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Legal consequences of concert cancellations for Covid-19

Regrettably, owing to the coronavirus, some musical events have had to be cancelled. What are the consequences of such cancellations for the artists and organisers concerned? Is the artist still entitled to the contractual fee? Text by Céline Troillet

Legal consequences of concert cancellations for Covid-19

Empty stages and concert halls: what is the legal situation regarding events cancelled because of Covid-19 restrictions? (Photo: Disq)

The coronavirus is a source of discomfort and uncertainty for us all. We must adapt as well as we can to these unprecedented circumstances since they are, for the time being at least, beyond our control. There are no clear answers to the health and economic issues that this crisis has raised, and there is great legal uncertainty. There are many outstanding questions.

Do you have a contract?

If you have a contract (or electronic exchange), see if it regulates the cancellation of the concert on grounds of force majeure or pandemic, and what effect such a cancellation has on fees. Albeit possible, this is seldom the case. Unfortunately, when a contract does provide for such cancellation, the parties usually agree that fees are not due in that event. Contracts rarely provide for a reduction in costs or the repayment of expenses already sustained.

A. Absence of a contract

If there is no written agreement, what legal provisions are applicable? To find out, you must proceed step by step:

1. Consider what type of contract under the Swiss Code of Obligations (CO) might be binding on you: Swiss law, unfortunately, does not prescribe how an artist’s engagement contract is to be legally classified, and there is no precedent or case law in this regard. Therefore, there are several possible interpretations. Moreover, each case must be considered individually and you should seek legal advice in this regard.

The possible types of contract used for artists are: the contract for works and services (Article 363 et seq. CO), the employment contract (Article 319 et seq. CO), or the agency contract (Article 394 et seq. CO). The conditions of the individual contract types, and the differences between them, are described in section B below.

2. Once it is established what type of contract you are bound by, check the following explanatory notes on the types of contract (also see section B) to what extent compensation might be possible.

3. If the contract does not match any of the contract types provided for in the Code of Obligations, reference must be made to a general provision of contract law dealing with the consequences of non-performance of an obligation., i.e. Article 119 CO.

⇒ Principle and conditions of Article 119 CO:

This article stipulates that if, after a contract is concluded, circumstances intervene which make it impossible for one of the parties to perform its obligations (for reasons not attributable to that party), then the party is no longer bound by its contractual obligations. The law considers “subsequent” impossibility (i.e. after the contract is concluded), which presupposes the realisation of the three following conditions:

• the obligor (the party liable for performance of an obligation) is no longer able to perform (objective impossibility);
• the impossibility must arise from circumstances after the conclusion of the contract. Chance occurrences (beyond the control of a party) are a good example;
• the impossibility is not attributable to the obligor (it is not his fault if performance is made impossible).

⇒ Objective impossibility not attributable to the obligor:

It is for the court to determine whether the obligation is impossible to perform for reasons not attributable to the obligor.

When public order or internal security is threatened, as in the case of a pandemic, the Federal Council, for Switzerland, is obligated under the Federal Constitution to issue ordinances and take emergency decisions (Article 185 of the Federal Constitution). Within the framework of its discretionary power, the court is required to take into account the rules and decisions issued by the federal authorities. It follows that, in the case of concert cancellations proceeding from official decisions, the existence of an objective impossibility not attributable to the obligor would probably be recognised.

⇒ Legal consequences for the parties:

An impossibility within the meaning of Article 119 CO releases the obligor (the party who has to perform an obligation) from its obligation as well as the creditor (the party for which the obligor is required to perform) (Article 119(2) CO).

In other words, when a contract is concluded (between an artist and a concert organiser), the parties (the artist and the organiser) are both released from their obligations (the artist is no longer required to perform on stage; the organiser is no longer required to pay the artist a fee) if, through no fault of the artist’s (i.e. because of Covid-19 and not for a reason attributable to the artist), the person who was supposed to act (the artist) is prevented from fulfilling his obligation (to perform on stage).

B. The individual types of contract under the Swiss Code of Obligations

The contract for works and services (Article 363 et seq. CO):

Generally, the performances of an artist or group of artists fall within the scope of the contract for works and services (the artist delivers a single performance, based on a pre-defined programme, which is equated with a work).

Here, the case of force majeure is governed by Article 378 CO. This article provides that, where completion of a work is rendered impossible by a chance occurrence affecting the principal, the contractor is entitled to payment for the work already done and to reimbursement of any expenses incurred that were not included in the price.

