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Note: The first edition of this paper was presented to the sixth annual meeting and conference of the Inter-Pacific Bar Association in Manila on May 3, 1996. Since that time the provisions of the Japanese Code of Civil Procedure have been changed substantially. This revised second edition was prepared on August 1, 2000.


International Commercial Litigation in Japan

by Masafumi Kodama and Jay Tyndall

Introduction

The Japanese legal system represents an example of a civil law jurisdiction which has been heavily influenced by the adoption of significant amounts of statutory law. Litigation, while a recognized and commonly practiced form of dispute resolution, implicitly has not been seen as socially desirable by the vast majority of people and, therefore, has not been fomented greatly in policy or practice. Thus, foreign litigants may find that the trial process in Japan, while potentially an avenue of recourse for the resolution of commercial conflicts, is often not likely to be the optimal or most desirable means for it.

While virtually all attorneys would like for their clients to be able to avoid litigation in a foreign jurisdiction, in practice it is not always possible. With this reality in consideration, the following summary will attempt to highlight practical considerations and specific problem areas of commercial litigation in Japan with international aspects.


I. Service of Process

Service of Process in Japanese Cases:
In a civil case filed with a Japanese court, the court will handle virtually all aspects of service after the filing of the complaint.

1 CODE OF CIVIL PROCEDURE, art.98, sec.1 provides: "Except as otherwise provided by law, service shall be made by the court under its own authority."
(1) Service made directly by the plaintiff (including service by the plaintiff's agent or by mail) will not be considered valid.

Service upon an individual or entity within Japan will be performed in the manner set out in articles 99-107 and 109-113 of the Code of Civil Procedure (CCP). The court will first attempt service by mail. If this is unsuccessful, it can then choose from various other available methods, including service by publication after a party's motion requesting it.

Service upon an individual or entity outside Japan can be effected in accordance with CCP articles 108-113

2 CODE OF CIVIL PROCEDURE, art.108 provides: "Service in a foreign country shall be made by the judge entrusting the service to that country's authority in charge, Japanese ambassador, minister or council."
(2) and under the provisions of any applicable bilateral treaty, the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Convention on Service of Process) or the Hague Convention on Civil Procedure, depending on which treaty the country where service is to be made has signed. Usually the court will demand that a plaintiff attach to the documents being served a set of translations into a language which the defendant can understand.

Service of Process in Foreign Cases:
If a successful plaintiff in a foreign court intends to enforce its favorable judgment in Japan, several things should be noted. As mentioned in Section II., infra, proper service under the Japanese definition must have been made on the defendant in the original action in the foreign court. The Supreme Court of Japan, in its judgment of April 28, 1998, stated that where there is an applicable treaty on service of process, any service of process made in a manner not in accordance with that treaty will not satisfy the "proper service" requirement for recognition. Thus, in addition to the overseas forum's rules regarding service of process, the rules set forth in any applicable treaty (i.e., a bilateral treaty, the Hague Convention on Service of Process or the Hague Convention on Civil Procedure) must be followed.

Personal service in Japan is uniformly not considered to be valid. If the complaint in a foreign case is served personally in Japan, any subsequent judgment in that case will be unenforceable in a Japanese court. Whether service by mail sent directly from a plaintiff is valid in this context is still not clear, as there is no Japanese case law addressing this issue.

3 The Hague Convention on Service of Process, article 10(a), to which Japan has not made reservation, provides: "[The Convention does not interfere with] the freedom to send judicial documents, by postal channels, directly to persons abroad". There are two contradictory views as to the correct interpretation of the word "send". One is that it does not refer to service of process, therefore, service by mail is not permitted under the Convention. The other is that the word does refer inclusively to service of process.
(3) In any event, all basic documents served must be accompanied by a Japanese translation if the defendant in the foreign judgment sought to be enforced is a Japanese individual or entity.

4 Judgment of November 11, 1988 (Tokyo District Court); Judgment of March 26, 1990 (Tokyo District Court).
(4)


II. Enforcement of Foreign Judgments

Code of Civil Procedure, Article 118:
Requirements for enforcement and recognition of foreign judgments are set out in CCP article 118.

