International Film Co-Production Agreements

Zeynep Erkan, LL.M.

On the stages of international film co-production, relations of parties and dispute resolution.

‍Film productions are long and complex processes not only from business perspective but also from legal perspective.

Main phases of film production can be listed as follows:

1. Development: Finding the story, creation of the script, obtaining the rights of the script

2. Pre-Production: Planning and scheduling, finding financial resources and budgeting, casting, contracting the production

3. Production: Shooting the film

4. Post-Production: Cutting and editing the film

5. Distribution: Distributing and commercializing the film

A film co-production agreement is an international business agreement signed between business partners. In this sense, they are different from multilateral or bilateral international agreements since their parties are not countries but firms from different countries.

It is strongly advised that contracts are finalized before production starts in order to be able to stick with the plans and schedules.

Some key contractual provisions of a co-production agreement can be listed as below:

1. Film/production specifications: The title, format, length, language, the screenplay, principal contributors, and locations of the film shooting and all other technical parameters of the production must be indicated.

2. Contributions of the co-producing partners: The nature of the participation of each partner must be defined carefully.

3. Production schedule: The outline of the work that is necessary to shoot the film should be described in detail. This is the game plan for everyone included in the film production.

4. Budget: Not only the estimated calculation of the film’s costs but also the stipulations of the cast, the crew, duration of the shooting, the length of the workdays, number of locations, transportation costs and so on. The budget should be individually accepted and approved in writing by all co-producing partners and attached to the co-production agreement.

5. Financing plan and cash flow: Once the co-producing partners are able to raise all of the funding for a film co-production, the next step is to prepare a detailed cash flow chart, which will outline both the cash coming in and expenses paid out during the co-production. When partners from different countries co-produce a film, they need to carefully consider the tax consequences of their collaboration. Careful structuring of the collaboration may significantly reduce the tax burden on the coproducing partners.

6. Rights clearance: The protection of all intellectual property rights is a particularly troublesome issue for international film co-productions. “Chain-of-title” documentation is the evidence of a production company’s right to produce a film based on the producer’s ownership of the right to the intellectual property material such as a book, a stage play, a screenplay etc. It must be ensured that all underlying rights, secondary rights, merchandizing rights, (remake, sequel, prequel rights, if any) are in order prior to entering into the production phase. 

7. Distribution of the film: Co-producing partners should decide whether distribution rights are divided between the partners by territory or otherwise, and determine who shall be responsible for appointing distributors or sales agents in various territories locally or globally.

8. Materials and delivery: Co-producing partners should agree on who would be responsible for the delivery of the film and materials in various territories to the various distributors.

9. Profit sharing: Once the co-producing partners determine what each party will contribute to the co-production, they also need to decide how they will share any returns. It is important to differentiate the sharing ownership of the property from sharing the revenue derived from it. The copyright owner of a film determines how the work may be distributed and exploited, and whether to allow any derivative works to be adopted from it. On the other hand, a party having the right to a certain percentage of the net profits from a film has an interest in the revenue stream derived from the film. Such profit participant does not necessarily have any control over how the property is explored.

10.  Insurances: There are many types of insurance coverage available and exactly what needs to be insured on production depends on the size and circumstances of the film. When shooting in multiple countries looking into whether laws require different types of insurance before production begins is recommended.

11.  Credits on screen: The co-producing partners also need to agree on the wording, size, and placing of the credits for their companies, their individual credits, and also the credits of creative talent such as the director, writer, and actors. Some credits may be mandatory while others may be determined by contractual obligations or demands of third parties.

12.  Confidentiality: It is often recommended that each co-producing partner should be bound by a duty of confidentiality regarding the film and the co-production process in general. The co-producing partners should define at least with some specifications which information and data must be considered confidential. Generally, the confidentiality provision is included in the co-production agreement, although a separate confidentiality/non-disclosure agreement can also be used.

13.  Termination: When a party requests to discontinue the co-production, the termination clause becomes vital since it sets the terms in which the party may leave the table. Termination terms are especially important when one of the parties becomes insolvent.

14.  Dispute resolution: Co-producing partners should note that if a dispute arises between the partners and the governing law (or jurisdiction) has not been specified then this alone may create complex legal questions.

International film co-productions bring together a lot of elements; business, law, art and different cultures. The co-production agreement functions like the glue holding together all of these different elements and thus, must be tailored skillfully in order to prevent future disputes. Do not hesitate to contact Erkan Attorney Partnership for any legal consultancy and document preparation for film co-production projects.

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