If a concert is formally cancelled for coronavirus-related reasons, the impossibility for the principal (the organiser of the concert) to perform the contract should be recognised insofar as the principal is unable to stage the artist’s concert through no fault of his own. As a result, Article 378 CO would apply, and the artist would be entitled to remuneration for any work already performed (e.g. rehearsals) and his expenses.

The employment contract (Article 319et seq. CO):

Under certain circumstances, the artist’s contract can be deemed an employment contract (a subordinate relationship between the artist and the organiser, where the artist’s obligation to play music is determined by the employer’s needs rather than by his own as an artist).

Article 324 CO regulates the employee’s salary if he is prevented from working. Whether or not this provision applies to cases of force majeure, i.e. the cancellation of a concert by reason of coronavirus-related measures, is disputed. Most would answer in the affirmative, which would mean that the artist would be entitled to continued pay.

Agency contract (Article 394 et seq. CO):

If the artist’s contract falls neither under the contract of works and services nor under the employment contract, it will generally be classified as an agency contract (the artist seen as an agent performing a service for the organiser).

The agency contract does not provide for cases of force majeure. As a result, if a concert is cancelled for coronavirus-related reasons, Article 119 CO would probably apply and, accordingly, no remuneration would be payable. A reservation should be made in the event of untimely cancellation (e.g. immediately before the scheduled performance). In that case, compensation (but not the fee) could be granted to the artist for the loss sustained (Article 404 CO).

C. Conclusion

It is important to address the possible cancellation of the concert and the consequences on your legal relationship in the artist’s contract. If these points are regulated and the circumstance occurs, the artist and the organiser know what they can expect and claim from each other and can thus avoid financial and other damages.

In absence of a written contract, or if the contract does not regulate this point, the situation is likely to be more difficult. Since the legal nature of the artist’s contract is not clear, the relationship between the organiser and the artist will have to be interpreted to determine which of the three contract categories it is subject to (contract for works and services, employment contract or agency contract). The legal consequences will vary depending on the applicable rules. Payment of the artist’s fee will be justified in some cases, and not in others.

As you can see, there is no clear-cut answer determining the legal consequences of concert cancellations due to coronavirus. The circumstances must be appraised case by case. In absence of a contract, the ideal solution would be for the parties to agree a compromise. A postponement of the service or the total or partial reimbursement of your expenses could be possible solutions.

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Regrettably, owing to the coronavirus, some musical events have had to be cancelled. What are the consequences of such cancellations for the artists and organisers concerned? Is the artist still entitled to the contractual fee? Text by Céline Troillet

Legal consequences of concert cancellations for Covid-19

Empty stages and concert halls: what is the legal situation regarding events cancelled because of Covid-19 restrictions? (Photo: Disq)

The coronavirus is a source of discomfort and uncertainty for us all. We must adapt as well as we can to these unprecedented circumstances since they are, for the time being at least, beyond our control. There are no clear answers to the health and economic issues that this crisis has raised, and there is great legal uncertainty. There are many outstanding questions.

Do you have a contract?

If you have a contract (or electronic exchange), see...read more

Publishing agreements: What do I need to consider?

Publishing agreements in Switzerland are governed by the Swiss Code of Obligations (OR) The respective statutory provisions on it are, however, not very detailed. In the case of music publishing agreements in particular, you cannot simply rely on the law. Besides, the contractual parties may also stipulate their own arrangements in the agreement. So what do you have to be aware of with respect to publishing agreements? Text by Nicolas Pont

Publishing agreements are concludes between all parties involved in a work: authors (composers, lyricists, arrangers) and a publisher. (Photo: Alexskopje / Shutterstock.com)

The publishing agreement is incorporated into the law (Art. 380 ff. OR). The legal provisions are, however, not mandatory, and the parties have a lot of room to manoeuvre for the negotiations prior to signing the agreement. In cases of doubt, it might help to refer to the commented version of the SUISA model agreement.

Publishers can be referred to as the “managers of a work” – as the entity or person whose duty it is to promote the work. They seek to maximise usage and exploitation, e.g. in the form of radio broadcasts, synchronisation with audiovisual works and sales of music score. In return for this promotional activity, publishers who are members of collective management organisations (CMOs) benefit from part of the royalties for the usage of the works. The publisher is thus included in the works registration as an interested party and obtains a percentage of the work remuneration.

