Here Is EXO-CBX’s Full Statement Regarding Terminating Their Contract With SM Entertainment
The full statement from EXO Baekhyun, Chen, and Xiumin‘s lawyers has been released.
On June 1, the idols shocked K-Pop fans all over the world when they announced that they had formally filed a lawsuit to terminate their contract with SM Entertainment.
EXO’s Baekhyun Xiumin And Chen Sue To Terminate Contract With SM Entertainment
The full statement from the idols’ lawyers can be read below.
My name is Lee Jae Hak and I am a lawyer from the law firm LIN and am representing Baekhyun, Xiumin, and Chen (referred to henceforth as Artists. I am writing this to convey the artists’ stance in regard to their exclusive contract with SM Entertainment (referred to henceforth as SM).
The artists, through their lawyer, have asked SM Entertainment to provide a transparent accounting of their payment process seven times from March 21.
The request for transparent accounting is the most basic right of the artists, and SM Entertainment is also bound by law to fulfill their requests. But SM has maintained that they will not be able to do so.
As such, SM has abused its power and influence by making artists, after signing a 12-13 year contract, re-sign with them to make their contracts exceed 17-18 years.
The artists feel as if they had been forced into signing slave contracts exceeding 20 years long, considering the many years they spent as trainees. Below are some of the abuses the artists have been through that they had not been able to expose themselves.
— Lee Jae Hak
1. Artists’ stance on SM failing to provide transparent accounting
The artists signed contracts with SM for 12-13 years and have faithfully carried out their activities as members of EXO.
As mentioned above, during the long years they had been signed to SM, the members had trusted SM when it came to their payment and have received their payment along with accounting documents provided by SM. Recently, the artists, through their lawyers, have asked on several occasions for the accounting receipts, but SM has stated they wouldn’t be able to.
SM is obligated by law to provide its artists with a full history of income generated, expenses subject to tax deduction, and deduction amount. As the aforementioned exclusive contract states that the artists are received a payment settlement twice a year, a full accounting should also be provided twice a year. However, during the 12-13 years they had been signed to SM, the agency has never provided these documents.
According to precedent, if the agency does not provide an accounting, the artist is deprived of their right to question and challenge the amount received, and hence not providing the documents is ground for contract termination. And because, despite many requests, SM has not provided the documents, there is legal ground to terminate the contract.
Despite the artists firmly requesting the documents by May 31, and because SM has not provided the documents, unfortunately, as of June 1, we are notifying you that the contract has been terminated.
Had SM paid artists accurately, there is no reason why it could not have provided the documents. The fact that SM is not able to provide the documents means that SM has not been paying the artists fairly, and as such the artists will exhaust all legal option to look at the requested documents.
Also, if the artists (Baekhyun, Xiumin, Chen) are not the only ones who have not received transparent accounting, this might be an issue with all other SM artists as well.
In reality, it is difficult for Baekhyun, Xiumin, and Chen to engage in a legal battle with a company as large as SM, but they have mustered up courage knowing that they will be representing the suspicions of other SM artists.
— Lee Jae Hak
2. Artists’ position on unfairly long-term contracts and attempts to extend them further.
Artists have previously signed exclusive contracts with SM for over 12 to 13 years. This differs from the standard exclusive contract for pop culture artists (singer-centered) notified by the Fair Trade Commission based on a contract period of seven years and is unilaterally disadvantageous to artists by exceeding the minimum reasonable level.
For the 13-year contract period, including the extended period from the provisional injunction decision in the TVXQ case, SM has already concluded that the above contract is an ultra-long-term exclusive contract with a unilateral structure and that SM is using its superior position to exercise unfair control and slander the applicants. For the applicants (TVXQ members), it is a contract that excessively infringes on their economic freedom and basic rights by imposing excessive benefits in return or an undue burden. It is a legal act that violates good morals and other social order, and all or part of the contents of the contract has been judged that there is considerable room for it to be deemed invalid or that its effect has expired due to the expiration of its reasonable duration (Seoul Central District Court Act 2009.10.27, refer to 2009 Kahab 2869 decision). In addition, in the case of the provisional injunction in the above case, the court once again found it difficult for idol starts who have teenagers as their main fan base, such as the applicants (TVXQ members), to maintain their existing popularity in the same field of activity until their thirties. It was also pointed out that a long-term exclusive contract deprives the entertainer of the opportunity to acquire appropriate compensation for exceptional talent and constant efforts to succeed in the entertainment industry and, in fact, may perform the same function as a lifelong contract. (Seoul Central District Court Act 2011.2.15, refer to 2010 Kahab 1245 decision).
