Final Court Rulings Reveal That a Slave Contract Between JYJ and SM Entertainment Never Existed

Eight years after the start of the lawsuit, the full court ruling for the lawsuit between JYJ and SM Entertainment lawsuit was revealed, showing no evidence of a slave contract.

Former TVXQ members Jaejoong, Yoochun, and Junsu, now known as JYJ, filed a lawsuit against SM Entertainment on July 31, 2009.

The lawsuit continued until 2012, where it ended with a settlement. JYJ’s lawyers requested for the court documents to be sealed. But a new law was put into place in 2015, forcing the civil court case documents to be made available to the public.

Viewable court documents sparked the search for the truth. Recently, details of the entire conflict and contract were revealed, finally clearing up the case once and for all.

At the start of the case, SM Entertainment had a single demand. They wanted the JYJ members to pay back the monetary loss that was caused by JYJ refusing to participate in concerts, CFs, and other schedules from the start of the lawsuit to the end. SM Entertainment asked for 2.2 billion won in damages with 20% interest, compounded yearly, until the amount was paid off.

On the other side, JYJ had multiple demands.

Their first demand was for SM Entertainment to pay them 20 million won for each time the company interfered with a JYJ member’s activity. Secondly, they claimed that the pay distribution listed in the contract was unfair, so they demanded SM Entertainment adjust the distributions and pay the JYJ members the difference. Next, they wanted SM Entertainment to pay JYJ the money that was withheld from them in 2009 after the start of the lawsuit. Lastly, they wanted 5 billion won with 20% interest, compounded yearly until the amount was paid off.

 The court ultimately decided on the following 6 terms:

  1. The contract between the JYJ members and SM Entertainment was valid up until July 31, 2009, when JYJ submitted their lawsuit. Once the lawsuit was submitted, JYJ and SM Entertainment were no longer legally tied via a contract.
  2. The only demand from JYJ that was acknowledged was their claim for money withheld in 2009. Each of the JYJ members would receive 650 million won.
  3. Both parties will withdraw their monetary damage claims.
  4. Both parties will not interfere with each other’s activities.
  5. Both parties will keep the ruling a secret to the public. (Invalidated with the 2015 law)
  6. Both parties will pay their own lawsuit fees.
JYJ was unable to have many of their demands met as the court sided with SM Entertainment.

There was concern that fans would believe the 650 million won payment to each member could have been considered a settlement payment for the slave contract the JYJ members were under. If the court acknowledged that there was a slave contract, the court would have forced SM Entertainment to pay the requested 5 billion won.

The court determined that there was no slave contract given by SM Entertainment, and therefore no necessary payment.

JYJ claimed their contract with SM Entertainment was a slave contract due to the length of the contract and the revenue distribution.

Regarding the length of their contracts, it was actually the parents of the 5 TVXQ members who agreed to extend the length of the contract from 10 to 13 years. Rumors of TVXQ being a member-rotational group surfaced, and the parents collectively petitioned SM Entertainment asking for an extension in the contract length in order to guarantee their security.

The court also acknowledged SM Entertainment’s revenue distribution as fair. Any and all production fees of the group’s album, from producers and composers, to mixing and music video production, were paid entirely by the company.

It was also written into the contract that all of the TVXQ members at the time would be paid based off of the group’s revenue, not profits.

Rising Sun and Mirotic gave TVXQ their first and second album sales bonuses.

Furthermore, SM Entertainment gave each of the members a bonus when the group hit certain sales milestones. When a total of 500,000 albums were sold, each member received a 50 million won bonus. This was reached after the release of Rising Sun. When 1,000,000 albums were sold, each member received a bonus of 100 million won, which was received after Mirotic.

TVXQ had many overseas activities and concerts during their time as 5 members and the revenue split between the company and the group at the time was 70% to SM Entertainment, 30% to the members. This distribution was also deemed fair by the court.

TVXQ at the Beijing stop of their 3rd Asia Tour “Mirotic”.

Finally, the members were guaranteed to be paid once an album’s sales reached 50,000. TVXQ has never failed to reach this number, meaning that they were paid for every comeback.

This brings the biggest question of all regarding the feud between JYJ and SM Entertainment. Was SM Entertainment interfering with JYJ’s activities?

During the time the lawsuit was proceeding, SM Entertainment asked JYJ to not appear on broadcasts in order to reduce any risk of another lawsuit occurring, as there could potentially be hidden contracts in play. SM Entertainment did not force this on JYJ and the court agreed. The Fair Trade Commission also investigated this and found no signs of foul play.

Source: Instiz