Class/collective actions in Japan: overview

A Q&A guide to class/collective actions in Japan.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.

Contents

Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

In Japan, collective actions can be brought before the courts when rights or obligations that are the subject matter of the actions are (Article 38, Code of Civil Procedure 1996 (CCP)):

  • Common to two or more persons or are based on the same factual or legal cause.

  • Of the same kind and based on the same kind of factual or legal cause.

Collective actions can also be formed after the courts transfer and/or consolidate separate but related actions following the request of defendants or the exercise of the court's discretionary power (Articles 17 and 19, CCP).

A collective action mechanism should be distinguished from a so-called class action mechanism by the fact that those who wish to benefit from the result or proceeds of a collective action must file an action on their own behalf.

Until very recently, there have not been any mechanism for class actions in Japan, where certain claimants seek to represent class members (that is, those whose claims are similar to their own), to bring actions on behalf of themselves and class members. However, recent reforms have now introduced a limited opt-in class action mechanism in relation to consumer contract claims (see below, Current trends).

Use of class/collective actions

Historically various claims have been brought before the courts using collective action mechanisms, for example:

  • Environmental claims (such as automobile or asbestos-related air pollution, industrial effluent-related water pollution, airport or air base-related noise pollution, or more recently, nuclear power plant-related contamination).

  • Product liability claims (typically compensatory claims against pharmaceutical or consumer goods manufacturers).

  • Labour law claims (alleging wrongful termination, discrimination or other unfair labour practices).

  • Claims based on fraud.

In these cases, collective action mechanisms have played a significant role in settling disputes with hundreds or thousands of plaintiffs. Competition law claims (mostly damages actions following the Japan Fair Trade Commission's investigation into bid rigging cases) are relatively new. Consumer protection is another area which has attracted much attention from the media and the government lately.

Current trends

In recent years, the Japanese Government has taken the initiative to introduce a series of legislation with the aim of enhancing consumer protections. The Consumer Contract Act 2000 introduced substantive laws for consumer protection such as the right to rescind consumer contracts where consumers are misguided in entering into such contracts. In 2007, the Consumer Contract Act was amended to allow "Specified Qualified Consumer Organisations" (SQCOs) to seek injunctive relief for the benefit of relevant consumers against business operators. This amendment did not, however, allow SQCOs to seek damages for the benefit of relevant consumers.

This will no longer be the case. The Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP) introduced a special procedure, sometimes referred to as the "two-stage action" system, or Japanese Class Action System. Under this mechanism, the existence of liability will be determined through a first stage based upon claims brought by SQCOs (first stage). If affirmed, the action will move forward to the second stage, where the quantum of damages will be determined based upon individual claims filed by consumers who elected to opt in to the procedure upon circulation of proper notice following the first stage (second stage).

It should be noted that the ASP only covers claims arising from consumer contracts and to certain categories of property damage (for example, damages for personal injury are not covered by the Act). A consumer contract is defined as any contract (excluding employment contracts) entered into between an individual and a business operator (Articles 2(3) and 3(1), ASP) (see Question 5).

The new Act is expected to come into effect at a date no later than December 2016, as prescribed by Cabinet Order, but as of the time of writing (July 2015) no such order has been issued.

 

Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

The principal legal source for traditional collective actions is the Code of Civil Procedure 1996 (CCP), and for the newly introduced class actions, the Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP).

Principal institutions

Both collective actions and the new class actions can be brought before the District Courts of the competent jurisdiction (Articles 4(1) and 5, CCP, Article 6, ASP) which serve as the courts of first instance.

Japanese courts can exercise jurisdiction over foreign corporations or entities in the context of collective actions, for example when:

  • A main office or sales office is located in Japan (Article 3-2(3), CCP).

  • For contractual claims, a place of performance is agreed to be somewhere within Japan (Article 3-3(i), CCP).

  • For tortious claims, the alleged tortious conduct took place in Japan (Article 3-3(viii), CCP).

Similarly, in the context of new class actions, Japanese courts may exercise jurisdiction over foreign corporations or entities when the claims are related to the business which such corporations/entities continuously conduct in Japan (Article 3-3(v), CCP).