5 CODE OF CIVIL PROCEDURE, art. 118 provides: "A foreign judgment which has become final and conclusive shall be valid only upon the fulfillment of the following conditions: (1) That the jurisdiction of the foreign court is not prohibited by law or treaty; (2) That the defendant subject to the adverse judgment has received service of summons, any other orders necessary to commence process, public notice excluded, or has appeared in the action of his own accord without receiving service; (3) That the judgment of the foreign court or its formation process is not contrary to the public order or good morals of Japan; (4) Comity exists in the issuing country."
(5) The primary requirements for recognition are that the Japanese defendant received proper service (as discussed above), that the terms of the foreign judgment and its formation process are not contrary to the public order or good morals of Japan, and that comity toward a like judgment rendered by a Japanese court would exist in the courts of the country which issued the judgment in question. If all of the CCP article 118 requirements have been met, an enforcement judgment will be rendered.

6 Minji shikkou hou (Law of Civil Enforcement), art 24.
(6) Settlements and other court orders are included in the concept of "judgment" under article 118 if they have the same effect as a final and conclusive judgment in the country where they were issued.

The "not contrary to the public order or good morals" requirement is, perhaps, the most problematic aspect of article 118. It can come into play in commercial litigation. For example, in a relatively recent case,

7 Judgment of July 11, 1997 (Supreme Court).
(7) an American court's award of punitive damages against a Japanese defendant was found not to have satisfied this requirement and, thus, was deemed unenforceable. The punitive damages awarded under California law were deemed a kind of penal provision outside the scope of actual civil damages and, therefore, were contrary to Japanese policy regarding the assessment and allocation of civil damages.

Foreign judgments which are based upon evidence taken inside Japan in a manner which violates the treaties or agreements mentioned in Section VII., infra, may not be recognized based on this conformance with public order requirement. Whether the improperly taken evidence must be either outcome determinative or simply material to the result of the foreign judgment for the requirement not to be satisfied has yet to be decided.

The effects of the conformance with public order requirement are generally seen in the area of family law. In one highly-reported case,

8 Judgment of November 15, 1993 (Tokyo High Court).
(8) the court declined to enforce a foreign judgment which awarded custody of a child to a father who lived outside of Japan. The child had lived for several years in Japan with the mother apart from the father and spoke only Japanese (and not the native language of the father).

Parallel Litigation:
One tactic commonly used by Japanese defendants in order to block enforcement of a foreign judgment is to file parallel litigation in a Japanese court. That is, proceedings initially are commenced against a Japanese defendant in a foreign court. That defendant then files for a declaratory judgment in a Japanese court. The judgment sought would absolve him of any liability to the foreign plaintiff which might be imposed by the foreign court based on the issues before it. An enforcement judgment will not be issued in Japan if there is a prior final judgment on the same subject-matter rendered by a Japanese court. A Japanese court, however, may suspend or delay its proceedings if the plaintiff in the foreign litigation shows that the foreign litigation was commenced prior to that in Japan. Thus, any individual or entity which may need to seek enforcement of a foreign judgment in Japan should be aware of this tactic and the potential need to appear and defend against Japanese declaratory judgment proceedings.


III. Obtaining Jurisdiction

Jurisdiction in International Cases:
In determining whether it will take jurisdiction over a case which has foreign elements, a Japanese court will consider both black-letter law and the appropriateness of the forum. If the provisions of the CCP on jurisdiction are consistent with there being a Japanese forum, then the court must also examine the swiftness and fairness of any judgment it would render in comparison with that which would be rendered by other available fora.

9 Judgment of October 26, 1981 (Supreme Court).
(9) Lower Courts tend to weigh considerations regarding appropriateness and fairness rather more heavily than those regarding precise literal compliance with CCP provisions.

Summary Courts vs. District Courts:
There are Summary Courts in the Japanese Court system. They are, however, courts of quite limited jurisdiction. The amount in controversy must be not more than nine hundred thousand yen (900,000 yen). Thus, in practice, for most commercial litigation with international aspects, the court of first impression will be one of Japan's District Courts.

Which District Court:
Japan's District Courts basically are allocated one to each Prefecture. The Supreme Court has authority to set up and maintain branches of the District Courts.

10 Saibansho hou (Court Organization Law), art. 31.
(10) This is done based upon geographical and historical factors. The primary concern is that it not be too inconvenient for residents of any locale to attend court.

