EXO members Baekhyun, Xiumin, and Chen have formally announced the termination of their exclusive contracts with SM Entertainment.
The legal representative of Baekhyun, Xiumin, and Chen, Attorney Lee Jae Hak of Lind Law Firm, conveyed the position of the trio, real names Byun Baek Hyun, Kim Min Seok, and Kim Jong Dae respectively, in an official statement on June 1st.
They revealed, "From March 21st until now, we have sent seven registered letters to SM requesting transparent accounting data and proof of calculations. However, SM has maintained its stance that they cannot provide copies of these documents."
They continued to disclose, "As of today, June 1st, we have notified SM of the termination of our existing exclusive contracts."
The members criticized SM, stating, "Despite the 12 to 13-year exclusive contract period, SM is attempting to force artists to sign subsequent exclusive contracts again, claiming contract terms of at least 17 or 18 years. This is an extremely unfair abuse of power towards the artists by SM."
Below is the full statement from Baekhyun, Xiumin, and Chen.
Attorney Lee Jae Hak of Lind Law Firm, the legal representative for EXO members Baekhyun, Xiumin, and Chen (real names Byun Baek Hyun, Kim Min Seok, Kim Jong Dae, referred to as 'the artists' henceforth), is here to express the artists' stance on their exclusive contracts with SM Entertainment.
The artists have, through their legal representative, sent seven registered letters to SM since March 21st, repeatedly requesting transparent accounting data and proof of calculations.
Despite their rightful request for accurate and transparent calculation bases, SM unjustly maintained that they could not provide copies of the documents.
Furthermore, SM, after making long-term contracts of 12 to 13 years with the artists, is now trying to insist on contract terms reaching an extremely unreasonable 17 or 18 years by forcing the artists to stamp on subsequent exclusive contracts.
If we include a not insignificant training period, this stretches over 20 years. The artists feel that SM is forcing so-called 'slave contracts' on artists based on its superior position. The artists wish to convey their position on various unfairnesses they could not previously express.
The full position statement from the artists regarding SM's refusal to provide accounting data and their activity over the years follows:
1. The artists have sincerely engaged in entertainment activities as EXO members under long-term exclusive contracts spanning 12 to 13 years with SM.
2. During this long-term contract period, the artists have received their settlement payments only based on SM's unilateral documents without clear and objective evidence, trusting SM's explanation at each settlement.
3. SM has a duty to provide the artists with accounting data and proof of calculation including total income details, deductible cost details, and details of deductible amounts according to the exclusive contract and the Act on the Development of the Public Culture and Arts Industry.
4. According to precedent, the exclusive contract is based on a high level of trust. If SM does not fulfill its duty to provide accounting data, the artist cannot fully exercise their contractual rights to review earnings calculations and raise objections with SM. Not providing accounting data is a reason for contract termination.
5. Despite earnestly requesting that SM provide copies of accounting data by May 31st through numerous registered letters, SM did not provide evidence of calculations, leading the artists to notify SM of the termination of the existing exclusive contracts as of today, June 1st.
6. In essence, if SM had accurately paid the settlement money to the artists, there would be no reason whatsoever to not provide the settlement data and grounds for the settlement. The fact that SM is unable to provide these documents strongly suggests that the company has not adequately paid the settlement to the artists. As a result, the artists are planning to take all possible legal actions, civil and criminal, against SM, including a lawsuit to claim the payment of the settlement money and inspect the exact settlement details.
7. Furthermore, if, like in the cases of the artists Baekhyun, Xiumin, and Chen, SM has not provided settlement data and grounds for settlement to other SM artists, this issue might not be limited to Baekhyun, Xiumin, and Chen alone but could potentially affect all artists under SM Entertainment.