Different mechanisms

There is a mechanism called "Appointed Party" in Article 30 of the CCP, which allows certain claimant/plaintiff(s) who have been appointed by other claimant/plaintiff(s) to act on behalf of such appointer(s) in pursuing civil actions. Appointments can be made when there is a sufficient number of claimants who share a "common interest" (Article 30(1), CCP).

A "sufficient number of claimants" is when there are more than two claimants. The "common interest" requirement will be satisfied when the principal allegations and defences are common among the claimants. An appointment can be made either before or after bringing an action. The Appointed Party can pursue the case on behalf of the appointer and the result will be binding upon the appointer including settlement. This mechanism should be distinguished from a class action system where individual appointment is not necessary. It is believed that this mechanism is not used frequently in practice because of the requirement for an individual appointment.

See Question 23 for alternative dispute resolution.

 
3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

Principal areas for collective actions

Collective actions arise in all areas. However, they are currently most frequently seen in actions involving personal injury, competition claims, product liability, labour disputes, financial services and consumer protection.

Consumer protection and rights

As mentioned in Question 1, there has been recent reform in consumer protection and rights, which introduced the "two-stage" class action system for seeking damages in relation to consumer contracts (see Question 1, Current trends).

 

Limitation

4. What are the key limitation periods for class/collective actions?

Limitation periods for tort claims

The Civil Code 1896 (CC) sets the general rule for the limitation period that will apply for a tort-based damages action. Periods vary depending on the nature of the action, but the most common ground for bringing a damages action regardless of the area (for example, personal injury, competition claims or product liability) is tort.

The limitation period for tort claims under the Civil Code is whichever comes first from the following (Article 724, CC):

  • Three years from the time when the claimant came to know both the damage and the identity of the perpetrator.

  • 20 years from the time of the tortious act.

The point from which the limitation period begins has been the subject of debate in many collective actions in the past. In particular, with respect to the second bullet point above, the court in some instances has interpreted the phrase "the time of the tortious act" to mean the time when the damage caused by the tortious conduct materialised, rather than the time when the tortious conduct was committed (for example, In Re Hepatitis B Lawsuits [2006] Supreme Court Decision of June 16 2006, Minshu vol. 60, num. 5, page 1997). This is somewhat contrary to the natural reading of the text, however the court recognised that in certain cases, the symptoms caused by pollutants or viruses, for example, materialise only after a certain latent period.

There are exceptions to the general rule above under various statutes. For example, the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade 1947 (Anti-Monopoly Law or AML) provides for no-fault liability where the Japan Fair Trade Commission (JFTC) has made a determination that there has been an Article 3 (Unreasonable Restraint of Trade) or Article 19 (Unfair Trade Practices) violation and such determination has become final (Article 25(2), AML). The limitation period for such no-fault liability is three years from the time when the determination becomes final (Article 26(2), AML). It should be noted that the claimant can still seek damages arising from Anti-Monopoly Law violations based on tort theory, in which case however, the claimant must prove the existence of fault on the part of the perpetrator using the preponderance of evidence standard. In such cases, the limitation period under the Civil Code as described above applies.

Another exception to the general rule is provided under the Product Liability Act 1994 (PLA). The PLA provides for no-fault liability under certain conditions and the limitation period for such no-fault liability is whichever comes first from either of the following:

  • Three years from the time when the claimant came to know both the damages and the identity of the perpetrator.

  • Ten years from the time of the delivery of the defective products.

However, with respect to the second bullet point above, in cases where damage is caused by substances which have an accumulative effect on human health, or where the symptoms appear after a certain latent period, the period will only begin to run when damage materialises (Article 5(1)(2), PLA).

Limitation periods for contractual claims

The limitation period for contractual claims under the Civil Code is ten years from the time when the claims become exercisable (Articles 166(1) and 167(1), CC).

It should be noted that on 31 March 2015 the Cabinet proposed to the Diet a bill to reform the Civil Code. If approved, it would bring about a significant change to many provisions governing claims and obligations, including the general rule for limitation periods. The bill as currently drafted proposes the following changes:

  • Regarding the limitation period for contractual claims, the limitation period would become either whichever comes first from the following:

    • five years from the time when the claimant came to know that the claim was exercisable; or

    • ten (20, in the case of personal injury or death) years from the time when the claim become exercisable.