The proper District Court in which to file will generally be the one in the district where the defendant resides or is located.

11 CODE OF CIVIL PROCEDURE, art. 4, sec.1 provides: "A suit shall be subject to the jurisdiction of the court situated in the place of the general forum of a defendant." CODE OF CIVIL PROCEDURE art. 4, secs. 2 and 4 provide: "The general forum of a natural person shall be determined by his domicile, his residence if his domicile is not in Japan or it is unknown, or by his last domicile if his residence is not in Japan or it is unknown." and "The general forum of a legal person shall be determined by its principal office or place of business, or, in case it has no office or place of business, by the domicile of its representative or the person in charge of its affairs in Japan.
(11) Rule-based exceptions to this basic principle can be found in articles 5-13 of the CCP, some of which are derived from or related to it.

12 CODE OF CIVIL PROCEDURE arts. 5-13 refer, for instance, to place of contract performance and place of commission of tort.
(12) However, the exceptions carry important tactical considerations and are frequently employed in order to obtain a desired forum other than that where the defendant is located. CCP articles 4-13 apply equally to foreign and/or extraterritorial plaintiffs. The nationality or location of the plaintiff generally will not affect District Court selection.

Forum Selection Agreements:
Forum selection agreements are widely upheld by Japanese courts. If an agreement is in some respect international in scope, the court of a specific country must be explicitly designated in a document or documents prepared by one or both parties, such that the existence and content of an agreement are clear.

13 Judgment of November 28, 1975 (Supreme Court).
(13)

In addition, forum selection agreements which act to preclude the jurisdiction of Japanese courts will be valid only if the following two requirements are satisfied. The first is that the matter in question must not be within the exclusive jurisdiction of the Japanese courts. This is determined by the court's adapting to context and applying fundamentally the same considerations as those for deciding whether to accept jurisdiction in international cases (See Section III., Jurisdiction in International Cases, supra). The second requirement is that the court designated by the agreement would, independently, under the law applicable in that forum, have jurisdiction over the matter in question.

14 Id.
(14)

If a Japanese court determines that it will take jurisdiction in a case, as in Section III., supra, and there is an applicable forum selection agreement, the court may apply CCP article 11 to decide which Japanese court will hear the case. Under CCP article 11, forum selection agreements must be written and must identify the matter(s) to which they apply.

15 CODE OF CIVIL PROCEDURE, art. 11 provides: "1. The parties may decide the jurisdictional court of first impression by agreement. 2. The agreement referred to in the preceding paragraph shall not be valid unless it is made in writing and is made in respect to a claim based on a specific legal relationship."
(15) CCP article 11 will not necessarily apply to all cases where a Japanese forum has been selected. If a Japanese court decides that a domestic forum is not appropriate, then CCP article 11 is no longer a consideration, even if the parties selecting it are all Japanese nationals. Thus, neither the nationality of the parties to a forum selection agreement nor of the chosen tribunal is decisive with regard to the applicability of CCP article 11.


IV. Selection of Governing Law

Choice of Law Agreements:
Choice of law agreements relating to commercial contracts are also widely upheld.

16 Hourei (Law Concerning the Application of Laws in General), art. 7 provides: "As regards the formation and effect of a juristic act, the question of the law of which country is to govern shall be determined by the intention of the parties."
(16) Absent such an agreement and in other areas of law, such as torts and real property, the Hourei (Law Concerning the Application of Laws in General) will apply, as explained below. There is a compliance with public order requirement for the application of foreign law, much like the one discussed above in relation to the recognition of foreign judgments.

17 Law Concerning the Application of Laws in General, art. 33 provides: "If the law of a foreign country is to govern, and the application of certain provisions of such law is contrary to public order or good morals, those provisions shall not apply."
(17) An often cited case applying this requirement, Judgment of June 6, 1985 (Tokyo High Court), involved divorce. The court declined to apply the otherwise applicable Philippine law on the grounds that it did not permit divorce.

18 See also Judgment of July 20, 1984 (Supreme Court), where the court declined to apply Korean law to the property division in a divorce case because it did not provide for the division of earnings made during the marriage.
(18) Given the precedent cited above regarding American punitive damage awards, it does not seem unlikely that the conflict of laws public policy compliance requirement could come into play in relation to a choice of law agreement for a commercial case.

