/*

* Translator’s note:

*

* When copying to other places do not alter the content.

* The original written in Korean can be found in www.2paradise.us, TVXQ fan-site.

* For your private use only and without responsibility on the part of the translator

* or the fan-site.

*

* Last modified 3rd March 2011.

*/

 

Hello this is “WonJang”.

I got a detailed review of the 7^th May public hearing.

It was provided by a one of our fan-site members. Thank you.

 

Please use this as extra information for your private use only.

As we must consider the fact that she was taking these down by hand and only what could be heard best to her ability. It’s not too long so don’t skip too much, I recommend you to try reading it thoroughly.

 

*****

Hello, I’m back from the trial, public hearing.

I’ll try to write in most objective manner. It will be disadvantage to ourselves, the fans, if we see things from one side only.

The records are in the order I wrote them down, in the order as I heard them said in the trial. Only main points are listed. During the trial hearing lasting 1hr 30mins, there was so much talks so I was unable to write down every single thing.

 

* * * * *

 

Sitting Judge: Choi SeungJun (a man and a woman were seated on his both sides). Also there were two other people sitting at the lower table. (They seem like clerks?).

Today’s trial was appeal against the temporary contract injunction applied by the 3 members of TVXQ v SM Entertainment.

I’m not too familiar with legal language so some of the legal terms I wrote in simple forms I know.

 

‘applicant’ (3 members), ‘respondent’(SM Ent), ‘Creditor’ (3 members), ‘Debtor’ (SM Ent). I put (“I think”) with brackets to the parts I couldn’t hear well and assumed from pronunciation at that time.

When the Judge entered the room, he confirmed each solicitor by calling their names aloud.

·         3 member’s side was Yoo MyongHo, Im SangHyuk, Hwang JungHo, and Kim SoYoung from SeJong.

·         SM Ent.’s side was Choi SeungSu, Lee SuYoung, Choi JeongRyul, Kim Mi… from JiPyongJiSeong. (the names are not very accurate as I wrote down as I heard them said).

 

Only the solicitors were present from the 3 member’s side. From the SM Ent‘s side Kim YeungMin and Director Nam SoYung attended the trial. There were about 3 people who looked like reporters and others were some very young fans and student fans. Surprisingly there weren’t so many people. There were about 15 people in the gallery including myself.

 

Choi J:

3 members side submitted up to #19 (I think?) as explanatory material. Some evidence were repeated in the middle but since we have confirmed they are repeated, I won’t order correction. SM Ent. side submitted up to #58.

I read the response from each party. In a word, ‘frustrating’. It is so frustrating that there is probably one truth but the view on that truth is so different. Let’s first hear from the appellant, SM Entertainment.

 

SMEnt (Mr Choi JungRyul):

The contract injunction application itself was incident that occurred due to the entangled interest of the parties, rather than problems in the actual contract. SM Ent. is incurring unrecoverable damages  because the 3 members are making exclusive contracts that is beyond the purport of the last decision of the temporary contract injunction. Also they refused all the schedules they originally agreed to do, and as result SM Ent. is incurring damages in many ways and this is expanding to larger damages.

 

There is preconception in the Korean Entertainment industry about management agency companies. That company is the stronger party and entertainer is the weaker party. But that preconception was formed by some dishonest agencies and it is not right to make such generalisation. In the case with SM Ent. it is an agency operating with scientific and systematic ‘star system’. Boa, TVXQ, SuperJunior, SNSD are some of the evidence of this.

TVXQ also got huge popularity as soon as they made debut and it grew as a ‘big star’ under the management of SM Entertainment. It is no surprise to anyone that there is many people wanting to become a trainee of the SM Ent., an agency who can open doors to guaranteed future of becoming a star.

 

(List of many advantage and current assessment of the ‘trainee system’ followed)

 

As for the contract, it was updated 5 times. All 5 times, it was updated favourably to the TVXQ members and the last update was actually on 2009 Feb which was right before start of the legal dispute.

It is necessary to consider whether it is always a problem if the contract is for a long term. The contract should be void if treatment was bad for 13 years. But if the circumstance is such that one can work in a good condition, as a ‘top-star’ honourably, it can be considered worthy as a lifelong job.