  • Regarding the limitation period for tort claims, the limitation period would become whichever comes first from either of the following:

    • three (five, in the case of personal injury or death) years from the time when the claimant came to know both the damages and the identity of the perpetrator; or

    • 20 years from the time of the tortious act.

 

Standing and procedural framework for bringing an action

Standing

5. What are the rules for bringing a claim in a class/collective action?

Collective action

Collective actions can be brought before the courts when rights or obligations that are the subject matter of the actions are either (Article 38, Code of Civil Procedure 1996 (CCP)):

  • Common to two or more persons or are based on the same factual or legal cause.

  • Of the same kind and based on the same kind of factual or legal cause.

This can be divided into three categories:

  • Where rights or obligations are common to two or more persons.

  • Where rights or obligations are based on the same factual or legal cause.

  • Where rights or obligations are of the same kind and based on the same kind of factual or legal cause.

Class action

The Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP) introduced a special procedure, sometimes referred to as the "two-stage action" system (see Question 1, Current trends). The ASP has not yet come into force, however it is expected to become effective sometime before December 2016.

Under the new procedure, only Specified Qualified Consumer Organisations (SQCOs) approved by the government have standing to bring a class action on behalf of consumers against business operators. It should be noted that SQCOs do not need an individual appointment from consumers to bring the said action. Also, SQCOs can only bring claims on behalf of consumers and not someone at a different level in the distribution chain.

The government decides whether or not to approve an organisation as an SQCO, taking into consideration (among other factors) the organisation's track record of activity, its organisational structure, decision-making processes, financial foundation, and the level of compensation it receives from consumers, among others (Article 65(4), ASP).

Claims subject to the new procedure have to satisfy the following three requirements:

  • Numerousness: claims must relate to damages owed to a "considerably large number" of persons (Article 2(iv), ASP). The government interprets this to mean "tens of people".

  • Commonality: claims must be of "common obligations". Common obligations mean obligations that business operators owe to individuals to make monetary payments in compensation for damage to property arising from the "same factual and legal cause" (Article 2(iv), ASP). The government interprets the "same factual and legal cause" to mean that the facts supporting the claim are common in their principal part, and the basic legal theory is common among the consumers. In this regard, the scale of damages and whether or not there is a link between conduct and damages may be considered as issues specific to each individual consumer, and do not therefore necessarily have to be of the "same factual and legal cause".

  • Predominance: individual issues such as damages and the link between conduct and damages must not predominate over common issues such that "appropriate and swift determination of individual claims" cannot be achieved at the second stage (Article 3(4), ASP).

Furthermore, the ASP limits the type of claims SQCOs can bring under the new procedure to claims for monetary payment arising from a consumer contract. The ASP further limits the type of remedy one can seek under the new procedure to (Article 3(1), ASP):

  • Claims for specific performance.

  • Claims for the return of unjust enrichment.

  • Claims for compensation for losses arising from breach of contract.

  • Claims for compensation for losses arising from defect liability.

  • Claims for compensation for tortious losses.

With respect to the final three items above, the ASP further limits the type of damages SQCOs can seek to recover. Specifically, the following are not recoverable under the Act (Article 3(2), ASP):

  • Lost profit.

  • Secondary loss against the property or service not covered by the contract with the consumer.

  • Loss arising from personal injury and death.

  • Loss arising from pain and suffering.

These limitations may make the bringing of class actions in competition law claims or other types of claim difficult in practice. As stated earlier, the Anti-Monopoly Law provides for no-fault liability claims when there is a determination by the Japan Fair Trade Commission (JFTC) of competition law violations (see Question 4). However, the ASP does not allow recovery of damages based on a claim not stipulated in Article 3(1) as described above. In effect, SQCOs can only bring class actions in competition law claims based on tort theory or unjust enrichment theory provided under Articles 703, 704 or 709 of the Civil Code, and not on no-fault liability claims under Article 25(2) of the AML. In addition, SQCOs can only bring claims on behalf of consumers, which excludes the possibility of bringing competition law claims on behalf of business entities which may have been harmed by competition law violations.