Law Concerning Application of Laws in General:
Unless there is a valid choice of law agreement relating to a commercial contract, Japanese conflict of laws provisions come into force. These provisions are embodied in the Law Concerning Application of Laws in General. This code has only 34 articles, yet is one of the most difficult to interpret. It sets out "rule-based" principles of law selection with criteria such as place of the act, nationality, domicile, most significant relationship, etc. being determinative. Various subjective elements can come into play in interpreting these rules so, again, it should be emphasized that in all contracts it is best for the parties to promote the highest degree of certainty possible and agree in advance on applicable law and the appropriate forum.


V. Sources of Governing Law in the Jurisdiction

International Law vs. National Law:
Japan's legal system is such that certain of the country's obligations on an international plane can be enforced directly by private parties in a domestic court. Although the vast majority of international commerce-related treaties to which Japan is a signatory have been made a part of domestic law through implementing legislation, the potential use of treaties in Japanese litigation is worthy of mention. If it can be shown that domestic law is in conflict with an applicable treaty provision to which Japan has acceded, the treaty provision will be controlling.

19 Japanese Constitution of 1947, art. 98, sec. 2.
(19) Similarly, Japan's treaty obligations represent an independent source of law that is enforceable within its courts.

20 K. SATOU, KENPOU 1 (The Constitution 1) 48 (1986).
(20)

National Law vs. Prefectural Law:
Japan's local governments are structured in a hierarchy of administrative divisions, from the Capital and Prefectures, to subdivisions like cities, towns, and villages.

21 These are called, respectively: To (one) - Tokyo, sui generis, the Capital; Dou (one) - Hokkaido, an historic administrative division which is now the equivalent of a Prefecture; Fu (Two) - Prefecture-like entities which encompass the Osaka and Kyoto metropolitan areas. Originally, Tokyo was also designated a Fu. The Fu were, at the time of their creation during the Meiji Era land reforms, intended to represent the major urban centers of the nation. They are, in most important respects, the equivalent of Prefectures; Ken (forty-three) - Prefectures, the basic regional units of local government in Japan; Shi (many) - Cities, recognized based upon population and centralization requirements. Individual Prefectures may impose further limitations; Chou (many) - Towns, recognized based upon Prefectural requirements; Son (many) -Villages, all other land outside Cities and Towns.

It should be noted that Ku, or Wards, the administrative units within municipalities, generally do not have legislative authority. However, within Tokyo, the Capital, Wards are viewed as the equivalent of municipalities. In this instance, the Wards are vested with law-making ability and Ward-made law generally receives the same treatment as that made by municipalities.

(21)

Determining hierarchy and application of laws within the Japanese system is quite simple. In all cases where National law conflicts with Prefectural or Municipal law, National law will be controlling.

22 The Japanese Constitution of 1947, art. 94. The question primarily arises when Prefectural or Municipal law imposes more strict regulation on the same act or activity than does national law.
(22) In cases where no conflict appears, Prefectural or Municipal law may apply. Generally, land use/development and environmental protection are the primary areas regulated by the Prefectures and Cities.

Preferences in the Law:
It can fairly be said that in large cities like Tokyo and Osaka, a higher degree of "internationalization" exists within the legal profession. That is, a larger percentage of professionals speak English or some other foreign language, have some experience working or studying abroad, or have had some degree of involvement with international transactions of one sort or another. While on the face of the situation, there should be no substantive difference between commencing suit in Tokyo's District Court or that of Aomori, in fact, an obvious difference in the nature of the legal community in such disparate places will, in certain respects, be experienced.

Also, the Tokyo and Osaka District Courts have special divisions for intellectual property law cases. If a matter involves certain international or intellectual property aspects, if possible, it might be best to take advantage of the resources available in one of the more developed jurisdictions. Since 1998, the Tokyo and Osaka District Courts have been empowered, at the election of the filer, to hear certain intellectual property cases (basically those involving industrial intellectual property) falling within the original jurisdiction of the District Courts in, respectively, Eastern and Western Japan.

23 CODE OF CIVIL PROCEDURE, art. 6
(23) Again, the locality should not affect the law to be applied. However, specialization, naturally, does have its effects on jurisprudence.