SM Entertainment has capabilities distinguishing it from other agencies. Firstly it provides training recognizing the potentials of an individual singer from young age. Secondly their producing ability.

 

(List of assessment of the SM Entertainment’s ability followed)

 

Moreover Korean entertainment agency contracts have particular characteristics compared to contracts of other foreign counties. That is, one agency manages exclusive recording contract, management contract, and agency contract. Because the listed 3 contracts are all combined in a Korean agency contract, it is not right to compare the contracts to other foreign cases where the contracts are done separately.

 

Also there was no problem in trust relationship between the 3 members and SM, so the application for the contract injunction can be seen as a typical betrayal act and if the courts accepts this act as legal then it will be bad influence to the industrial order, it will light fire to encourage bad agencies to steal away successful entertainers.

SM is open to contract amendments, currently it is changing/revising/updating contracts according to the advice and regulations of the Fair Trading Committee, for all the SM singers.

 

SMEnt (Mr Choi SeungSu)

To our interpretation of the decision of the court about the temporary contract injunction, the court only allowed the part where SM Ent. is not to interfere with individual activities of the 3 members. But the 3 members are proceeding as if there was a decision the contract is void. We would like to request the court to clearly explain to us again whether the 3 members are allowed to make independent contracts according to the decision.

Choi J: (to the solicitor of 3 members)

Has the 3 members ever requested to shorten the contract term?

JYJ:

No, 3 members were weaker party so they were in no position to discuss.

 

Choi J:

I can’t understand that part. The wish for contract injunction would have formed over period of time where they would have built up discontent, and not in an instant. Even between parties in difficult relationships aren’t there some things that are ought to be discussed?

 

JYJ: (no response)

 

Choi J: Can the trust relationships between the two parties be re-established?

 

SMEnt (Mr ChoiJR):

Yes, even if not in a perfect exclusive way, it is absolutely possible that we can bring up win-win situation for both parties. Such a huge value like TVXQ, we cannot have it destroyed. We can continue relationship in a business-like manner.

 

JYJ: (no comment)

 

Choi J: 3 member’s side, tell me your story.

 

JYJ: (Mr Yu MyongHo) (This person spoke so softly… it was uncomfortable to listen as he said so many things that were not true… solicitor… huh…)

The purport of the decision of the temporary contract injunction was to guarantee free activities of the 3 members. But SM Entertainment’s actions to the 3 members are always in attitude of revenge. The 3 members wished to continue activities as 5 members; SM Entertainment entirely ignored and unilaterally made schedules and requested to participate no matter what. The primary trigger of the dispute was due to the problems in profit distribution. During the trial for the temporary contract injunction in 2009, document related to the proof  was sent to SM Ent, but the received response was there is nothing to pay because at that time the money JYJ borrowed from SM Ent, 10million~25million Wons for tax and other things, exceeded the settlement amount and total sum is ‘minus’.

 

Also SM Entertainment is claiming JYJ infringed the exclusive contract by cosmetics incidents and other things, but those acts did not affect actual performance of their entertainment activities so it is irrelevant to the contract. The Chinese cosmetics company is only a simple investment and by obstructing such simple investment, is causing loss to the 3 members. The 3 members are not doing Chinese cosmetics company anymore and SM Ent CEO Mr Kim YeungMin is locked up by the D.A, admitting all his wrong doings after deformation action brought by the cosmetics company.

The activities as 5 members were desired but SM Ent. did not tell the schedule. The Chinese concert was detail that was not agreed. It was schedule that SM Entertainment made unilaterally and trying to force participation. The Chinese concert had many problems with approval and to our knowledge it was cancelled due to other reasons other than the boycott of the 3 members. (the solicitor continued saying other not-true things… such as SM Ent. is disturbing 3 member’s activities against court’s orders and the 3 members have nothing to do with cosmetics company).

SM Ent. refused the request for the revenue distribution documents. They did not cooperate nor performed the evidence preservation order. That is the reason termination of the contract was notified.

 

We are not saying SM Entertainment is bad. We do recognise SM Entertainment is a great management agency.