Similarly, the ASP does not allow recovery of damages based on statutes (other than the Civil Code) such as the Product Liability Act 1994 and the Financial Instruments and Exchange Act 1948, which provide for no-fault liability under certain circumstances.

Claimants outside the jurisdiction

Collective actions can be brought by claimants and/or against defendants domiciled or established outside of Japan. Similarly, SQCOs may bring a class action on behalf of consumers or against business operators domiciled or established outside of Japan. In such cases, the CCP sets out the criteria for determining jurisdiction.

The basic rule is that the courts have jurisdiction when the defendant is domiciled or resident in Japan, or, in case of the legal entity, when its principal office is located in Japan, regardless of the nature of claim or nationality of the claimant (Article 3-2, CCP). In addition, the courts have jurisdiction if the place of the performance of the contract is in Japan, or, in tort, where the tortious act occurred in Japan (Article 3-3 (i) to (viii), CCP).

 

Professional claimants

Generally, professional commercial claimants cannot pursue legal actions based on claims purchased from third parties in exchange for a share of the proceeds of the action because it would constitute a violation of the Attorney Act 1949. Article 72 of the Attorney Act prohibits anyone other than an attorney or a legal professional corporation from engaging in the business of providing legal advice or representation in exchange for compensation unless otherwise permitted by specific statutes.

Qualification, joinder and test cases

6. What are the key procedural elements for maintaining a case as a class action?

Certification/qualification

Collective actions. Collective actions can be brought by the claimants or the court can consolidate separate but related proceedings and try multiple claims following the request of defendants or the exercise of the court's discretionary power (Articles 17 and 19, Code of Civil Procedure 1996 (CCP)) if they satisfy the requirement of Article 38 of the CCP.

Class actions. The court can certify claims as eligible for class action proceedings at the end of the first stage (of the "two-stage action system" introduced by the Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP)) (see Question 1, Current trends). For the requirements (such as numerousness, commonality and predominance) and limitations see Question 5.

The decision to certify a claim can be appealed to the high court (Article 281, CCP). The second stage cannot take place while an appeal is pending. When the decision becomes final, it will be legally binding upon not only the Specified Qualified Consumer Organisations (SQCO) that brought the action, but also on SQCO(s) which did not bring such action, or consumers who file claims in the second stage (Article 9, ASP). Therefore, if the case is not certified as a class action, other SQCOs cannot bring the same action on behalf of consumers. Consumers are not bound by the court's decision and are free to bring individual actions. If the case is certified as a class action, those consumers who are not fully satisfied with the court's decision can elect not to file a claim in the second stage and to instead initiate separate individual actions. Note that in this scenario SQCOs cannot initiate separate class actions on behalf of such consumers as they will be bound by the previous court decision at that point in time.

When the court's decision is made as to whether the case can proceed as a class action, a SQCO will:

  • Notify all "known consumers", by post or e-mail, with potential claims subject to the class action as determined by the court in the first stage (Article 25(1), ASP).

  • Provide public notice through the internet, newspapers and so on (Article 26(1), ASP).

"Known consumers" is interpreted to mean persons whose names as well as addresses or e-mail addresses and so on, are known to the SQCO at the time of notification. Upon the SQCO's request, the defendant business operator may also be required by the court to provide public notice through the internet, newspapers and so on (Article 27, ASP).

Consumers must elect to opt in, that is, delegate the authority to recover their claims to the SQCO so that the SQCO can then file the claims with the court within a prescribed period set by the court (Articles 30 and 31, ASP).

The second stage for the Japanese Class Action System (or "two-stage action system") consists of:

  • A simplified determination procedure.

  • A normal litigation procedure, which will be required when the parties object to the court's determination in the simplified determination procedure.

