Japan’s principal data protection legislation is the Act on the Protection of Personal Information (APPI). It provides the basic principles for the government’s regulatory policies and authority, as well as the obligations of private business operators that handle personal information (handling operators).
Before April 2022, national administrative bodies were regulated by the Act on the Protection of Personal Information Held by Administrative Organs and the Act on the Protection of Personal Information Held by Independent Administrative Agencies, etc. However, after April 2022, the obligations prescribed in these two laws were integrated into the APPI.
Local government bodies are regulated under their own local regulations (jourei), but these vary between bodies. In April 2023, the APPI introduced nationwide principles for jourei and related implementing guidelines to homogenise the administration of national data protection regulations. Under this set of amendments, standard rules regarding personal information handled by local governments are uniformly stipulated in the APPI, while jourei can only stipulate local rules in very limited situations allowed under the law.
Another important law is the Act on the Use of Numbers to Identify a Specific Individual in Administrative Procedures (My Number Act), which stipulates special rules for what is known in Japan as the Number to Identify a Specific Individual in Administrative Procedures (My Number), a 12-digit individual number assigned to each resident of Japan.
In June 2023, the Telecommunications Business Act (TBA) introduced a regulation about sending cookies to external parties. It also imposed new obligations regarding user information on large telecommunications service providers (TSPs) that have either 5 million paid users or 10 million free users.
There are no laws or regulations that target artificial intelligence (AI) at this time.
Furthermore, the Personal Information Protection Commission (PPC – the regulator primarily responsible for the APPI and the My Number Act) has published guidelines for handling personal information (PPC Guidelines). The ministries with jurisdiction over some industrial sectors have published data protection guidelines for those sectors. For example, the Financial Services Agency (FSA) and the PPC have jointly published data protection guidelines for the financial sector, and the Ministry of Internal Affairs and Communications (MIC) has issued data protection guidelines for telecommunications business operators.
The APPI follows the Organisation for Economic Co-operation and Development’s eight Privacy Principles. Japan has reached an agreement with both the EU and the UK to certify each other’s country or territory as an “adequate” country for Japan’s and the EU/UK’s data protection purposes; this decision was renewed in March and April 2023. However, this does not mean that the APPI is identical to Regulation (EU) 2016/679 (General Data Protection Regulation – GDPR).
Japanese data protection law is, nonetheless, closer to the EU omnibus model than the US sectoral/subnational approach in the sense that Japan has a comprehensive data protection law: the APPI.
According to a supplementary provision of the APPI, a review of whether to amend the law is conducted every three years. Based on this provision, on 27 June 2024 the PPC published an “Interim Summary”, outlining its current thinking based on discussions and examinations to date. On 4 September 2024, the commission then published the results of a public consultation, covering the following main topics:
However, it remains unclear whether legislation based on the Interim Summary will be submitted to the next regular Diet session (January–June 2025). If the amended law is enacted, its implementation is expected to begin in either 2026 or 2027.
On 31 July 2024, an expert panel was established to discuss issues regarding strengthening APPI enforcement, with the report being published on 25 December 2024. In addition, on 21 October 2024, the PPC published its “Perspectives for Enhancing the Triennial Review of the Personal Information Protection Act”. These perspectives could possibly be interpreted as suggesting a shift towards GDPR-style legislation to some extent, but such fundamental institutional changes may not be realistic in the short term, particularly as passage at the next regular Diet session would face significant hurdles. The PPC has conducted hearings with various stakeholders regarding these perspectives, with the results being published on 17 December 2024.
The PPC is tasked with enforcing and implementing the APPI, and has the following powers:
For some sectors, other government authorities also enforce the APPI – for example, the FSA is the relevant authority for banks, whereas MIC is the appropriate authority for TSPs. There are no regulators specifically overseeing AI data.
The PPC does not have the authority to conduct criminal investigations, and the APPI explicitly stipulates that the commission’s power to conduct on-site inspections does not include criminal investigations (Article 146.3).
It is important to note that the APPI imposes no administrative fines. Criminal sanctions may only be imposed if a handling operator:
The PPC empowers private organisations called accredited personal information protection organisations (nintei kojin jouhou hogo dantai) to handle and promote the protection of the personal information held by handling operators. These accredited organisations process complaints against handling operators or provide information on them to ensure the reliability of the businesses of those handling operators, and promote the protection of personal information. They also establish their own rules, with which their members must comply.