 

But by the power SM Ent. has in the industry, the 3 members are having really difficult time negotiating their activities, without a management company, and is going through hard times. Also the TVXQ fans have sent 120000 petitions to the FTC about the SM Entertainment. The 3 members still wishes to be together with the 2 members. Also the revenue distribution for 2009 is not done yet.

 

Choi J: Didn’t the 3 members contracted with other management agency?

 

JYJ: (Mr Im SangHyuk) No.

 

SMEnt: (Choi SeungSu): To our knowledge, they have.

 

SMEnt: (Choi JungRyul):

Currently the three members are in contractual relationship with Japanese company AVEX, this is something that cannot be done by the 3 members’ ability. There must be a management agency and that agency would have signed ‘rental’ contract with AVEX.

 

Choi J:

Do you understand that it is against the purport of the decision of the court if the 3 members make exclusive contract with other management agency?

 

JYJ: (no response)

 

Choi J:

Do you understand the 3 members must not break this whole agreement table by making exclusive contract with other management agency?

 

JYJ: (Im SangHyuk) Understood.

Choi J: Why isn’t the revenue distribution done for the Year2009?

 

SMEnt:

During the trial for the temporary contract injunction, the 3 members impliedly said ‘revenue distribution was done but it was signed without proper confirmation’. So we said how about everyone to sit together as always and do the confirmation and finalize the distribution. But the 3 members said they won’t come and will send accountant and solicitor. We replied if the 3 members come we will do the distribution. Then we have never heard from them again.

 

Choi J:

I don’t understand. Until now, didn’t you do the revenue distribution if a representee comes instead? I don’t understand why the 3 members must come in person and sign. Why do you do the distribution that way? Can’t the 3 members send representative persons, take the revenue distribution papers and the 3 members confirm them then finalize the distribution?

 

SMEnt:

Sure that is one way. However it is difficult to identify any missing expenditure or revenue only by papers sent through a representee. Because it is the 3 members who will have best knowledge about expenditure and revenue of TVXQ. To explain how revenue distribution is done until now, is like this. First we meet with revenue distribution papers, together with all types of receipt and contracts, we meet face to face and confirm them together. The reason is to find any part of the distribution that is incorrect. ‘I had this schedule this time, but how come it is missed in my revenue?’, ‘this expenditure is not mine, why is it in my expenditure?’ like such, if there is any incorrect accounting then the documents for the particular schedule must be searched, checked and confirmed. It is only after this process the revenue distribution accounting is finalised. So representee who does not know the schedule or circumstances, confirming and sending the documents to TVXQ will become a problem. So we have always done the revenue distribution accounting with the members present in person.

 

Also about the revenue accounting information the 3 members side claimed just now, we did prepare everything. We have performed revenue distribution document submission order as well as the evidence preservation order. We made document with all the information about the revenue for the last 5 years as requested by the 3 members.  As for the receipts, contractual documents, these are arranged by date together with those for SuperJunior and SNSD. Retrieving these related to TVXQ only was a difficult job.  After sorting these comprehensively we ended up with 1 huge container box full of documents. So we made inquiry to the courts. ‘These is this much documents, tell us what we do with this’. Then the court replied ‘even if you bring the documents, there is no space to keep them here at the court, how about photocopying parts requested by the 3 members?’. As advised, we have set up a separate office, put all the documents there, and placed a photocopier in the room. Then we sent many times document communicating to come so we can photocopy the parts they need. The 3 members never came.

 

Choi J:

I don’t understand. Why didn’t you go when you are told they will show all documents? You wanted to see the documents. They said they will show, why didn’t you go?

 

JYJ:

It’s true that SM Ent. sent the documents relating to the revenue. But the content itself so lacks credit so we could not trust them. For example they made 240million Wons (I think??) in the Asian Tour in 2008 for 14 concerts. It was written they made 1X0million Wons in Asian Tour in 2009 for 12 concerts, although difference in audience numbers was only about 10~20%. We couldn’t go because we are discussing if it is worth going to see the receipts and contractual documents when we cannot trust the documents in the first place. It is not we didn’t go. In particular, according to the news paper articles, TVXQ made over 9000million Wons as recording sales last year. But according to SM Entertainment the actual profit is only about some tens of millions of Wons. It is difficult understand this situation.