After the said notification process, consumers with claims will then delegate the authority to recover their claims to the SQCO, and the SQCO will file said claims with the court within a prescribed period set by the court (Articles 30 and 31, ASP). The court will forward the claims to the defendant business operator who will then approve or reject them (Article 42(1), ASP). If the defendant business operator does not respond within the prescribed period set by the court, it is deemed to approve in their entirety all claims against it (Article 42(2), ASP). If the defendant business operator approves the claims, they will be confirmed without additional procedure (Article 42(3), ASP). If the defendant business operator rejects the claims, the court will determine them through what is called a simplified determination procedure, in which only documentary evidence will be examined (Articles 44 and 45, ASP). If the SQCO, the business operator, or the consumer objects to a determination reached by the court in a simplified determination procedure within one month after the receipt of such determination, claims will be determined through a normal litigation procedure (Articles 46 and 52, ASP).

 

Minimum/maximum number of claimants

Collective actions. There is no minimum or maximum number of claimants for bringing collective actions.

Class actions. As explained earlier, in order to bring a class action pursuant to the ASP, the number of claimants must be a "considerably large number" (Article 2(iv), ASP). The government interprets this to mean "tens of people" (see Question 5). There is no maximum number for bringing a class action.

 

Joining other claimants

Collective actions. In collective actions, the court may add a person as a claimant in proceedings on its own initiative or on application. There are no explicit deadlines provided in the CCP. If a third party's legal position is affected as a result of a pending civil action, the party may request to intervene in order to assist parties (Article 42, CCP).

Class actions. In class actions, consumers cannot intervene in the first stage in order to assist an SQCO (Article 8, ASP). This is because allowing so would defeat the purpose of separating the two stages and letting SQCOs pursue the first stage on behalf of all the potential consumers, thereby making it as speedy and efficient a process as possible.

 

Test cases

Collective actions. The court may exercise its case management powers by selecting one or more claims to move forward while the rest of claims remain pending. This approach is common especially when the number of claimants is large and when the number increases over time. In such cases, under Article 152(1) of the CCP, the court may separate the cases/claims into different groups depending on, for example, the date of filing, and allow the groups whose claims were brought earlier to move forward. From that point in time, claims belonging to different groups will be completely separated and the legal procedure will proceed independently of the other groups. In theory, the court will issue a judgment with respect to each group of claims and the judgment will have no binding effect on other groups of claims. However, claims belonging to different groups may be based on the same factual or legal cause, and therefore, the judgment in earlier cases may have a de facto effect on later judgments.

Class actions. It is not clear from the statute whether or not the court will allow test cases in class actions.

Timetabling

7. What is the usual procedural timetable for a case?

Average length of proceedings

Collective actions. The Act on the Expediting of Trials 2003 provides that all civil litigation before the court of first instance must be concluded in as short a time as possible within a period of two years (Article 2(1)). The Act requires the Supreme Court to conduct periodic reviews and publish a biennial report considering the success of this benchmark (Article 8(1)). According to the most recent report released in July 2015, the average length of a civil litigation case in Japan was 7.8 months in 2012. 3.5% of cases took more than two years but less than three years to conclude, while 1.2% took more than three years but less than five years. Cases which took more than five years represented 0.2% of the total.

There are no statistics for the average length of proceedings for collective actions, but these would normally require more than two years, and in rare cases even more than five years, for the court of first instance to reach a verdict. This is because collective actions often involve many parties and many procedural/substantive issues to be addressed, which inevitably prolongs the length of proceedings. The appeal before the high court tends to be shorter. On average, the length of proceedings before the high court is one to two years.

Class actions. As it has not yet come into effect, there is yet to be a case under the framework provided by the Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP).

Effect of the area of law on the procedural system

8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

The applicable procedural system does not vary depending on the relevant area of law in which the collective action is brought. Class actions are confined to claims arising out of consumer contracts.

 

Funding and costs

Funding

9. What are the rules governing lawyers' fees in class/collective actions?

The Japan Federation of Bar Associations (JFBA) has set out a regulation applicable to all lawyers in Japan which states that lawyers' fees (in any action) must be fair and reasonable taking into consideration the value of the economic interest at stake, level of difficulty, time and effort required, and all other circumstances (Article 2, Regulation on Attorney's Compensation 2004).

The regulation does not provide further guidance as to what will be considered fair and reasonable. There are no specific restrictions as to the type or amount of fees lawyers can collect from their clients, and contingency fee arrangements are generally considered to be permitted.