With this, the existing exclusive contact is excessively long in duration, severely restricts personal rights, and is in accordance with Article 45, Paragraph 1, Subparagraph 6 of the Monopoly Regulation and Fair Trade Act, ‘Trading with the other party by unfairly using the transactional position.’ And, given the types of unfair trade practices in Attached Table 2 of the Enforcement Decree of the same act, such long-term compulsion falls under ‘Forcing Provision of Profits’ or ‘Provision of Disadvantages (Setting of Disadvantageous Transaction Conditions).’
Moreover, SM made artists sight exclusive contracts for seven years based on their debut date and an additional three years extension in case of overseas activities. But in the case of K-Pop artists, it takes at least a few months and up to several years to debut after signing an exclusive contract, and overseas activities are a natural premise. Furthermore, although Xiumin and Chen were members who planned to be active in China from the beginning, they were pressured to sign a long-term contract of 10 years or more from the date of the exclusive contract.
On the other hand, SM is trying to claim a contract period of at least 17 or 18 years by having artists sign the subsequent exclusive contracts again, as the 12 to 13-year contract period is not enough. This is SM’s repeated and extremely unfair tyranny against its artists.
In the process of signing the follow-up exclusive contracts, artists were unable to properly negotiate as the existing exclusive contract bound them, and it was difficult to set contract conditions that reflected their wishes. Even in the case of provisional injunction in the TVXQ case, the court found that the applicants (TVXQ members) only passively signed the exclusive contract form presented by SM and were not involved in determining the contents of the contract through negotiations with SM. As for the applicants (TVXQ members), it should have been possible to stop the existing negotiations and negotiate with an agency other than SM if an agreement was not reached. The fact that opportunity to select a contractual partner was not guaranteed. Therefore, proper negations could not be made between the applicants (TVXQ members) and SM. It is pointed out that even if an extension agreement was made after the applicants (TVXQ members) established their status as celebrities, the applicants, who were already bound by the existing exclusive contract, could not connect their increased status to strengthened negotiation power. While doing so, it was judged that the follow-up contract was an unfair contract with defects due to the difference in negotiating power (refer to the Seoul Central District Court 2010 Kahab 1245 decision on February 15, 2011).
It is also pointed out that the act of signing a follow-up exclusive contract like this also falls under Article 45, Paragraph 1, Subparagraph 6 of the Monopoly Regulation and Fair Trade Act as ‘acts of trading with the other party by unfairly using one’s trading position.’ In this way, it is considered that the long-term forced use of follow-up exclusive contracts falls under the ‘forced provision of benefits’ or ‘provision of disadvantages (establishment of disadvantageous transaction conditions)’ in Attached Table 2 of the Enforcement Decree of the same act.
Also, with this long-term exclusive contract, not only Baekhyun, Xiumin, and Chen but also most SM artists are in a similar situation.
Baekhyun, Xiumin, and Chen are seriously considering filing a complaint with the Fair Trade Commission regarding the long-term existing exclusive contract and subsequent exclusive contract signing.
— Lee Jae Hak
Lastly, the EXO members left a message for their fans who have supported them.
3. Statement to fans.
We apologize to the fans for causing concern, we are deeply sorry.
Although we are currently in a legal dispute with SM, we will choose a gracious path to settle our differences so as not to create concerns for fans.
We are currently, at this moment, very scared and in fear, but we have decided to raise our small voices about the mistreatment we have received.
We hope that you will be interested in our story and our struggling courage. We would like to sincerely thank our fans who have supported us for so long. Thank you so much.
— Lee Jae Hak
Stay tuned for updates.