 

Choi J:

In that case I have more doubts. If the sales said 9000million and then profits say tens of millions then isn’t it right to go, check the documents that they are willing to show, find evidence that shows SM Ent. has been hiding something? If there is such conclusive evidence, the situation will be that we don’t even need this trial. With one conclusive evidence, the contact can be voided, so I cannot understand why you wouldn’t even try to go in search of evidence. You have requested such evidence but didn’t even go; does that mean you don’t have any objection to the expenditure?

 

JYJ: (no response)

 

Choi J: (questioning again) Why are you not investigating about expenditure.

 

JYJ:

In case of Japan, AVEX and SM Japan is taking most of the profits. In particular AVEX is taking the biggest share and SM Japan is taking over 20% of the profits in the middle. So the profit to SM Ent. is very small and 3 members are getting part of that. Contract with Japan is also unfair (continued explaining unfair profit details about Japan). We couldn’t go because we are discussing how we should prepare for this part.  It is not we didn’t go.

 

Choi J:

If that is the case, that you can’t trust… why are the 3 members contracting and continuing activities with AVEX? 
(so sharp! T_T)

 

JYJ: (short silence….) (continued claiming that SM Ent. contracted with disadvantages and couldn’t receive proper profits as result).

 

SMEnt:

SM Entertainment is (KOSDAQ) listed company and is audited by an accounting firm (KPMG?). All the documents, contracts, receipts, deposit papers, everything that we have submitted to the courts and the 3 members are subjected to auditing. We can submit explanation document to all and there is no problem with accounting.

Also SM Japan only takes 4~5% of the profit. That is cost for management. The reason being, in the case with TVXQ, we don’t entrust everything to AVEX and SM Japan does the management. As result they take 4~5% for doing the management work. This too, we can submit explanatory document.

Choi J:

What is that matter, about one member receiving ‘minus’ account because he borrowed big money, during the 2009 revenue distributing?

 

JYJ: It was two people.

 

SMEnt:

‘Two people’ is correct and they each had about 1X~25million Wons as depreciation assets (“borrowed money”). So it became a ‘minus’. This too we can submit explanation documents.

 

Choi J:

I don’t understand. A singer like TVXQ didn’t’t even get 20 million Wons as revenue distribution in 6 months so he borrowed money then the final sum is ‘minus’?

 

SMEnt:

Revenue distribution accounting occurs once in 6 months. We need to also consider accounting for 6 months is done, then there is 3 months term, then next 6 months accounting is done. It is for this reason that the 2009 distribution for first half of the year happened during the latter half of the year. i.e. during the temporary contract injunction application. But TVXQ had almost no Korean activities during the first half of the 2009, they were mainly doing their activities in Japan. But Japanese revenue distribution also happens 6 months term. Revenue distribution accounting for first half of the Year2009 then happens at beginning of Year2010. As result, the final sum was ‘minus’. But if they come to do their revenue distribution accounting today, they are to receive huge amount of money. (meaning their profits from 2009 Tokyo dome etc are distributed in 2010… they will be getting huge money this year).

 

Choi J: (to SMEnt)

Other management agencies, like SM Ent., will have many people who would have contracted from young age as trainee. Comparing such singers, can you confidently say TVXQ’s record profit terms were the best treatment in the industry? I don’t mean comparing them to other singers in SM Ent.

 

SMEnt.:

Contents of contracts of other agencies we do not know. But to my (Choi JungRyul’s) knowledge, contract of TVXQ is contract with best treatment (conditions) in the industry. By no means unfair.

 

Choi J: It would be difficult to ask other companies to submit their contract for review?

 

SMEnt: Yes.

 

Choi J:

Today, there are definitely times where I raised my voice to both parties. I ask for your understanding. Listening to the both sides, this issue is such that both parties will incur loss. I think you should settle. Are the 3 members acting as TVXQ?

 

SMEnt: They went to receive an award as if representing TVXQ.

 

Choi J: Won’t that be temporary actions?

 

JYJ: Currently the 3 members cannot contract with other places because the SM Entertainment’s strong position in the industry.

 

Choi J: (to SM Ent) Is it possible to have 1 year term contracts?

 

SMEnt: (Choi JungRyul) (in panic) In an entertainment industry there is no such thing as 1 year term contracts! That’s!!

