Tuesday, November 3, 2009

[INFO] 091103 Summary of the Judgment of JaeChunSu's Petition for Preliminary Injunction to Void Exclusive Contract

What JaeChunSu wants - their exclusive contract declared as null and void [i.e. ineffective]

Current stage of proceedings – Preliminary Stage, still needs to wait for actual trial

What was granted – temporary suspension of the exclusive contract + JaeChunSu can engage in independent activities + SM cannot compel JaeChunSu to participate in entertainment related activities (otherwise it has to pay $10,000,000 KRW per violation)

Why - “basic relationship of trust that is the foundation ...has already crumbled” (3B) and if the actual trial was prolonged, JaeChunSu would basically be receiving little or no income if they were not allowed to pursue independent activities

Why the rest of was not allowed – because possiblitiy that TVXQ may continue as a group + ratio of distribution of revenue are difficult to calculate (3C)

On the issue of 1,000,000,000 KRW – the reason why the Court needs JaeChunSu to pay a deposit (or a bond insurance) is because in the case where SM wins, the court has to ensure that they have enough money to compensate SM (it is a common practice to request the party with a weaker financial position to provide security)

VERY VERY Important points raised by the Court in its reasoning –
 On negotiating powers when accepting the contract – ONE SIDED
o 2B1 – The Court rejected SM’s claim that JaeChunSu has equal or superior negotiating powers in accepting the contract.
o 2B5 – “an extremely one-sided contract”

 On the 13 years contract period – EXCESSIVE
o 2B2 – the earliest date the contract ends is 13th January, 2017 excluding the conscription period. On the length of the contract, the court commented it is the longest amongst all provided examples (apart from Boa and Yoo Young Jin’s 15 years)

 On the amount of damages JaeChunSu has to pay if they terminate the contract – SLAVE CONTRACT
o 2B3 – court hints that it is unfair as SM can terminate the contract without itself paying damages
o 2B4 – court concludes that the provisions on damages goes more than the original intention (of compensating the injured party i.e SM)
and instead “absolutely blocks the Petitioners [Jaechunsu] from exiting the Contract for the sole purpose of maximizing the profits of the Respondent [SM].”
“ By doing so the provisions act as a device to enslave the Petitioners to the Respondent for the abovementioned contractual period of 13 or more years and the court finds it difficult to sanction such them as they are” [seems like the court cannot help but agrees with the lay term ‘slave contract]
o 2B5 – court believes that such contracts does nothing but to solidify the monopoly of large entertainment companies in Korea

 Conclusion –
o The contract is “contrary to the public morals and social policy, or otherwise void because it exceeds what is rational for the length of a contractual term
o Unless SM modifies almost all of the important parts of the contract, including the contractual period and clause on damages in case of termination, this contract is likely to be void because it imposes on JaeChunsu an “unjust burden”

 Afternote –
o After the entering of the original contract (you can find the dates under 1C as listed in the table), there were 5 subsequent supplementary agreements. The last agreement is dated 6th February, 2009. [note from writer – this is the point of time where JaeChunSu claims they have not been receiving income therafter. It is unknown what amendment have been made which brought forward such claim]

Credits: pinkwings @ OneTVXQ.com


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