Anyone can file a complaint for disciplinary action against a lawyer with the local bar association to which the lawyer belongs if he or she thinks that the lawyer's fee is so far beyond the fair and reasonable standard that it amounts to disgraceful conduct.

 
10. Is third party funding of class/collective actions permitted?

Article 72 of the Attorney Act prohibits anyone other than an attorney or a legal professional corporation from engaging in the business of providing legal advice or representation in exchange for compensation, unless otherwise permitted by specific statutes. A violation of the article can result in up to two years of imprisonment or a fine of up to JPY3 million (Article 77(iii), Attorney Act).

There is a concern that third party funding may be found to be in violation of the Attorney Act even though, technically speaking, it would not be providing representation per se so long as claims were assigned by the claimants to the third party for collection, and such party acted as a principal. The concern is that arrangements of this type might nonetheless be construed as providing representation when viewed as a whole. This might go towards explaining why there are currently no third party funding schemes available in Japan.

 
11. Is financial support available from any government or other public body for class/collective action litigation?

The Japan Legal Support Center, which was established by the Japanese Government pursuant to the Comprehensive Legal Support Act 2004, provides legal aid for those who cannot afford to pay by themselves the costs and lawyer's fees associated with bringing a civil litigation claim. There are no specific restrictions as to the type of cases or claims one can bring using legal aid, provided that certain general conditions are met. These general conditions include:

  • That the claimant falls under a specified income threshold.

  • That the claim is not frivolous.

  • That the case does not require extremely atypical and specialised expertise.

 
12. Are other funding options available to claimants in class/collective actions?

There are no other funding options available to claimants.

Costs

13. What are the key rules for costs/fees in class/collective action litigation?

The court has discretion to award a party its costs on the "loser pays" principle (Article 61, Code of Civil Procedure 1996 (CCP)). The court may award a losing party all or part of its costs if such costs resulted from unnecessary action or delay on the part of the winning party (Article 62, CCP).

Filing fees for collective actions are set according to the value of economic interest at stake (Appendix Table 1, Act on Costs of Civil Procedure 1971). In contrast, under a class action, the filing fee required for consumers to file a claim in the simplified determination procedure is set at JPY1000 per claim, regardless of the economic interest.

Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

There is a concern that limited availability of funding (with the exception of legal aid provided by the Japan Legal Support Center) may act as a barrier to legal actions being brought, especially in cases where the amount of the individual claim is low and the prospect of winning uncertain.

The new class action system addresses these concerns to some extent by introducing the two-stage action mechanism, where the existence of liability would be determined at the first stage and a flat rate of JPY1000 per claim set for consumers filing a claim at the second stage.

 

Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

A party may request disclosure of documents by itself or have its lawyers make such a request through the Bar Association. In the former case, the request will be sent in the name of the requesting party, whereas in the latter case, the request will be sent in the name of the Bar Association. However, there is no sanction against failure to comply with either of the requests.

During litigation

There are principally two procedures for disclosure of documents during litigation under the Code of Civil Procedure 1996 (CCP):

  • Commission to Send Documents.

  • Document Production Order.

"Commission to Send Documents" (bunsho-sofu-shokutaku) is a request made by a party to a civil action (including collective actions) addressed to anyone in possession of documents to produce these documents to the requesting party (Article 226, CCP). There is no sanction against failure to comply with such a request. However, this method can be an effective tool in obtaining documents from a third party because certain parties do produce documents on a voluntary basis in response to such requests under certain situations. Typical situations include hospitals producing medical records in response to a request from a patient, banks producing accounting records in response to a request from a customer, and administrative bodies such as the Japan Fair Trade Commission (JFTC) producing certain investigative records and documents in response to a request from an alleged victim of the Anti-Monopoly Law.

In the case of the JFTC, it has set out guidelines on how it should handle "Commission to Send Documents" requests, which are sought in relation to follow-on damages actions (In re Production of Documents Concerning Anti-Monopoly Damages Actions, General Secretariat Notice No. 6 dated 15 May 1991). The guidelines state that under certain conditions the JFTC will produce documents that formed the basis of administrative orders (or where there was an administrative hearing, the case files) in response to a "Commission" request from the court which is handling a follow-on damages action. These conditions include redacting from the documents information which the JFTC considers to constitute business secrets, or which unnecessarily invades the privacy of the relevant parties.

