EXO-CBX and SM Entertainment Mediation Update: Settlement Not Reached, Second Round Announced

On September 23, the 15th Civil Division of the Seoul Eastern District Court, presided over by Judge Cho Yong-rae, held its inaugural mediation session regarding the civil disputes involving CBX (Chen, Baekhyun, Xiumin) and SM Entertainment. These disputes stem from a contract enforcement lawsuit initiated by SM against CBX in June of last year, along with CBX‘s own claims for settlement against SM, with a combined legal value of approximately 600 million KRW.

During the private mediation, which lasted for approximately 30 minutes, only the legal representatives from both sides were present. Unfortunately, no resolution was achieved, prompting the court to set a follow-up mediation session for October 2.

Context of the Legal Dispute

On June 1, 2023, the members of CBX—Chen, Baekhyun, and Xiumin—articulated their dissatisfaction regarding various settlement matters and specific terms of their exclusive contracts, ultimately announcing their intention to terminate these agreements. However, on June 19, 2023, despite their initial disagreements, both parties publicly stated that they had come to a mutual resolution. Baekhyun proceeded to sign a renewed contract with SM, thereby reaffirming his commitment to the collaboration.

In a surprising development, Baekhyun launched an independent label, INB100, in January of the previous year, with Chen and Xiumin later joining him. This new label subsequently became a sub-label under One Hundred.

Claims of Breached Agreements

CBX alleges that SM Entertainment made a verbal commitment to a 5.5% album distribution fee through Kakao Entertainment, which has not been honored. The group asserts that this breach has effectively hindered their ability to adhere to the contractual clause that mandates the payment of 10% of individual activity revenue as royalties to SM. Conversely, SM claims that the underlying issue is attributable to what they describe as improper influence exerted by artist MC Mong.

Last June, CBX’s management lodged complaints against SM representatives, including Tak Young-joon and Lee Sung-soo (CAO), accusing them of fraud in violation of the Act on the Aggravated Punishment of Specific Economic Crimes. In response, SM filed a lawsuit to enforce the contract, labeling CBX’s actions as unreasonable.

Investigation Findings

In July, the Korea Fair Trade Commission (KFTC) completed its examination into the album distribution fees issued by Kakao Entertainment, ultimately finding no violations of the Fair Trade Act. Kakao stated that distribution rates are established collaboratively with business partners, taking into account factors such as contract duration and advance payments.

After thoroughly reviewing all relevant documents and Kakao Entertainment’s clarifications, the KFTC concluded that no illegal activities were conducted.

As the first mediation round has concluded without an agreement, all eyes are on the upcoming session scheduled for October, as it may provide a pivotal opportunity to resolve the enduring conflicts between EXO-CBX and SM Entertainment.

Sources: Daum

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