By the co-production contract, two or more people agree to collaborate and pool goods, rights or services to complete the production of an audiovisual work, of whatever type or genre, in claiming ownership of the rights to the work and resulting audiovisual recording. of their collaboration, and in proceeding jointly to their exploitation, and to distribute the benefits or the losses of the same in the proportions that they establish.
The legal nature of co-production can be very varied, depending on the different forms it can take contractually, even these same forms can occur in successive phases. The tax consequences of adopting one form or another are also different, so it is advisable to obtain prior tax advice. Co-production can be hidden when the relationship of the third party that participates with the producer in the results of production is not revealed in front of third parties, for example, implemented by means of a joint account contract or manifested when the condition of
the co-producers as such is known, even appearing in the credits of the audiovisual work. Given the lack of clear legal norms that regulate this contractual relationship, it is of utmost importance to record in the contract the agreements reached by the parties, in order to avoid that the relations between the co-producers have to be governed by the decision of a judge based on legislation that may not be the most appropriate for the case.
International co-production is one in which the co-producers are established in different countries. It may be the case that a foreign producer simply contributes an amount but is not qualified as a co-producer, or if he is, the audiovisual work of which he is co-producer is not considered to be the nationality of his country. International co-production has the advantage that the production of the audiovisual work is done by people established in, and who know well, the different countries or markets in which it will be exploited, and can also benefit from the status of national audiovisual work and therefore, receive aid and subsidies in the different countries from the co-producers. It has the drawback of its greater complexity both for practical purposes, differences in languages, ways of thinking and working,physical distance as legal different legal systems have to be harmonized.
International co-production agreements, both bilateral and multilateral, allow an audiovisual work produced by different producers established in the states party to the agreement, to be classified as a national audiovisual work by each of the states, and can benefit from the benefits and aid of each state.
Clauses in International Co-Production Contracts
Previous documents
In the course of negotiations between the parties, it is common for them to reach an agreement in principle on the basic elements of their future co-production agreement. In order to record the commitment, usually called documents, memorandum of understanding, memorandum of understanding, letters of commitment, letters of intent, etc. These documents can have two very different consequences: being mere proposals or drafts and not having binding force, as they are subject to the negotiation and signing of a contract in which the final conditions must be detailed, or have binding force, even if it is left to the subsequent contract expressing the details.
In the contract, it must be indicated that it includes the final agreement between the parties, repealing any other previous document.
Parties to the Contract
Not all parties to the co-production contract have to be producers, and may be television networks, distributors, banks, private investors. In any international contract, especially in those in which one of the parties is a multinational company, with companies established in different countries, it is of particular interest to specify and verify which contractual party assumes the obligations of the contract may not have the same solvency the parent company as a subsidiary without content. It is also convenient to verify the powers of the person who signs and verify that they have powers to bind themselves.
Background
This part of the contract will explain what each of the parties does, and what is expected from the development of the contract, and for example if the parties want the audiovisual work to benefit from the benefits of an international agreement, this background if well they are not constitutive of rights and obligations if they help interpret the covenants of the contract that may have an obscure wording.
Purpose of the contract
The purpose of the co-production contract is to precisely define the audiovisual work, with details that will normally appear in a detailed annex. Detail the different tasks, responsibilities and contributions or contributions of the co-producers and third parties, in the pre-production, production and post-production phases of the audiovisual work. Distribute the property quotas of all the elements of the audiovisual work, including the intellectual property rights over it. Specify how the commercial and derivative exploitation of the audiovisual work will be carried out. And determine the rules for the distribution of income or operating losses of the audiovisual work.
Definition of the audiovisual work
The audiovisual work, as the object of the co-production contract, must be defined in detail in it and in its annexes. For example, an annex will specify its content, authorial and technical characteristics, specifying the nationality of each of the parties to verify that the quotas necessary to benefit from the agreements are met. These are the so-called key elements of the work that is co-produced. Another annex will include the budget for the audiovisual work and all the items that comprise it, as well as the financing or payment plan, which will be made up of contributions from the parties or third parties. A third annex will include the production plan.