Alternatively, a party to a civil action can request that the court issues a Document Production Order. In making such a request, the requesting party must specify the document, the general content, the possessor, the issue the requesting party seeks to prove and the grounds for the request (Article 221(1), CCP). This requirement for specificity limits the scope of document production to a certain extent.

The court will grant the request for the Document Production Order unless the document falls under the following categories specified in the statute:

  • Documents stating the matters the possessor can refuse to testify on due to kinship (Article 220(i), CCP).

  • Documents concerning a secret in relation to a public officer's duties which public disclosure would likely harm the public interest or the performance of the public duties (Article 220(ii),CCP).

  • Documents concerning a business secret or matters certain professionals can refuse to testify about due to confidentiality (Article 220(iii), CCP).

  • Documents created exclusively for use by the possessor (excluding documents held by the state or a local public entity, which are used by a public officer for an organisational purpose) (Article 220(iv), CCP).

  • Records or seized documents concerning a criminal case or juvenile protection case (Article 220(v), CCP).

The court must hold a hearing if the possessor of the document is a third party to the civil action (Article 223(2), CCP). If the request is granted, then the court will issue an order to the possessor of the document. The opposing party can file an appeal to the high court (Article, 223(7), CCP). If the addressee does not produce the specified documents despite the court order, the court can deem that the issue the requesting party sought to prove through those documents to be true (Article 224(1), CCP). In case of third party addressees, the court can impose an administrative fine of up to JPY200,000 (Article 225(1), CCP).

There is a special disclosure obligation for business operators in the case of class actions. Specified Qualified Consumer Organisations (SQCOs) can request from business operators the disclosure of any document stating the name and address or contact information of the relevant consumer (Article 28(1), ASP). This is for the ease of notifying consumers upon the determination by the court that the case can proceed as class action (see Question 6).

 
16. Are there special considerations for privilege in relation to class/collective actions?

Attorney-client privilege is not recognised in Japan. There have been proposals for reform in certain areas of law (such as anti-trust law), however there has not been a developed discussion to introduce such privilege with respect to civil litigation in general.

However, attorneys are bound by the ethical duty of confidentiality toward their clients (Article 23, Attorney Act) regardless of whether there is an explicit agreement between an attorney and a client to that effect. Attorneys can refuse to testify in a civil action on matters covered by the confidentiality obligation (Article 197(1)(ii), Code of Civil Procedure (CCP)) and documents concerning such matters are exempt from the general disclosure obligation as discussed above (Article 220(iii), CCP).

 

Evidence

17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

Parties can request the testimony of factual and expert witnesses. In the case of factual witnesses, parties can appoint the witness, whereas in the case of expert witnesses, the court can appoint the witness.

There is a third category of witness, a quasi-expert witness whom the parties call upon but is not a court-appointed expert witness. There is no strict regulation concerning the admissibility of opinions by a court-appointed expert or a privately appointed expert. The value of evidence will be determined by the judge taking into consideration all the circumstances.

Often, witnesses are requested to prepare a written statement providing the overview of his or her testimony in advance of his or her testimony. Both factual and expert witnesses are cross-examined at the testimony.

 

Defence

18. Can one defendant apply to join other possible defendants in a class/collective action?

The court can add a person as a defendant in proceedings either on its own initiative or following an application (Article 152, Code of Civil Procedure (CCP)).

It is common for multiple defendants to jointly retain the same attorney(s), co-ordinate their defence strategy, and/or appoint a joint expert. There is no particular legal privilege (such as "common interest privilege") recognised in this regard.

 

Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?

For both contractual claims and tortious claims, monetary compensation is the standard remedy for damages (Articles 417 and 722(1), Civil Code 1896 (CC)). For defamation claims, the court can order an appropriate disposition to restore reputation (Article 723, CC).