VI. Court Systems and Practices

Civil Trial Procedure:
The first action to initiate a lawsuit is the filing of a written complaint. The complaint is filed in the District Court of the proper jurisdiction and venue. However, content-certified registered mail is often used to warn a prospective defendant of impending litigation and to seek last minute settlement in the hopes of averting an actual filing.

24 ISONO, BUSINESS AND JAPANESE JUDICIAL PRACTICE, 51 (1994).
(24)

There is a filing fee based on the amount of a claim. It is recoverable from the defendant if the plaintiff prevails. Filing fees progressively increase with the amount of the claim stated in the complaint. The Minji soshou hiyou tou ni kansuru houritsu (The Law Concerning Civil Litigation Costs, Etc.) provides the following schedule:

Court Filing Fee Based on the Amount of the Claim
up to 300,000 yen / 500 yen for each 50,000 yen
over 300,000 yen and up to 1 million yen / 400 yen for each 50,000 yen
over 1 million yen and up to 3 million yen / 700 yen for each 100,000 yen
over 3 million yen and up to 10 million yen / 1,000 yen for each 200,000 yen
over 10 million yen and up to 100 million yen / 1,000 yen for each 250,000 yen
over 100 million yen and up to 1 billion yen / 3,000 yen for each 1 million yen
more than 1 billion yen / 10,000 yen for each 5 million yen


For example, a plaintiff seeking a 100 million yen recovery must pay a 417,600 yen fee for the filing of his complaint. It has been said that filing fees which progressively increase with the damage amounts alleged in a complaint sometimes act to discourage large damage claims and litigation generally in Japan.

The next step in the case is for the District Court judge to order the parties served in the manner discussed above in Section I.. Commencement of suit is most commonly limited by the five year statute of limitations for commercial transactions

25 COMMERCIAL CODE, art. 522.
(25) and the three year statute for tort claims.

26 CIVIL CODE, art. 724.
(26)

Court proceedings of the first impression normally consist of Hearings (koutou benron), Arrangement Proceedings (seiri tetsuzuki), and Witness Examination (shounin jinmon). Hearings must be held in an open courtroom. They are often rather ceremonial, with attorneys simply stating, "My argument is as written in the pleading document". A defendant should note, however, that failure to either appear at the first hearing or submit an answer prior to it results in deemed admission of the opposing party's allegations, which, as a general rule, leads to the entry of default judgment.

27 CODE OF CIVIL PROCEDURE, arts. 158 and 159.
(27)

In most cases, arrangement proceedings, which had been used in practice and were statutorily recognized in three distinct categories in 1998, are more substantial occasions for the parties and the court to clarify what the issues are and how trial schedules should be planned.

28 CODE OF CIVIL PROCEDURE, arts. 164-178.
(28) Written arguments and documentary evidence may be submitted at hearings and at some kinds of arrangement proceedings. Dates for these two types of proceedings are set approximately once every three to six weeks.

After several hearings and/or arrangement proceedings, judges will begin hearing witness testimony. It should be noted that courts have the discretion to accept testimony in the form of witness affidavits in lieu of oral examination, if no party objects.

29 CODE OF CIVIL PROCEDURE, art. 205.
(29) There is no jury system, and all trials are to the court. Usually, the plaintiff's witnesses are examined first and then the defendant's, but a judge may change the order of witnesses at her discretion. Adversary questioning by cross-examination is allowed, and judges themselves may question witnesses extensively. Recently, courts have been trying to hear all witnesses in a single day in order to comply with CCP article 182. Article 182 requires that witness and party examinations be conducted within a condensed time period. One or more hearings may be held after witness examination. Judgments typically come approximately one to two months after the close of hearings.

The judge may set a date for Conciliation (wakai) at any time in the proceedings. If a party desires conciliation, it will make a request to the court and the court will usually grant the request, unless the other party objects. In any event, conciliation is not a required part of the case. Information put forth in conciliation is not to be considered as evidence by the court, but the trial judge does preside over the conciliation proceedings. In practice, arrangement proceedings and conciliation proceedings are sometimes combined.

It should also be kept in mind that, in the interest of judicial economy, a court may and, in practice, often does intervene at any stage of the proceedings and strenuously urge the parties to enter into a settlement whose terms are proposed by it or one of the parties.