The PPC finds potential violations of the APPI through:
It has the power to enforce administrative sanctions, but the APPI does not provide for administrative fines; please see 1.2 Regulators for details. The introduction of administrative fines is under discussion.
The PPC provides guidance or advice, and does not take further action in most cases, although the commission takes strong action such as issuing orders in serious cases.
Please see 1.4 Data Protection Fines in Practice for recent statistics about administrative sanctions enforced by the PPC.
The APPI does not provide for administrative fines, but enforcement statistics are as follows.
No administrative orders have been issued because ordinary companies have been in compliance with the PPC’s administrative guidance and advice. Moreover, companies are typically concerned with their social reputation, so they endeavour to comply with laws and regulations.
Legal problems concerning AI have been the subject of intense discussion of late, including matters such as liability for the actions of AI and ownership of rights regarding AI-created content; however, no laws or regulations target the emerging technology itself at this time. The government plans to submit a new bill to the Diet in 2025 that will promote the use of AI and address cases of malicious use.
The PPC published an announcement on 2 June 2023, stating its interpretation of the APPI in the context of generative AI and requesting generative AI service providers and users to comply with the law. MIC and the Ministry of Economy, Trade and Industry (METI) published their AI Business Guidelines for AI developers, service providers and users on 19 April 2024. These guidelines include cautions and points to note regarding privacy and data protection.
The Institute for Information and Communications Policy (IICP) and MIC have jointly published the Draft AI R&D Guidelines for International Discussions, which explain the R&D and nine other principles for research into and development of AI. These are tentative guidelines for further international discussion. MIC also published the Guidelines for AI Utilisation in August 2019, which summarise the issues that users (including service providers) are expected to pay attention to in their utilisation phase of AI in the form of “principles”, and provide explanations based on the principle of a human-centred AI society. Some other AI-related associations have also published the same principles or guidelines for research into and development of artificial intelligence.
There are no regulations specific to AI data, but please note that general regulations are applicable. For example, if AI data includes personal information, the APPI applies to the processing of that data. Please also refer to 1.5 AI Regulation for more details.
Data subjects may go to court to seek compensation for damages or distress caused by breaches of data protection. There are two major types of legal causes.
In a decision issued in October 2017, the Supreme Court found that breaching the right to privacy may give rise to claims for compensation for distress caused by the leakage of personal information (eg, names, birthdates, addresses, telephone numbers). The case was appealed to the Osaka high Court, which awarded JPY1,000 to the claimant on 20 November 2019. In addition, the Tokyo high Court awarded JPY3,300 to other plaintiffs on 25 March 2020 for the same data breach. The Supreme Court denied appeals of these cases in December 2020, so these appellate court decisions are deemed final.
The Act on Special Measures Concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers allows for class actions to be filed by consumers. Please note that claims allowed under the law are limited to property damage and emotional distress within the scope of the class action itself if the distress is caused along with property damage or by intentional conduct.
As a practical matter, multiple data subjects may select the same lawyer to represent them, and that lawyer can file a single lawsuit on their behalf, which is similar to a class action.
IoT Services
Legal problems regarding the IoT and ubiquitous sensors have been the subject of intense discussion of late, but no specific laws or regulations are currently targeting either issue. However, MIC has published guidelines regarding comprehensive measures for IoT securities (July 2016).
The Information-technology Promotion Agency will introduce the security requirement compliance evaluation and labelling system for security features of IoT products in March 2025.
Big Data
As for big data analytics, data sharing will typically happen between companies subject to contracts between those companies. METI has published guidelines on contracts regarding sharing (big) data between companies.
Please also refer to 1.5 AI Regulation.
Handling Operator Duties
The various obligations of handling operators under the APPI are as follows.
Entrustment
Under Article 27.5(i) of the APPI, if a handling operator entrusts all or part of the handling of personal data it acquires to an individual or another entity, that individual or entity will not be considered a third party under Article 27.1. For example, if a handling operator uses third-party vendors of handling operator services and shares personal data with those vendors for them to use on the handling operator’s behalf and not for their own use, that transfer will be deemed an “entrustment” and is not subject to data transfer restrictions.
When a handling operator “entrusts” personal data, it must exercise appropriate supervision as necessary over the entrusted person to ensure security control over the entrusted personal data (Article 25).