In this way, the audiovisual work that is the subject of the co-production contract will be perfectly specified, and including a clause stating that changes will not be allowed, except with the unanimous agreement of the co-producers, confusion will be avoided in the event of eventual changes unilaterally decided by a co-producer.
Intellectual property rights and image
The use of any pre-existing work in the audiovisual work to be produced will require the transfer of the rights of its author or owner: a novel, script, music; Likewise, if a person's image is used, their consent will be required. If this consent or transfer of rights is held by one of the co-producers, it must be provided for the benefit of the co-production.
The definition of who are the authors of an audiovisual work will depend on which is the law under which it is born. Different legal systems may have different rules for the allocation of rights, despite the fact that different Community Directives harmonize this aspect, at least as regards the main director. They are the authors of the audiovisual work: the director-director, the authors of the plot, the adaptation, the script and the dialogues, and the authors of the musical compositions, with or without lyrics, specifically created for the audiovisual work.
Apart from complicating the question of who is the director in the audiovisual animation work. The co-producers must determine in the contract who they consider as authors, and detail the chain of rights: if one of the co-producers is the one who had signed the assignment of rights with the authors, they must declare themselves in the contract and guarantee that the rights have been duly acquired, and obviously, contribute those rights to the community.
The intellectual property rights of the interpreters must also be taken into account. Assignment of the responsibilities of the parties It is necessary to determine who will take the executive or delegated production, and to what extent they will reach their responsibility, who hires and assures the personnel, artistic responsibilities, technical tasks, marketing, etc., and specify if they have a specific remuneration for it or not.
Representation against third parties
It is important to establish whether and under what conditions any of the co-producers, on their own, can enter into contracts on behalf of all the others, for example, marketing contracts for audiovisual work.
Contributions of the parties and third parties
Co-production will only be possible if each of the parties contributes what they have promised to contribute. The contributions can be monetary, not monetary, of goods or rights, usually rights to the pre-existing work, options, rights to a script, rights to artists, or production, marketing services, in which case they may be compensated with a fee or compute as a contribution in exchange for rights over the audiovisual work.
Correct compliance with the contribution schedule is essential to carry out production, and if one of the parties does not contribute what they have promised to contribute, the contract must establish the agreements that allow the co-producer or co-producers to fulfill their commitment. continuing production. For example, a mechanism can be established by which, if eight days after being requested, the defaulting party still does not contribute what it owes, the remaining co-producers can terminate the contract and replace the defaulting co-producer with another from the same country, becoming the defaulting co-producer a creditor of the production for the amounts that would have contributed to date. That credit would be put in last place,even after the substitute co-producer had recovered his input.
It is important to foresee what happens if production goes over budget. The contributions of third parties unrelated to the co-production may be conditioned on obtaining guarantees from the co-producers, or on the fact that the completion of the audiovisual work by a third party is guaranteed.
Co-ownership of copyright and integral elements of the audiovisual work
A key element of the contract is that, subject to the co-producers having made the committed contributions, they will turn out to be co-owners of the intellectual property rights that correspond to the producer on the work and the audiovisual recording and all the elements that comprise it: brands, masters, discards, drawings, characters, rights to sequels, remakes, spin offs, etc., in proportion to their respective contributions. Said community of goods will be governed by the covenants established in the contract. The condition of owners of said rights and goods is the cause that justifies the perception and distribution of income in the same proportion. In other words, the chain of legal facts in the co-production is as follows: the amount of the contributions
of each co-producer determines the proportion in the goods and rights that result from the co-production, and, consequently, in the operating income of the same, as well as in the weight of the voting rights to the agreements that are proposed between the co-producers.
Clauses must be drafted to protect co-producers against actions that may be brought by creditors against any co-producer whom they intend to seize the property quotas for the audiovisual work.
Likewise, it must be established which of the co-producers must comply with the formalities required for the effectiveness of the rights.