30 CODE OF CIVIL PROCEDURE, art. 89 provides: At whatever stage the suit may be, the court may endeavor to effect a compromise or may have the commissioned or requisitioned judge endeavor to effect a compromise.
(30) A party may even be given the option of accepting a court proposed settlement or being held subject to an adverse judgment with harsher terms. Along these same lines, under CCP article 265, parties to an action may jointly request the court to stipulate the terms of a binding settlement. Such a written request may be unilaterally withdrawn only prior to the court's returning the settlement.

31 CODE OF CIVIL PROCEDURE, art. 265.
(31)

For larger-scale cases, CCP article 30

32 CODE OF CIVIL PROCEDURE, art. 30 provides: A large number of parties having a joint interest and not coming under the provisions of the preceding Article [regarding non-juridical associations or foundations with representatives] may appoint from among them one or more persons who is or are to act as plaintiff or defendant for all parties. 2. When, subsequent to the pendency of the action, a person or persons acting as a plaintiff or defendant have been appointed in accordance with the provisions of the preceding paragraph, the other parties shall withdraw from the litigation as a matter of course. ... 4. Persons who have appointed a person who is to act as a plaintiff or defendant in accordance with the provisions of paragraph 1 ... (hereinafter referred to as "appointers"), may cancel such appointment or change the parties who are appointed (hereinafter referred to as the "appointed parties"). 5. If any of the appointed parties becomes unqualified because of death or some other reason, different appointed parties may prosecute the action for all the other parties.
(32) authorizes a style of litigation something akin to a class-action, which is conducted by removable appointed "representatives". Such representatives may add claims on behalf of the represented parties until oral proceedings have concluded.

33 CODE OF CIVIL PROCEDURE, art. 144.
(33) A streamlined witness examination procedure is available for this type of action. Unless a party objects, an augmented number of judges (five, increased from three) may examine witnesses separately and simultaneously at the time when oral testimony is to be presented.

34 CODE OF CIVIL PROCEDURE, arts. 268 and 269.
(34)

The judgment comes into existence when it is declared in open court. Cases are frequently settled. Appeal times (usually one year at a minimum) act to favor out of court settlement. To put the foregoing into perspective, it is helpful to view the aggregate caseload of the District Courts. Of the roughly 156,000 cases filed in a year:


Appeal:
Japanese civil procedure entitles litigants to a trial de novo at the first level of appeal, complete with new evidence, and, assuming no Constitutional issues, a possible review of important legal issues in a second level of appeal to the Supreme Court. As a result, the average appealed case lasts more than two years, and cases extending over five to seven years are not unusual.

36 Id., at 146 and 170.
(36)

First Appeal (kouso) is an appeal as a matter of right. It is generally heard by the High Court. It may be based on any grounds. Trial procedures remain in effect. Additional evidence or causes of action may be submitted. The First Appeal must be filed within two weeks after service of the trial judge's decision.

37 CODE OF CIVIL PROCEDURE, art 285.
(37)

The initial First Appeal hearing takes place, at the earliest, three months after filing. In most cases, First Appeal takes only about two or three hearings, which makes for a duration of about five months from the date of the trial decision to that of the appeal decision. However, if new witness testimony and evidence are to be submitted, First Appeal procedures can become quite protracted.

Of the roughly 16,000 First Appeal cases filed in a year:


Second Appeal (joukoku) is usually brought to the Supreme Court. The available grounds for appeal as a matter of right are limited to Constitutional error or certain serious procedural errors.

39 CODE OF CIVIL PROCEDURE, art. 312.
(39) The Supreme Court may also accept appeals of cases which, in its determination, are inconsistent with precedent or include important legal issues.

40 CODE OF CIVIL PROCEDURE, art. 318.
(40) This level of appeal will add to a case, on the average, one additional year or more beyond the date of the result in the First Appeal.

41 Supreme Court General Secretariat, supra, at 170.
(41)


VII. Taking of Evidence

Hague Convention on the Taking of Evidence:
Japan is a signatory to the Hague Convention on Civil Procedure of 1954 and has entered into several bilateral treaties regarding the taking of evidence. Where there is a bilateral treaty, its terms will apply, unless it was executed prior to the Convention of 1954. Otherwise, the party seeking evidence must be eligible to apply the terms of the Convention on Civil Procedure. Japan is not a signatory to the Hague Convention on the Taking of Evidence.