8. Truthfully, for Baekhyun, Xiumin, and Chen, taking on a large corporation like SM in a legal dispute is an extremely challenging task. However, it's a step they have decided to undertake with courage, in an effort to represent the various concerns held by many SM artists.
b. Artists' stance on the unfairly long-term contract and attempts for further extension
1. The artists had initially signed an exclusive contract with SM that spanned over a lengthy period of 12 to 13 years. This is starkly different from the 7-year contract duration stipulated in the standard exclusive contract form for public culture artists (focusing on singers) announced by the Fair Trade Commission, and it is excessively long and unilaterally disadvantageous to the artists.
2. SM has already received a judgment in the TVXQ case's injunction decision that the 13-year contract term, including the extended period, is an ultra-long-term exclusive contract with a unilateral structure. The court has seen that this contract unfairly exerts its dominance, excessively infringing the economic freedom and basic rights of the applicants (members of TVXQ), and violating good morals and social order (Refer to Seoul Central District Court, October 27, 2009, 2009Kahap2869 decision). Moreover, the court pointed out that the unfair ultra-long-term exclusive contract would essentially serve as a lifetime contract, depriving artists of the opportunity to earn appropriate compensation for their outstanding talent and efforts to succeed in the entertainment industry (Refer to Seoul Central District Court, February 15, 2011, 2010Kahap1245 decision).
3. Thus, the original exclusive contract restricts personality rights excessively due to its overly long duration, falling under 'the act of trading unfairly by abusing the trading position' in Article 45, paragraph 1, item 6 of the Monopoly Regulation and Fair Trade Act. Moreover, such a long-term period enforcement corresponds to 'the imposition of profit' or 'the provision of disadvantages (setting of disadvantageous trade conditions)' in Appendix 2 of Unfair Trade Practices of the same Act.
4. Furthermore, SM has made the artists sign an exclusive contract that extends by 7 years based on the debut day, and another 3 years if they conduct activities overseas. In the case of Korean K-POP artists, several months to several years are required to sign an exclusive contract and make a debut. Additionally, overseas activities are a natural premise. Despite Xiumin and Chen being members who had initially planned to mainly conduct activities in China, the exclusive contract that adds 3 years when conducting overseas activities has effectively forced a long-term contract of over 10 years based on the exclusive contract date.
5. In addition, SM, not content with an exclusive contract period of 12 to 13 years, is trying to force the artists to stamp the follow-up exclusive contracts, insisting on a contract period of at least 17 or 18 years for each artist. This shows SM's continued unfair practice against its artists.
6. During the stamping process of the follow-up exclusive contract, the artists were unable to negotiate properly as they were bound by the original exclusive contract and had difficulties reflecting their wishes or setting contract conditions from an equal position. In the injunction decision of the TVXQ case, the court judged that the follow-up contract was an unfair contract with defects due to the difference in bargaining power (Refer to Seoul Central District Court, February 15, 2011, 2010Kahap1245 decision).
7. It is also pointed out that such acts of concluding the follow-up exclusive contract also fall under 'the act of trading unfairly by abusing the trading position' in Article 45, paragraph 1, item 6 of the Monopoly Regulation and Fair Trade Act.
8. Such a long-term exclusive contract is not only for Baekhyun, Xiumin, and Chen but also believed to be for most artists under SM.
9. Given such a long-term original exclusive contract and the act of concluding the follow-up exclusive contract, Baekhyun, Xiumin, and Chen are seriously considering filing a lawsuit with the Fair Trade Commission.
c. A Message to Our Fans
1.We cannot express enough our apologies and regrets for the worry and distress this situation has caused you all.
2.While we find ourselves compelled to respond legally due to differences with SM, we assure you that we will do our utmost to find a wise resolution and settle this dispute so as to minimize your concerns.
3.Although we are now finally speaking up about the injustices that we could not mention before, it is true that we are feeling very scared and apprehensive about this moment.
4.We sincerely hope you can lend your attention and understanding to the words we share and the difficult courage we have mustered. Once again, we are profoundly grateful to our fans who have supported us for so long.
June 1, 2023 Law firm Lin Attorney in charge: Lee Jae-Hak