Entering into agreements and contracting parties

SUISA’s model agreement can be used as a contractual basis and adapted as required, but usually, each publisher has its own agreement. SUISA members have the opportunity as authors or publishers to have SUISA’s legal department check their agreement prior to signature free of charge. Our legal department may correct any disadvantageous provisions and also provide details on the professionalism of the publisher.

The law assumes that the author is the individual that has created the work. This means that a group of authors cannot be considered as authors. Only an individual member of a band can be a contracting party and sign the agreement. In order for the works to be completely integrated as the subject matter of the publishing agreement, all who have contributed to the creation of the composition must therefore sign the publishing agreement.

Furthermore, attention should also be paid to the fact that arrangements of works already published are not automatically published with the same publisher. As arrangements must be protected in their own right according to the law, the publisher must acquire the rights on them in a separate agreement with the arranger.

Term of the agreement

The agreement may be in effect between 3 (minimum duration stipulated by SUISA) and up to 70 years after the death of the author (statutory term of protection for a work). It is generally in the interest of a publisher to sign an agreement which spans as many years as possible, whereas authors are interested in limiting the term covering the assignment of their rights. It is, of course, possible to enter into a three-year-agreement which – if it is not being terminated – can be extended on a rolling basis of one year. Such an option does not require any additional steps.

If you determine the term of the agreement, the investment of the publisher should be taken into consideration, e.g. in cases where music score is being published. In any case, the parties should be aware of how long they are bound contractually. Another important point is to realise how difficult it might be to dissolve an agreement prior to its end date if the parties end up having a conflict. It is absolutely vital that rightsholders inform SUISA in any case so that SUISA can adapt its documentation.

Remuneration for the publisher

The percentage for the publisher is jointly determined by the parties. There is only one mandatory provision: In accordance with SUISA’s distribution rules, the publisher may only receive a maximum share of 35% of the remuneration from performing and broadcasting rights (e.g. for concerts and radio broadcasts). Subject to this reservation, the parties are free to determine the percentage. If no percentages have been entered into the agreement by the contracting parties, those determined by the distribution rules shall apply.

Agreements often do not contain explicit percentages, but rather refer to the applicability of the distribution rules of the respective collective management organisation. In the case of agreements with foreign publishers who register their catalogues with the society in their country, this leads to the application of foreign distribution rules: For performing and broadcasting rights, a publisher in Germany therefore receives 33.33% (GEMA), and 50% in England (PRS).

The international umbrella association of the collective management organisations, CISAC, has set out a guideline for the distribution key between authors and publishers that publishers should not receive more than 33.33% for performances and broadcasts. The 230 CISAC member societies from 120 countries are free to adapt this key. Many societies, such as GEMA and SACEM already apply this recommended distribution. SUISA also wishes to adapt its rules and regulations to this CISAC guideline. The respective application for a change of the SUISA distribution rules has been submitted to the Swiss Federal Institute of Intellectual Property (IPI) at the beginning of 2016. The IPI approval is still pending and would not come into force before 2017.

An “admin publisher”, which merely creates a connection with a collecting society (i.e. completes work registrations, checks distribution statements and possibly submits complaints etc.) should, logically, receive a smaller percentage than a publisher who is also looking after the promotion and placement of the work and the search for a producer.

You should not forget to determine the distribution of such monies that are not being paid by the collecting societies (e.g. for synchronisation rights). These revenues are usually split 50/50 between the publisher and the author. Finally, the author usually receives a 10% share of the income arising from the sales of music score.

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  1. Der Text sollte updated werden. Nach dem neuen Verteilungsreglement der SUISA erhält der Verleger neu höchstens 33,33% der Vergütung
    aus den Aufführungs- und Senderechten. (Im Text steht noch die alte Regel von 35%)

Leave a Reply

All comments will be moderated. This may take some time and we reserve the right not to publish comments that contradict the conditions of use.

Your email address will not be published.

Publishing agreements in Switzerland are governed by the Swiss Code of Obligations (OR) The respective statutory provisions on it are, however, not very detailed. In the case of music publishing agreements in particular, you cannot simply rely on the law. Besides, the contractual parties may also stipulate their own arrangements in the agreement. So what do you have to be aware of with respect to publishing agreements? Text by Nicolas Pont

Publishing agreements are concludes between all parties involved in a work: authors (composers, lyricists, arrangers) and a publisher. (Photo: Alexskopje / Shutterstock.com)

The publishing agreement is incorporated into the law (Art. 380 ff. OR). The legal provisions are, however, not mandatory, and the parties have a lot of room to manoeuvre for the negotiations prior to signing the agreement. In cases of...read more