Judicial Means:
In the complaint, facts which support the claim must be stated and evidence important to the case must be cited. Copies of important written evidence must also be attached to the complaint.

42 Minji soshou kisoku (Rules of Civil Procedure), art. 53 provides: In addition to entering the subject of a claim and its bases (the facts necessary to state the claim), facts which may become the basis for a claim shall be entered in a concrete manner in a complaint and important items relating to said facts and evidence shall also be entered for each claim to be proven. 2. Assertions based on facts in the complaint shall be entered by distinguishing to the best of one's ability assertions based on facts for a claim and assertions based on items relating to said facts. Rules of Civil Procedure, art. 55 provides: The following relevant items shall be attached to the complaint for each of the following types of cases: (1) case concerning immovables: a transcription of their registration, (2) cases concerning personal affairs: a transcription of the household registration, (3) cases concerning bills or checks: a copy of the bills or checks. 2. In addition to the provisions in the preceding paragraph, a copy of important documents which are to become evidence in testimony (hereinafter referred to as a "copy of documentary evidence") shall be attached to the complaint.
(42) Consequently, attorneys should always investigate completely the evidence available to them prior to filing suit. On the other hand, it is not at all uncommon for material evidence to be obtained, by various means, after the commencement of litigation. The scope of discovery, however, is limited in Japan, compared to that typically available in Anglo-American jurisdictions.

Although not truly judicial, one often employed out-of-court measure for the taking of pre-trial evidence from a third party is a letter of inquiry. The Bengoshi hou (Lawyers Law) in article 23(2) grants the power to local bar associations to issue letters of inquiry. The bar association issues such letters upon the request of an individual attorney. The matters addressed in a letter must relate to a potential case or claim, but are not limited in scope outside this constraint. Otherwise confidential fire reports from municipal fire departments and medical records from hospitals are examples of the documents often submitted to attorneys through this means. There is no sanction or penalty for failure to answer this type of letter.

The other potential means for the taking of pre-trial evidence is shouko hozen, or the preservation of evidence. A motion for the preservation of evidence may be filed with a court prior to the commencement of a case. This measure will be utilized, however, only if the evidence sought is likely to be unavailable at a later date. Examples of this type of situation are when a potential witness is dying or will leave the country indefinitely or when there is a high risk that documents with evidentiary value will be altered or destroyed once the party in possession of them becomes aware of the imminent commencement of litigation.

43 CODE OF CIVIL PROCEDURE, art. 234. This type of request is often used in medical malpractice cases.
(43) The obligations of a witness or a possessor of documents to maintain them as evidence are quite limited. Motions to preserve evidence must indicate the parties involved, the facts to be proved, the evidence to be preserved, and the reasons why the preservation of evidence is being sought.

44 Rules of Civil Procedure, art. 153.
(44)

After a case has commenced, each party may submit written inquiries to the other, requesting responsive written answers. The responding party may refuse to answer if the request is not sufficiently specific, is designed to insult or embarrass, is duplicative, seeks the expression of an opinion, requires unreasonable expense or time to answer, or pertains to a subject about which that party would be excused from testifying as a witness.

45 CODE OF CIVIL PROCEDURE, art. 163.
(45) The lattermost of these reasons refers to a type of evidentiary privilege protecting against witness self-incrimination, incrimination by family members or guardians, the making public of official business of members of government, the disclosure of confidences maintained by health care providers, attorneys, and clergy, and the revelation of trade or professional secrets.

46 CODE OF CIVIL PROCEDURE, arts. 196 and 197.
(46) There is no sanction for failure to answer an inquiry, but the court may take any non-response into account in its fact-finding process.

47 CODE OF CIVIL PROCEDURE, art. 247 authorizes the court, when rendering a judgment, to take into consideration all information which appears before it.
(47)

Document production may be compelled from either a party or a non-party under CCP article 220 only on the following occasions:

  1. The party in possession of the document has referred to it in the current litigation;
  2. The party who has the burden of proof has a legal right (pursuant to law other than the CCP) to demand the delivery or inspection of the document;
  3. The document has been prepared for the benefit of the requesting party or relates to a legal relationship between the requesting party and the holder of the document; or
  4. The document (other than a document for governmental use) does not fall into the following categories:

Requests for production under CCP article 220 must be made by a motion identifying the document, summarizing its content, identifying its holder, specifying the fact(s) to be proved by it, and stating the basis for the request under the categories listed above.

