On September 23, the 15th Civil Division of the Seoul Eastern District Court (Presiding Judge Cho Yong-rae) conducted the first mediation session concerning civil lawsuits between CBX (Chen, Baekhyun, Xiumin) and SM. The cases involve SM’s contract enforcement lawsuit filed against CBX in June last year, and CBX’s settlement claim against SM. The total lawsuit value is approximately 600 million KRW.
The closed-door session, which lasted around 30 minutes, was attended only by legal representatives from both sides. No agreement was reached, and the court scheduled a second mediation date for October 2.
Background of the Dispute
On June 1, 2023, Chen, Baekhyun, and Xiumin, through legal representation, expressed dissatisfaction with settlement issues and other terms of their exclusive contracts, announcing their intention to terminate the contract. Despite initially opposing positions, both parties announced on June 19, 2023, that they had reached a mutual agreement. Baekhyun signed the agreement and renewed his contract with SM, promising to continue working together.
However, Baekhyun unexpectedly founded the independent label INB100 in January of last year, and Chen and Xiumin also joined. INB100 later became a sub-label under One Hundred.
Allegations Over Unfulfilled Promises
CBX claims that SM verbally promised a 5.5% album distribution fee through Kakao Entertainment, but this promise was not honored. The group argues that this breach made it impossible to comply with the agreement clause requiring 10% of individual activity revenue to be paid to SM as royalties. SM counters that the issue stems from what they describe as unfair inducement (tampering) by MC Mong toward their artists.
CBX’s agency filed complaints last June accusing SM representatives Tak Young-joon and Lee Sung-soo, CAO, of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. SM also filed a contract enforcement lawsuit, stating that CBX’s actions were unreasonable and seeking enforcement of the agreement.
Regulatory Review
In July, the Korea Fair Trade Commission concluded its investigation into Kakao Entertainment’s album distribution fees, finding no violations of the Fair Trade Act. Kakao Entertainment confirmed that distribution rates are set after consulting with business partners, considering contract duration and advance payments.
The KFTC ultimately determined that there was no illegality after reviewing all related materials and Kakao Entertainment’s explanations.
With the first round failing to produce results, attention is now on the upcoming October session to see if the long-running dispute between EXO-CBX and SM can finally be resolved.
Sources: Daum
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