Lack of a film distribution license, without compromising the effectiveness of the distribution contract

【Original】Article/Ximing

The author discussed film contracts in violation of laws and administrative regulations and invalidation in the previous articles "Which laws in violation of film and television contracts can cause the contract to be invalid" and "Identification Standards for Mandatory Provisions of Validity" The problem. This article discusses the validity of the film distribution contract signed by the parties in the absence of a film distribution business license in conjunction with the referee.

A commercial entity without a film distribution business license signing a contract with film distribution as the main content is equally valid and has no flaws in effectiveness. Take the following judgment as an example: Party A’s Cloud X Company and Party B’s Shao X Pai Company signed a "Distribution Agreement" for the movie "X Lost Z City". The content related to the topic of this article includes: Yun X Company authorized Shao X Pai Company to enjoy the film in Distribution rights for movie theaters in mainland China. The Shao X faction company is responsible for formulating the release plan of the film; for negotiating with the theaters on the screening, reward system and implementation of the film, as well as for the production and delivery of materials, on-site distribution, and field activities. A dispute later became a lawsuit. In the first instance, Zhongyun X Company argued that “Shao Xpai Company does not hold a film distribution business license. According to Article 24 of the “Film Industry Promotion Law of the People’s Republic of China” and Article 30 of the “Film Management Regulations of the People’s Republic of China” According to Article 7, the "Issuance Agreement" signed with Cloud X Company shall be invalid". The court of first instance held that the "Issuance Agreement" and "Supplementary Agreement" signed by Shao X Pai Company and Yun X Company were the true intentions of both parties, and the content did not violate the mandatory provisions of national laws and administrative regulations. Although Yun X Company argues that Shao X Pai Company does not possess the "Film Distribution Business License" and therefore the "Distribution Agreement" is invalid, it is based on Article 37 of the "Regulations on Film Management of the People's Republic of China" concerning the establishment of film distribution units The provisions of the “Film Industry Promotion Law of the People’s Republic of China” are not relevant to this case, and Article 24 of the “Film Industry Promotion Law of the People’s Republic of China” is an administrative provision that does not affect the validity of the “Distribution Agreement” in this case. Therefore, the above-mentioned defense opinion of Cloud X Company lacks legal basis. The court rejected it and confirmed the validity of the "Issuance Agreement". Both parties should perform the obligations stipulated in the "Issuance Agreement" (see: Beijing Dongcheng District People's Court (2019) Jing 0101 Min Chu No. 5330 Civil Judgment, Beijing The Second Intermediate People's Court (2019) Civil Judgment Jing 02 Min Zhong No. 9123).

In this case, the legal basis for the parties to claim that the contract is invalid was Article 52 (5) of the Contract Law, which violated the mandatory provisions of laws and administrative regulations and the contract was invalid. For the time being, regardless of whether the content of the contract in this case is related to the invalidation claim, the legal basis for the invalidation claim shall be evaluated separately.

First of all, Article 37 of the "Film Management Regulations" reads: "The establishment of a film distribution unit shall apply to the film administrative department of the people's government of the province, autonomous region, or municipality directly under the Central Government where it is located; the establishment of a film distribution unit across provinces, autonomous regions, and municipalities shall Submit an application to the radio, film and television administrative department of the State Council. The film administrative department of the people's government of the province, autonomous region, or municipality directly under the Central Government or the radio, film and television administrative department of the State Council shall make a decision of approval or disapproval within 60 days from the date of receipt of the application, and notify the application People. If approved, a "Film Distribution Business License" shall be issued, and the applicant shall register with the administrative department for industry and commerce with the "Film Distribution Business License" and obtain a business license in accordance with the law; if it is not approved, the reasons shall be explained." This article is about the state's control over market access qualifications, and issuing issuance without the permission of access. The infringement is the administrative order and has nothing to do with public interests, and it does not harm high-level rights and interests. Moreover, even if it claims to violate mandatory regulations, it is not appropriate to use this article as a basis.

​​Secondly, Article 24 of the "Film Industry Promotion Law" reads: "If an enterprise has personnel and financial conditions suitable for the film distribution activities it is engaged in, it shall be approved by the film authority of the State Council or the people of the province, autonomous region, or municipality where it is located. Film distribution activities of the government are approved by the competent film department of the government. Enterprises and individual industrial and commercial households that have the personnel, venues, technology, and equipment suitable for the film screening activities they are engaged in shall be approved by the film competent department of the people’s government at the county level where they are located. Can be engaged in movie screening activities in fixed locations such as movie theaters." Obviously, this article is also about the order of control, and has nothing to do with the legal interests guaranteed by the invalid system. At the same time, according to the "Film Industry Promotion Law", there is a more appropriate basis for asserting the validity of the contract.

In practice, there are no film distribution business qualifications, but there are not a few people who implement distribution activities. TheThe behavior violates the country’s film administrative management system and will face certain administrative responsibilities. Of course, it is not worth encouraging. However, the contract signed with film distribution as the content and the transaction behavior based on distribution as the core are not in the civil level. No negative evaluation will be given.