49 CODE OF CIVIL PROCEDURE, art. 221.
(49) If the requesting party has extreme difficulty in determining what documents are in the hands of a given holder, that party may simply formulate a request specific enough for the document holder to identify the document. The court may then request the holder to report on the proper identification of the document and provide a summary of its content.

50 CODE OF CIVIL PROCEDURE, art. 222.
(50) Court examination of any third parties from whom it intends to require production is mandatory.

51 CODE OF CIVIL PROCEDURE, art. 223.
(51) This level of pre-production review can result in procedural bottlenecks. Blanket requests for document production, however, are not permitted.

The trend in case law has been to widen the scope of compulsory document production in interpreting CCP article 220. If the holder of a document claims that it falls within category 4.a. or b. above, the court will conduct an in camera inspection to determine whether or not this is the case. Requiring production after the redaction of any portions of a document which fall within the 4.a. or b. categories is an alternative. Inter locutory appeal from a court's rulings on an inspected document is available.

52 Id.
(52) Currently, official governmental documents are broadly exempt from document production obligations, and the Diet bound itself by resolution at the time of the CCP reforms to enact new legislation relating to governmental document production within approximately two years. As of July, 2000, however, there has been no such enactment.

If a party does not comply with a document production order, the court may regard the fact sought to be proved by the document, as stated in the requesting motion, to be true.

53 CODE OF CIVIL PROCEDURE, art. 224.
(53) Monetary penalties of up to 200,000 yen may be imposed on a non-complying non-party

54 CODE OF CIVIL PROCEDURE, art. 225.
(54), but this sanction has almost never been utilized. Thus, initiating litigation in Japan in the hope of subsequently obtaining a great deal of evidence is generally not recommended. On the other hand, Japanese civil procedure has no limitations on the admissibility of evidence, except for rules relating to the mechanics of witness questioning and the various rights of a witness not to provide testimony. As a result, a wide variety of evidence can be considered by the court.

In terms of obtaining oral testimony, one potential obstacle is the refusal of a witness to voluntarily attend examination. Although administrative sanctions for non-appearance are provided for in the CCP and the court may require an officer to physically compel witnesses to appear, these measures are almost never utilized. In any event, witnesses who do attend court, as stated above, may refuse to provide testimony if it would result in self-incrimination or incrimination of a family member, reveal confidential information obtained in the exercise of their respective professions by doctors, attorneys, clergy, and some other professionals, or reveal technological or occupational secrets. Public officials are exempt from giving testimony if they have been asked to disclose confidential information and the disclosure is likely to be contrary to the public interest or to create great difficulty in the execution of a public duty.

55 CODE OF CIVIL PROCEDURE, arts. 191, 196, and 197.
(55)


VIII. Recent and Expected Developments in the Jurisdiction

Reform of the Code of Civil Procedure:
The Code of Civil Procedure recently experienced a wide range of reforms. These reforms became effective in January of 1998. We expect to see continuing development of the body of case law implementing the newly introduced provisions. In particular, it remains to be seen whether or not the historic, precedent based exceptions to the obligation to produce documents falling in the third CCP article 220 category discussed above will survive the enactment of the specific exceptions in the new fourth category of that article. Additionally, there has been further movement for judicial reform, which has been embodied in a council of the Prime Minister, called The Judicial Reform Council. The issues under discussion include reduction of court filing fees, revival of the jury trial system, enlargement of the scope of discovery and the introduction of punitive damages. Whether these reforms will come to pass in the near term remains uncertain.


Conclusion

Because of limitations on time and space in a topical summary such as this, not all material worthy of mention can be covered. It is simply hoped that the foregoing has provided the reader with some idea of how to shape her expectations, as well as to provide some advisory notice of aspects of international commercial litigation that may be particular to Japan.


Copyright © 2000, 2001 Jay M. Tyndall and Masafumi Kodama




Endnotes


Copyright © 2000, 2001 Jay M. Tyndall and Masafumi Kodama


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