 

Choi J: (laughed and cuts in)

Oh, I don’t mean strictly 1 year term. It’s just my sudden thought, so just think it as an example. If the long term contracts are becoming an issue, how about having 2~3 year short contracts and under agreed conditions when the conditions are satisfied the contract will extend automatically? I am not familiar with entertainment world so I am not sure if such contract already exists, it may even sound funny but I want to ask, how does such contract sound?

 

SM Ent: (solicitor hesitated and mumbled, it’s not something they can decide. Then CEO Kim YeungMin stood up and answered) I am SM Entertainment CEO Kim YeungMin. I think it is possible to negotiate in those terms.

 

Choi J: Is such negotiation possible from the 3 member’s side?

 

JYJ: (Im SangHyuk) No, there is no possibility of such negotiation (he sounded very firm).

 

SMEnt: (Choi SeungSu): About this, how about you call the 3 members and ask their opinion?

 

JYJ: (Yu MyongHo) 3 members are such people that they only become adults short while ago.

 

SMEnt: 3 members are not kids. They are already 25 years old, an adult.

 

Choi J: What’s the situation with the main trial?

 

JYJ: (Im SangHyuk) (confidently) Yes, we commenced the main trial.

 

SMEnt: (Choi SeungSu) (in disbelief) WE commenced the main trial. It is trial to confirm validity of the contract.

 

Choi J:

Why didn’t’t the 3 members commence the main trial? If you have no intention of negotiating, shouldn’t’t you have commenced the main trial and terminate the contract? Do you really have no intention to negotiate?

 

JYJ: (Im SangHyuk) 3 members have no intention to negotiate. (he seemed very certain).

 

Choi J:

What I want to say about negotiation is that you need to come to the table expecting to give up some parts. If one tries to impose his/her argument unconditionally, it means the person has no intention to negotiate. I hope the both sides understand this.

 

JYJ:

Currently SM Ent is being a tremendous tyranny and it is very difficult for the 3 members to do their activities as they are called traitors. They are in great suffering.

 

Choi J:

 If so, shouldn’t’t it make more sense that you negotiate? I am not saying SM Ent. is actually so, but if like claimed by the 3 members, if SM Ent. is making it difficult for them in the entertainment industry, considering it is only past ‘temporary contract injunction’ stage, shouldn’t they negotiate?

 

JYJ: (no response)

 

Choi J:

If the 3 members have no intention to negotiate, then there is no reason for me to meet them.

 

Listening to what is said today, it seems SM Ent. is thinking that right now they are incurring loss but through negotiation they can come to a position where they can make big future profits. In a way this trials itself is caused by SM Ent. unable to manage well entertainer in their company. I think negotiation must consider all these points.

 

JYJ: (Im SangHyuk)  As you said, I will ask the 3 members if they have intention to negotiate.

 

Choi J: Yes, please do. Also for SM Entertainment, how about you come to negotiation with really breaking through contract? Not something like reducing terms 13 years to 11 years or increasing 10% distribution to 15%?

 

SMEnt: (Choi JungRyul)

Yes we will do that. Also in this trial the 3 members side said many things that were not true, we wanted to object to them right away but we will submit them in writing instead.

 

Choi J:

Yes, both parties please dispute in writing, I will make final decision after May. I hope there will be many good discussions between the parties during that time.

* * * * *

Finish

Honestly speaking it was like watching comedy. One saying things that are not true, one acting deceived even when he knows everything, and one going crazy of frustration because of the untruthful words. (JYJ, Judge, SMEnt respectively)

It was so great to see Judge asking such sharp questions. Choi J was taking offensive position and talked in strong ways as if he was angry.

For example, ‘If that is the case, that you can’t trust… why are the 3 members contracting and continuing activities with AVEX’

It was actually shouted at them like “If that is the case!!!! That you can’t trust!!! Why are the 3 members contracting and continuing activities with AVEX?!?!!!!”.

Also to SM Entertainment, “Can’t the 3 members send representative persons, confirm the revenue distribution papers they take with the 3 members then finalize the distribution?!!!!?!?"

Wow so strong… he had majesty air with him.

I don’t know if my writing is done properly. I am going to attend the next public hearing too.