BREAKING NEWS: EXO's Baekhyun, Chen, and Xiumin Terminate Contracts With SM Entertainment

On June 1st, Korean media outlets reported that EXO's Baekhyun, Xiumin, and Chen have notified SM Entertainment regarding the termination of their exclusive contracts.

Attorney Lee Jae Hak, who act as legal representative for the three EXO members, said, "The artists previously sent content certifications to SM seven times through their legal representatives from March 21st to the present, and through this, transparent settlement data and a copy of the settlement grounds has been repeatedly requested, but SM responded that they could not provide copies of the data."

Adding, "It is the artists' legitimate right to request accurate and transparent settlement grounds for settlements that have not been clear in the past. SM is also obliged to comply in accordance with the exclusive contract and the Popular Culture and Arts Industry Development Act. However, SM maintained an unfair position that they could not provide a copy of the data in the end."

Because of this unfairness, they revealed, "Although the artists earnestly requested that copies of the settlement data be provided by May 31st through proof of contents on several occasions, as the basis for settlement was not provided, the existing exclusive contract was inevitably terminated as of June 1st. We have come to notify SM of the cancellation. If SM correctly paid the settlement money to the artists, there would be no reason why it could not provide the settlement data and the basis for the settlement. The fact that SM is unable to provide such settlement data and settlement grounds is a strong counter-evidence that SM did not properly pay the settlement money to the artists. We will take all civil and criminal legal action."

They also pointed out, "SM is trying to claim a contract period of at least 17 or 18 years, respectively, by having the 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."

"Although we are inevitably pursuing legal action due to the difference in our position with SM, we will do our best to resolve the dispute by finding a wise way so that fans do not have to worry too much. Those of us who want to speak out in a small voice about injustice that we have not been able to talk about in the past are actually very afraid and scared at this moment. We hope that you will pay attention to our words and our hard courage. Once again, we sincerely thank the fans who have supported us for a long time."

Below is the full context of Baekhyun, Xiumin, and Chen's notice of termination of exclusive contract with SM Entertainment:

I am Lawyer Lee Jae Hak of Lin Law Firm, who served as legal representation for EXO's members Baekhyun, Xiumin, and Chen (Baekhyun Byun, Minseok Kim, Jongdae Kim, hereinafter referred to as 'artists'). Hereinafter, our legal representative would like to express the position of the artists regarding the exclusive contract between the artists and SM Entertainment Co., Ltd. (hereinafter referred to as 'SM').

Previously, the artists sent certifications of content to SM 7 times through their legal representatives from March 21st to the present, and through this, they repeatedly requested copies of transparent settlement data and settlement grounds.

It is the least legitimate right of artists to request an accurate and transparent settlement basis for settlements that have not been clear in the meantime, and SM is also obliged to comply in accordance with the exclusive contract and the Popular Culture and Arts Industry Development Act. However, SM maintained an unfair position that it could not provide a copy of the material in the end.
Along with this, after SM has signed long-term contracts with artists over 12 to 13 years in the past, this period is not enough, so they have them sign the subsequent exclusive contract again, resulting in a long-term contract period of at least 17 years or more than 18 years. They are also repeatedly committing extremely unfair tyranny, such as claiming
Regarding this, artists feel that SM is forcing artists to sign so-called slave contracts based on their superior position for a period of 20 years, including the period of not a little trainee.

Artists would like to convey the various injustices that they have not been able to tell about through the position below.

. Artists' stance on their activities and SM's refusal to provide settlement data

1. Artists have signed long-term exclusive contracts with SM for more than 12 to 13 years and have faithfully performed entertainment activities as members of EXO.

2. During the long-term exclusive contract period as above, the artists only believed SM's explanation about the settlement amount that was settled every time, and received the settlement money only by looking at the data unilaterally written by SM, which had no specific and objective evidence. Regarding this, artists have recently officially requested copies of the settlement data and the basis for settlement several times through their agents, but SM responded that they could not provide copies of the data.

3. SM has an obligation under the exclusive contract and the Popular Culture and Arts Industry Development Act to provide settlement data and settlement basis, including details of total income, details of expenses subject to deduction, details of amount subject to deduction, according to the existing exclusive contract to the artists. And since the settlement cycle according to the above exclusive contract comes twice a year, the above settlement data and settlement basis must also be provided twice a year. However, during the exclusive contract period of 12 or 13 years, SM has not properly provided such settlement data and basis for settlement to artists.

