On July 31, 2009, JYJ filed a request for a preliminary injunction to invalidate the exclusive contract with SM, and on October 27, 2009, the 50th Civil Division of the Seoul Central District Court (Presiding Judge: Byung-Dae Park) rendered a decision granting such request. The court ordered that “SM shall not, contrary to JYJ’s will, negotiate or enter into a contract with a third party for JYJ’s appearance in any TV program or movie, their participation in any performance or concert, their production of music records or their participation in any entertainment event or activity, or request third parties, including broadcasting companies, music production companies and concert agencies, to terminate their relationship with JYJ to interfere with JYJ’s engagement in any entertainment activity.” The court’s reasoning behind such order was that ① the exclusive contract between SM and JYJ allows SM to exercise unreasonable control over JYJ through its superior position, and imposes payment of excessive compensations or unjust burdens seriously infringing JYJ’s economic freedom and fundamental rights and, therefore, can be considered to be void or being invalidated as a legal action against good moral and social order, and ② given SM’s influence on the Korean entertainment market, a protracted litigation will likely substantially restrict JYJ’s entertainment activities, which may raise not only economic concerns but also cause serious infringement of JYJ’s fundamental rights under the Constitution, including their freedom of occupation and the freedom of activity.
SM filed an objection against the preliminary injunction order, however, the 50th Civil Department of the Seoul Central District Court (Presiding Judge: Sung-Joon Choi) dismissed SM’s objection and upheld the original preliminary injunction order on February 15, 2001, stating that ① the exclusive contract between SM and JYJ constitutes an “exclusive contract on a subordinate relationship” under which the entertainer does not have an independent decision-making right but must follow the agency’s unilateral instructions, and such defect in the exclusive contract caused by the difference in the bargaining power of the parties was not cured until the execution of the fifth supplementary contract, and ② the 13-year contract term, which we find to be excessively long, must be limited to a reasonable period to protect JYJ’s personal rights and their freedom of occupation and minimize side effects resulting from JYJ’s engagement in activities against their will, and such long term “exclusive contract on a subordinate relationship” cannot be justified by arguing that such contract was necessary for SM to reduce its investment risks or help JYJ enter overseas markets smoothly.
The preliminary injunction order had been possible thanks to JYJ’s courageous decision and prompted the Korea Fair Trade Commission to establish a standard form of exclusive contract to rectify unfair contractual relationships prevalent in the entertainment industry. Several entertainment agencies voluntarily took the initiative to improve their systems so that more entertainers have negotiating powers commensurate with those of entertainment agencies.
Some people, however, have recently been disseminating groundless rumors described below based on certain record on conciliation negotiation between JYJ and SM:
① Some people alleged on the internet that the exclusive contract between SM and JYJ was not unfair on the grounds that the settlement amount SM paid to JYJ was smaller than the amount originally claimed by JYJ, and that SM paid such amount to JYJ only to settle the amount that should have been paid to JYJ in 2009 but was not paid due to the lawsuit. However, JYJ agreed to reduce the settlement amount in order to settle the dispute as soon as possible, fearing protracted litigation will only waste the time and money and may make it impossible for JYJ to take part in the entertainment business of their own will for the litigation period.
② Other people alleged on the internet that JYJ executed the 13-year long-term exclusive contract at the request of TVXQ members’ parents. The court, however, found that the members’ negotiating powers were at their lowest at the time they signed their exclusive contract, which was right before the release of their debut album on January 14, 2004, and it is unfair and against good moral and public order for SM to have JYJ sign a long-term exclusive contract taking advantage of the situation where there is no alternative choice.
③ People also alleged on the internet that the Korea Fair Trade Commission’s order to take corrective measures is only applicable to those contracts between SM and its trainees. In fact, the Korea Fair Trade Commission has repeatedly issued orders to take corrective measures with respect to the exclusive contracts between the entertainment agencies and their entertainers. The controversy on the fairness of such contracts became widespread after the problems and issues related to the contracts between agencies and their trainees were raised.
C-JeS decided to take stern legal actions against the illegal activities distorting the court’s decision in the preliminary injunction order and the conciliation between JYJ and SM based on false rumors and damaging JYJ’s reputation. For the reasons described above, C-JeS has filed a complaint against those who spread false rumors described in this statement for the violation of the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. (defamation). C-JeS hopes this statement will help all JYJ fans confirm the truth and will prevent any further misunderstanding.
※ Attachment: Seoul Central District Court’s Order dated October 27, 2009, Preliminary Injunction for the Invalidation of the Exclusive Contract, Case No. 2009Kahap2869
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