Such compensation can cover not just "ordinary" damages but also "special" damages provided that, in the case of the latter, "special" damages was generally foreseeable at the time of the breach/infringement (Article 416, CC). Punitive damages are not available. Interest is awarded from the date of the breach/infringement, based upon an agreed rate or, in the absence of that, the statutory rate (of 6% in the case of commercial transactions and 5% in other cases).

For both contractual claims and tortious claims, the standard measure of damages is the difference between what actually happened and what would have been if the breach or infringement had not occurred. Quantification is under the sole discretion of the judge (Article 248, Code of Civil Procedure (CCP)).

Declaratory relief and interim awards

20. What rules apply to declaratory relief and interim relief in class/collective actions?

Declaratory relief is available in collective actions. Declarations can be made on issues of law, including, for example, whether or not certain legal obligations exist between the claimant and the defendant. However, declarations cannot be made on issues of fact generally.

Interim relief is available under certain conditions. For example, interim payments can be granted in order to avoid substantial hardship or danger that would materialise if the relief is not granted immediately during the pendency of the litigation.

 

Settlement

21. What rules apply to settlement of class/collective actions?

Collective actions can be settled either out of court or before the court. In the latter case, the settlement will be entered in the court record and such record will have the same legal effect as that of a final judgment, in other words, it will be legally enforceable against the opposing party (Article 267, Code of Civil Procedure (CCP)).

Class actions can be settled before the matter goes to court, between Special Qualified Consumer Organisations (SQCOs) and business operators. The settlement can relate to whether or not there were "common obligations" and the court record will be legally binding upon other SQCOs and consumers who filed claims.

 

Appeals

22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

The decision to certify a claim can be appealed to the high court (see Question 6).

 

Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

Claims can be dealt with through an alternative dispute resolution mechanism such as mediation or arbitration. However the use of such alternative dispute resolution mechanisms is not common, as most collective claims involve significant numbers of plaintiffs.

There are exceptions:

  • Mediation and/or arbitration before the Labour Relations Committee (a special administrative body specialising in resolving labour disputes), is quite common in labour law-related claims.

  • Environmental law-related claims, where mediation and/or arbitration before the Environmental Dispute Co-ordination Commission (another specialist administrative body), may be an option.

In addition, the Dispute Settlement Centre for Nuclear Disaster Compensation was established in 2011, to resolve claims against Tokyo Electric Power Co. in response to the nuclear accidents at the Fukushima nuclear power plants that resulted from a massive earthquake and the following tsunami that hit north eastern Japan on 11 March 2011.

 

Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

The government has just introduced the class action system and currently there is no active debate or proposal for reform to the procedural aspect of class/collective actions as the new system has not yet come into effect.

There is also ongoing debate for future reform concerning specific areas of law. One such example is whether or not attorney-client privilege should be introduced in anti-monopoly/competition law-related procedures. It remains the subject of debate for future reform.

 

Online resources

Japanese Government

W http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi

Description. This is an official site of the government which contains original language text of the legislation in Japanese (except for the Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers 2013 (ASP) which has not come into effect).

Original language text of the ASP can be found at: www.caa.go.jp/planning/pdf/130419-2_131213.pdf

Ministry of Justice

W www.japaneselawtranslation.go.jp/?re=02

Description. This is an official site of the Ministry of Justice which provides English translations for some major laws such as the CCP, Anti-Monopoly Law and Civel Code. These are for guidance only and have no binding effect.

The English translation for the ASP does not seem to be available on line.



Contributor profiles

Daisuke Oda

Mori Hamada & Matsumoto

T +81 3 5223 7757
F +81 3 6266 8625
E daisuke.oda@mhmjapan.com
W www.mhmjapan.com/en/

Professional qualifications. Japan, Attorney at Law

Areas of practice. General corporate (corporate governance and labour/employment); regulatory (compliance, financial regulations and others); litigation/dispute resolution.

Aruto Kagami

Mori Hamada & Matsumoto

T +81 3 5223 7757
F +81 3 5223 7657
E aruto.kagami@mhmjapan.com
W www.mhmjapan.com/en/

Professional qualifications. Japan and New York State, Attorney at Law

Areas of practice. Competition/anti-trust; regulatory compliance; international and domestic dispute resolution.


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