4. According to a precedent, an exclusive contract is based on a high degree of trust, and if the agency does not fulfill its obligation to provide settlement data, the entertainer has the right under the exclusive contract to review and file an objection to the agency in relation to the settlement of profits. is not properly guaranteed, so not providing settlement data is a reason for terminating the exclusive contract (refer to Seoul High Court 2020. 1. 31. Decision 2019 Na 2034976). In the meantime, despite numerous requests made through the agent's attorney, SM has already failed to fulfill its obligation to provide data, and as a result, grounds for termination of the existing exclusive contract have arisen.

5. Although the artists earnestly requested that copies of the settlement data be provided by May 31st through proof of contents on several occasions, as the basis for settlement was not provided, the existing exclusive contract was inevitably terminated as of June 1st. We have come to notify SM of the cancellation.

6. If SM correctly paid the settlement money to the artists, there would be no reason why it could not provide the settlement data and the basis for the settlement. The fact that SM is unable to provide such settlement data and settlement grounds is a strong counter-evidence that SM did not properly pay the settlement money to the artists. We will take all civil and criminal legal action.

7. Also, as in the case of artists (Baekhyun, Xiumin, and Chen), if settlement data and basis for settlement have not been provided to other SM artists, this is not just a problem for Baekhyun, Xiumin, and Chen, but a problem for all SM artists. that could be a problem.

8. In fact, it is very difficult for Baekhyun, Xiumin, and Chen to file a legal lawsuit against SM, a large company, but they started with the heart and courage to replace the various doubts that many SM artists have.

Artists' stance on unfairly long-term contracts and further extension attempts

1. In the past, artists have signed exclusive contracts with SM for over 12 to 13 years. This is very different from the standard exclusive contract for pop culture artists (singer-centered) notified by the Fair Trade Commission based on a contract period of 7 years, and is unilaterally disadvantageous to artists by exceeding the minimum reasonable level.

2. 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 (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 It 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 provisional injunction in the above case, the court once again found that it is very difficult for idol stars 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 they are in their 30s. It was also pointed out that a long-term exclusive contract deprives the entertainer of the opportunity to acquire appropriate compensation for his exceptional talent and constant efforts to succeed in the entertainment industry, and in fact, may perform the same function as a lifelong contract (Seoul). Refer to the 2010 Kahab 1245 decision of the Central District Court on February 15, 2011).

3. As such, the existing exclusive contract is excessively long in duration and severely restricts personal rights, and 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' to the act of doing'. 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 'Providing Disadvantages (setting disadvantageous transaction conditions)' in the Attached Table above.

4. Moreover, SM made artists sign exclusive contracts for 7 years based on their debut date, and an additional 3 years extension in case of overseas activities. By the way, in the case of Korean 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, even though Xiumin and Chen were members who planned to be active in China from the beginning, they were forced to sign a long-term contract of 10 years or more from the date of the exclusive contract from the beginning.

5. On the other hand, SM is trying to claim a contract period of at least 17 or 18 years, respectively, by having the 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.

6. In the process of signing the follow-up contract, the artists were unable to properly negotiate in a situation where they were bound by the existing exclusive contract, and it was difficult to set contract conditions or reflect their wishes on an equal footing. 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 content of the contract through negotiations with SM, and the applicant It should have been possible for them (TVXQ members) to stop the existing negotiations and negotiate with an entertainment agency other than SM if an agreement was not reached, but the opportunity to choose such a contract partner was not guaranteed, so the applicants (TVXQ members) The fact that negotiations in the true sense could not be made between the (members of TVXQ) and SM, and even if an extension agreement was made after the applicants (TVXQ members) established their status as celebrities, the applicants were already bound by the existing exclusive contract. It was judged that the follow-up contract was an unfair contract with defects due to the difference in negotiating power (Seoul Central District Court, February 15, 2011, 2010 Kahab 1245 see decision).

7. 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, 'acts of trading with the other party by unfairly using one's trading position'. In this way, the long-term forced use of a follow-up exclusive contract is regarded as separately falling under 'Forcing Provision of Profits' or 'Providing Disadvantages (Setting of Disadvantageous Transaction Terms)' in Attached Table 2 of the Enforcement Decree of the same Act.

8. Also, with this long-term exclusive contract, not only Baekhyun, Xiumin, and Chen, but also most SM artists are in a similar situation.

9. 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.

Message to the fans

1. We apologize for causing great concern to the fans with this incident, and there is no way we can avoid our apologies.

2. Due to the difference in position with SM, we are inevitably pursuing legal action, but we will do our best to resolve the dispute by finding a wise way so that fans do not have to worry too much.

3. Those of us who want to speak out in a small voice about injustice that we have not been able to talk about in the past are actually very afraid and scared at this moment.

4. We hope that you will pay attention to our words and our hard courage. Once again, we sincerely thank the fans who have supported us for a long time.

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