In an application for preliminary injunction filed against SM Entertainment (“SME”) by three members of TVXQ, Hero, Jae Joong, Xiah Joon Soo, and Micky Yu Cheon (the “Applicants”), requesting the suspension of effectiveness of their exclusivity contracts with SME, the 50th Civil Division of Seoul Central District Court demonstrated its agreement with the three Applicants’ arguments by ruling that SME should not negotiate and/or conclude any agreement with a third party regarding the Applicants’ entertainment activities or interfere with any entertainment activities conducted by the Applicants at their own free will.
Shin & Kim represented the Applicants, and the gist of the arguments made was that the exclusivity contracts should be deemed null and void as they were unjustly weighted in favor of SME’s interests due to its superior bargaining power and were thus against public policy; it was also argued that there was an urgent need to suspend the effectiveness of such contracts as quickly as possible to protect the members’ basic constitutional rights of freedom of choice in employment activities. The court agreed with almost all of our arguments, and issued an injunction guaranteeing the Applicants’ right to independence in their entertainment activities.
Until now, Korean entertainers have had to bear the unfair treatment of their management companies, serving under long-term exclusivity contracts that have been labeled as “servitude” or “lifetime” contracts. They could file lawsuits to invalidate such long-term exclusivity contracts in protection of their rights, but such lawsuits usually take from 1 to 2 or more years to obtain a court ruling, which, in the entertainment world, is an unbearably long gap of time to not be active in entertainment activities. Due to such nature of litigation, Korean entertainers had little choice but to refrain from raising any issues with their unfair exclusivity contracts.
To address the aforesaid issues, Shin & Kim developed a practical and creative strategy to assist the three singers to break free from their unfair exclusivity contracts in a relatively short period of time, through the filing of an application for preliminary injunction, instead of a lawsuit on the merits of the case; this was the first time this kind of litigation strategy was attempted in the history of Korean entertainment and Shin & Kim drove its implementation through to successful fruition. Shin & Kim anticipates that this litigation strategy will pave the way for entertainers to obtain practical legal relief in disputes concerning unfair exclusivity contracts. Furthermore, it is widely viewed that the recent ruling in favor of the TVXQ members marks a starting point for fair and reasonable contract practices within the entertainment industry.
