Introduction
The music industry, like many other industries, relies on cross-border transactions. These transactions are backed by contractual clauses providing for dispute resolution through international arbitration. While not many celebrities appear before arbitral tribunals, such rare appearances can be spotted if the available cases are closely scrutinized.
At Jus Mundi, we decided to take up the challenge and examine the involvement of pop stars, artists, and celebrities in arbitrations by looking into our comprehensive dataset of commercial arbitration awards.
Below is a presentation of three intriguing commercial arbitration cases involving celebrities with interesting details and unexpected plot twists.
Unique v. Annis Respondents
The concert dates were fixed, the tickets were sold out, and everything was ready for three scheduled concerts in Brazil, except the star did not show up, and she was no one else but Rihanna herself.
After advancing US$825,000 as “deposits” with two contracts, Unique, the producer and promoter of the concerts, received a letter from WMA, Rihanna’s exclusive booking agent, claiming that Rihanna had not confirmed to perform in Brazil. In addition, the letter asked to remove Rihanna’s name from all advertisements and promotional activities.
Unique rushed to contact Annis, who acted on behalf of Rihanna, for immediate clarifications. Annis responded that they are on top of the problem and doing their best to resolve it, which allegedly occurred because of commission disagreements with WMA.
Unable to receive any reasonable explanation, Ms. Balsimelli, CEO of Unique, traveled, unannounced, to New York to investigate the matter on the ground. However, neither of the addresses provided by the Respondents revealed any trace ofany company operating under the mentioned names. What’s worse, she found the so-claimed “880 Eighth Avenue” address in Manhattan to be nonexistent.
Realizing that they were likely uncovering fraud, Unique attempted to get their money back from the Respondents but were only able to recover US$390,000.
Pursuant to the dispute resolution clause provided in the Performance Contract, Unique submitted the dispute for ICDR arbitration under the AAA Arbitration Rules 2009 against Annis Respondents, claiming fraud, aiding and abetting fraud, breach of contract, civil conspiracy, and unjust enrichment.
Tribunal
Henry G. Burnett (Sole arbitrator)
Arbitration
In an award dated 13 Aug 2012, the sole arbitrator found that the Vegas Style Respondents and the Annis Respondents had engaged in an elaborate fraudulent scheme to defraud Unique out of as much money as they could.
- Addressing the common law fraud claim, the tribunal ruled that the Respondents knowingly and intentionally committed fraud in relation to their statements that they were able to provide the services of Rihanna to perform concerts in Brazil, as well as their concerted efforts to conceal this fraudulent scheme after it began to unravel.
- The tribunal went on with the civil conspiracy claim and found the Respondents were jointly and severally liable as they participated in a civil conspiracy to intentionally defraud Claimants into paying substantial amounts of money for services that neither were capable of providing.
- With respect to the claim of breach of fiduciary duty, the tribunal found the Vegas Style Respondents liable for breach of fiduciary duty based upon its status as Claimants’ representative to procure the services of Rihanna for the Brazil concerts, as well as their representation that Claimants’ money would be maintained in an escrow account, and their failure to do so.
- The tribunal then turned to the breach of contract and found that the Respondents breached the Talent Binder and the Performance Contract by failing to perform and return Claimants’ money as required.
Consequently, the tribunal awarded Claimants US$435,000 plus interest in damages based on their fraud, civil conspiracy, breach of fiduciary duty, and breach of contract claims, as well as US$1,000,000 in punitive damages. Respondents were ordered to bear the fees and arbitration costs.
Cognac Ferrand v. Mystique Brands
The following arbitration is unique as it concerns the missed royalty payments to US rapper Snoop Dogg, while the sole-arbitrator is the current ICC Court president, Claudia T. Salomon.
Delaware-registered drinks importer Mystique Brands entered into an agreement in 2018 with a French cognac producer, Cognac Ferrand, entering a five-year exclusive right to import and market certain brands of cognacs.
As part of the import agreement, Mystique entered into an endorsement agreement with Snoop Dogg to promote “Cognac Landy” and “Drama” brands and agreed to assume all costs related to the agreements, including the royalty payments. (Commercial video of Snoop Dogg x Cognac Landy)
What could have gone wrong? Mystique went insolvent, and Ferrand decided to terminate the agreement in 2009, alleging Mystique did not pay the royalty to Snoop Dogg as set out in their agreement.
Dissatisfied with these developments, Mystique submitted the case for arbitration before ICDR in 2010, asserting that Ferrand improperly terminated the import agreement. Ferrand counterclaimed for US$4.5 million in damages. Sole arbitrator Philip O’Neill issued an interim award in 2021, holding that Ferrand’s termination of the agreement was lawful due to Mystique’s insolvency.
However, before the evidentiary hearing, the first arbitration was interrupted by Mystique’s filing for bankruptcy proceedings in 2013.
