existing contract duration as it was by not accepting the wishes of the Creditors, and the Creditors had no choice but to obey this result if the Debtor did not choose to benevolently shorten the duration. Therefore, the Creditors and the Debtor company could not have a negotiation in the true sense of the word…In the end, even if it was to be said that the 2nd through 5th Sub-Amendments were entered into after the Creditors built their positions as entertainers, they could not convert their higher status into stronger bargaining power. Therefore, the Debtor company’s argument that the defects of the contract that arose from the difference in bargaining powers of the Creditors and the Debtor company were all subsequently cured upon entering into the 2nd through 5th Sub-Amendments is without merit.”

5. I can’t understand why they are objecting to the terms of the contract now, after all these years.

The Judge says:

– “It seems however that all of the Creditors, [Kim Jaejoong, Park Yuchun, and Kim Junsu,]at the young age before they were adults, in the hopes that they would like to become famous entertainers, had signed the form of the contract presented by the Debtor company without deep examination of how the current Contract would affect them. It is difficult to take the Creditors who as shown above had no practical experiences whatsoever to the task for failing to take prompt legal measures. While it is of course the case that the parents, who were at the time the legal representatives of the Creditors, accompanied them, the parents also were outsiders unacquainted with the entertainment industries and exclusive contracts.”

– “Furthermore, according [to] the record, the Creditors learned the majority of what they knew with regards to entertainment activities from the Debtor company. Further since and continuing from their youth they had become accustomed to the life of acquiescing to the Debtor company’s orders and supervision. Therefore, it seems that it was not easy to raise legal problems about the current Contract to the Debtor company, which was for all practical purposes their basic livelihood even after their debut into the entertainment industry.”

– “[W]e are convinced by the argument that in order to become entertainer the Creditors had no choice but to draft the contract as demanded by the Debtor company, and that while they themselves were not particularly aware of the problems of the current Contract in the beginning, in the process of carrying out its terms for the long-term they gradually realized its problems and so came to seek legal action.”

– “…[I]t is proper to view the duration between the release date of the Creditors’ first album (January 14, 2004) and the date of the grant of Judgment for Injunctive Relief (October 27, 2009) during which the Creditors maintained their entertainment activities for the benefit of the Debtor company (approximately 5 years and 9 months) has exceeded the current Contract’s reasonable life.  Therefore, as we will say that even in this instance the current Contract is null and void due to the expiration of its duration. As such, the Creditors’ right of preservation to demand that the Debtor company ceases to enter into contracts on entertainment activities without regard to the will of the Creditors and to pursue the ban on the activities that interfere with their independent entertainment activities is affirmed.”

6. What about SM’s claim that JYJ sued SM because of the cosmetics?

The Judge says:

– “While from the record it is acknowledged that there was a conflict in views on the investment in the cosmetics business between the Creditors and the Debtor company, evidence that can be seen to classify such as the end-purpose for their bringing the current Petition is lacking

Source of the translation: http://dnbn.pe.kr/db01/30023

Seoul Central District Court’s Judgment on SM’s Application of Provisional Injunction to terminate the Exclusive Contract between CJeS Entertainment and JYJ –

Summarized

– “From only the records submitted by the Petitioner company [SM Entertainment], evidence that can be seen as Kim Jaejoong, Park Yuchun, and Kim Junsu signing an ‘exclusive contract’ with CJeS Entertainment that carry a continuing ‘binding power’ is lacking.”

– “From the records, it can be seen that Respondents Kim Jaejoong, Park Yuchun, Kim Junsu and the CJeS Entertainment made a temporary ‘contract that commissions business tasks relevant to entertainment activities.’ However, according to the records, we acknowledge that the Court already issued a provisional order on October 27, 2009 that the Petitioner company shall not, among other things, interfere with the Respondents’ engagement in any entertainment activity. Therefore, the Petitioner’s seeking the Court to terminate the validity of a ‘business commission contract’ between the Respondents cannot be allowed, for it directly violates the provisional judgment above.

Source of the original document in Korean: http://dnbn.pe.kr/db01/30003

Translation: DC TVXQ Gallery JYJ’s ATM

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One Response to Summary of the Court’s Judgment on SME’s cases

  1. Pingback: Summary of the Court’s Judgment on SME’s cases (via Mission 4 JYJ) « XIAHLover

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