How to adopt agreements between co-producers
A clause should be included in the contract that includes the way to adopt the agreements between the co-producers: which agreements will be adopted by majority, simple or qualified, and which by unanimity. How to decide on the final version of the audiovisual work is important.
Distribution of operating income
It should be noted that a key clause of the contract is the one that specifies the way to determine the distribution base for the co-producers.
Once the cost of the audiovisual work has been defined and recovered, the co-producers will be able to participate in the net income. The income obtained from state subsidies may correspond to a single co-producer or be part of the shared income.
Insurance
The co-producers must ensure the production of the audiovisual work and the negative against the usual risks of loss or civil liability. If distributors or broadcasters participate in the production of the audiovisual work, they will require the subscription of an error and omission insurance to guarantee that the risks of a possible infringement of the intellectual property rights of third parties, or of a completion bond, or insurance of Good end. The premiums for these insurances will be production costs, and it will be necessary to determine who underwrites it and who are the beneficiaries.
Third party participation in a co-producer's quota; transfer of the quota to a third party
A co-producer may in turn share his quota in the co-production with a third party, and the contract must be regulated if this requires authorization from the other co-producers, and if only the originating producer is liable for the obligations assumed against the others, the possibility or not of total transfer of rights by a co-producer to a third party.
Contract period
The duration of the co-production contract has two phases: the first, which includes all those activities and contributions necessary to complete the production of the audiovisual work, and the second, which includes the period within which the audiovisual work can generate operating income, with which this phase can be indefinite, and is independent of the duration of the intellectual property rights that the co-producers have over the audiovisual work, which. Although the term of protection of rights has expired, the audiovisual work can continue to be exploited and generate income. It is important to verify what is the term of protection of rights in the different laws applicable to audiovisual work.
Early resolution
Regardless of whether the term of the contract has not expired, it may provide conditions that allow early termination.
Breach of the obligations of the contract, situation of suspension of payments or bankruptcy of one of the parties in which case it is necessary to establish what
happens to the quota of the failed co-producer, for example, stipulate a right to purchase option in favor of the remaining co-producers.
Other covenants
Declarations and guarantees of each of the parties, force majeure, notifications, protection of personal data, confidentiality, and final version in case of translations of the contract.
Law applicable to the contract
There are no contracts without law, and contracts have the force to bind because there is a law, under whose protection they were born, that determines the conditions of their formation, perfection, nullity, causes of resolution, etc. It has already been said that the more The more detailed the contract, the less the laws that may be applicable to it will have to say. If this issue is already complex in a national co-production, it is more complex in an international one, in which the two legal systems in presence may be different. To avoid ambiguities and legal uncertainty, the parties to the contract can choose the law that is the rector of the contract, which will normally be that of the main producer. The law applicable to the contract is independent of the law applicable to the audiovisual work, and may or may not coincide with it.
Competent jurisdiction or arbitration
In an international contract it is important to determine which will be the jurisdiction or arbitration institution before which the parties will have to submit their disputes if they occur. To avoid the lengthy discussions that are generated when each co-producer wants to establish her own courts, it is advisable a neutral and effective a priori formula, submitting to the jurisdiction of the courts of the domicile of the defendant. In this way, the execution of the sentence will be more effective, without having to duplicate the procedure in two countries, one for the main dispute, and the other the country of the defendant for the execution of the sentence.
Bibliography
The Legal Regime of Audiovisual Co-production. José Antonio Suárez Lozano, 2000, EGDA.
Tax incentives for audiovisual production and co-production in Latin America, Canada and the United States. Steve Solot, 2013, LATC.
Basic Concepts of the Film and Audiovisual Industry. Ministry of Education, Culture and Sport - Spain, 2013, website.
Bases by which the procedure for the financial co-production of cinematographic audiovisual works is regulated. Canarias Cultura en Red, 2013, website.
Law No. 9,739
Dto. - Law No. 14,910
Law No. 15,012
Law No. 17,011
Law No. 17,164
Law No. 17,616
Law No. 18,253
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Dr. Esc. Maximiliano Mauri Vidal