Not resuming the arbitration due to ICDR regulations and the destruction of arbitration records in 2017, Ferrandcommenced a new ICDR arbitration against Mystique under the ICDR Arbitration Rules 2014, with Salomon seated as sole arbitrator.
In the second arbitration, Ferrand claimed over US$10 million against Mystique in damages for lost profits and pre-judgment interest.
Tribunal
Claudia T. Salomon (Sole arbitrator)
Arbitration
In an award dated 1 May 2020, the sole arbitrator denied all Ferrand’s claims while awarded Mystique around US$2 million for costs.
- The tribunal found that Mystique had not breached its minimum purchase obligations under the contract, as it had satisfied the first-year requirements and terminated the agreement.
- The tribunal rejected Ferrand’s repudiation argument since it failed to demonstrate the high level of intention not to perform (required under New York law) in March 2009, when the alleged repudiation took place.
- The tribunal emphasized the consequences of Ferrand’s termination of the agreement, as it released Mystique of its obligations under the agreement.
- The tribunal opined that the agreement couldn’t be read to impose an obligation on Mystique to incur any threshold level of expense related to marketing, advertising, or promotion.
- The tribunal also rejected Ferrand’s claim over royalties due to Snoop Dogg because it failed to establish evidence of damages and causation.
- The tribunal clarified that the remedy of lost profits was not available for Ferrand under New York Uniform Commercial Code.
- The tribunal concluded that Ferrand failed to establish its damages as Ferrand was unable to satisfy its burden of proof with respect to those damages.
Ferrand then moved to vacate the award, alleging the arbitrator had “manifestly disregarded” the outcome of the first arbitration and erred in awarding costs.
In January 2021, the US District Court of the Southern District of New York has upheld the award issued by Salomon and denied Ferrand’s motion to vacate the award.
The District Judge held that Salomon’s award was not subject to a de novo review, and the arbitrator was entitled to find that Mystique was the prevailing party in awarding costs.
Paul van Dyk v. Alda Events
No one in the crowd attending the “A State of Trance” festival at Utrecht in 2016 expected to see what was about to happen on the stage during the performance.
The German trance legend Paul van Dyk stood on the DJ equipment table to cheer up the crowd, and shortly after disappeared from the view leaving everyone puzzled, wondering what could have gone wrong and what happened to the artist.
The music kept playing, but soon after, it became clear that Paul had fallen into a 3 meters hole on the stage, landing headfirst and immediately falling unconscious.
Soon after, it became known that Paul suffered substantial injuries, including a brain injury and damage to his spine.
In the aftermath of the incident, it appeared that Paul stepped on an unmarked black Molton cloth covering the empty, unsafe space that appeared to be solid ground in the low light setting and fell at least 3 meters onto the floor below.
Paul remained in the hospital care in Utrecht and later in Berlin for more than two months recovering from the injury and later continuing his therapy after being discharged from the hospital for several months.
In March 2017, Paul commenced an ICDR arbitration under the ICDR Arbitration Rules 2014 against the Dutch concert promoter, Alda Events, claiming for breach of the booking agreement, negligence relating to the fall suffered by him during the performance, and recovery of all damages arising from such breach and negligence.
The agreement included, among other things, Alda’s responsibility to provide a safe environment for Paul’s performance. It provided:
That Alda was “solely responsible to provide a safe environment … including but not limited to with respect to the staging, stage covering, … supervision and direction” for Paul’s performance at ASOT.
Paul claimed that Alda personnel gave him no warning about the danger and made no effort to stop him from proceeding as he did.
Tribunal
Jeffrey G. Benz (Sole arbitrator)
Arbitration
In an ICDR award issued in September 2018, the tribunal analyzed minute details of the incident by addressing all the presented evidence that included the testimony of witnesses, the presentation of common practices with the design and security of the stages, and even video exhibits of previous DJ behavior during festival performances. Consequently, the tribunal concluded that Alda’s negligence and breach of its duty of care was the proximate cause of the resulting injury to Paul.
The arbitrator awarded in Paul’s favor for breach of contract and his claims for negligence because it found that Alda was aware of the DJ’s on-stage behavior at festivals, and Paul’s stage movements were foreseeable to Alda.
The arbitrator awarded in favor of Paul and his company around $12.6 million in total:
- $5.7 million for economic damages,
- $5.5 million for non-economic damages on the negligence claims,
- $0.1 million for pre-judgment interest, and
- $1.2 million for arbitration fees and costs.
Paul and his company filed the petition for an order confirming the award before a California federal court.
Alda challenged the validity of the arbitration agreement because it was Paul’s company who signed it.
The judge ruled that Paul had standing to pursue his personal claims in the arbitration because the lacking due consent may be cured by subsequent conduct, in this case, by voluntarily accepting and retaining the benefits of the contract. In any event, the judge concluded that Paul was, alternatively, a third-party beneficiary of the contract with the right to enforce the provisions that were clearly intended to benefit him personally. Eventually, the judge confirmed the $12.6 million award.