Joint Use
Handling operators may share and jointly use personal data with specific individuals or entities as long as the handling operator notifies the data subjects or makes the following information accessible to them (Article 27.5(iii)) before any information sharing or joint use:
After this information is published or the data subjects are notified of it, the identified joint users will not be deemed third parties within the context of Article 27 and, therefore, the handling operator and the identified joint users may share and jointly use specific items of personal data as if they were a single entity.
Business Succession
Handling operators may transfer personal data to third parties without the opt-in consent of data subjects if the transfer accompanies a business succession caused by a merger or for other legal reason (Article 27.5 (ii)).
Filing of Notification of Opt-Out Consent
Under Article 27.2 of the APPI, handling operators may provide personal data (excluding special-care-required personal information and personal data acquired by improper means or provided by another handling operator pursuant to the opt-out mechanism) to third parties without the opt-in consent of data subjects if the following conditions are satisfied:
Please note that, in practice, the PPC does not readily accept the foregoing opt-out notification unless it is not practical to seek the data subjects’ consent, and it is difficult to use the other exceptions.
Data Protection Officers
The APPI has no provision mandating the appointment of privacy or data protection officers; however, handling operators must take necessary and proper measures to prevent the leakage, loss or damage of personal data and to implement other security controls. Under the PPC Guidelines, those measures should include the following:
Effective since 1 April 2024, the PPC Guidelines also require handling operators to take security control over personal information that will be collected and expected to be treated as personal data so that cyber-attackers cannot intercept such information on behalf of the operator.
The PPC Guidelines indicate the appointment of a person to be in charge of the handling of personal data as an example of a proper and necessary measure. However, although handling operators are expected to adopt the measures described in the PPC Guidelines, any failure to adopt such measures is not a direct breach of the APPI.
Under the TBA, large TSPs are required to appoint a chief manager responsible for handling user information.
Privacy By Design/Default and Privacy Impact Analyses
The APPI does not mandate obligations regarding PIAs. However, the PPC has issued a report titled “Promoting the implementation of PIAs – Significance of PIAs and points to keep in mind in the implementation process”, which business operators are encouraged to follow voluntarily. The APPI does not refer to the concepts of privacy by design or by default, but PPC guidelines on accredited personal information protection organisations recommend that these organisations promote privacy by design.
Internal or External Privacy Policy
The PPC Guidelines recommend releasing a privacy policy or statement.
Article 32.1 of the APPI requires handling operators to make the following information regarding retained personal data available to data subjects:
Most handling operators typically comply by using internal and external privacy policies.
The PPC Guidelines also recommend stating the following in a handling operator’s basic policies as part of the implementation of security control measures regarding personal data:
Most handling operators typically comply by using internal and external privacy policies.
The PPC Guidelines also recommend being transparent in disclosing the entrustment of work involving personal data (eg, disclosing whether entrustment has been made and what kind of work has been entrusted).
Data Subjects’ Rights
Data subjects may request handling operators to disclose their retained personal data and the record of its provision to third parties. Handling operators must comply with these requests unless there is a possibility that the disclosure could harm the data subject’s or a third party’s life, body, property or other rights or interests, or that it could seriously interfere with the handling operator’s business (Article 33).
Data subjects may also request handling operators to correct, add or delete retained personal data. The handling operator must investigate without delay and, based on the results of the investigation, comply with these requests to the extent necessary to achieve the purposes of use of the retained personal data (Article 34).
Furthermore, data subjects may request that handling operators discontinue the use of or erase retained personal data and stop providing retained personal data to third parties if:
However, this obligation will not apply if it will be too costly or difficult to discontinue the use of or erase the retained personal data and the handling operator takes necessary alternative measures to protect the rights and interests of the data subjects (Article 35).
See 3.1 Objectives and Scope of Data Regulation.
See 3.1 Objectives and Scope of Data Regulation.
See 1.2 Regulators.
The use of cookies, web beacons and other tracking technology is not directly regulated under the APPI. Information collected by cookies or web beacons is not automatically deemed to be personal information, but it will be if the handling operator can easily collate information collected by cookies or web beacons with the name of the individual (for example, when an internet-based company can identify the cookie IDs of customers when logged in to its website).
In this regard, the transfer of personal data to third parties – whether the data is personal data or not – is determined based on the circumstances surrounding the transferor, not the transferee. In brief, if the data is not personal data in the hands of the transferor, regulations regarding the transfer of personal data to third parties are not applicable.
In the past, some schemes emerged whereby data management platforms provided non-personal information such as user data collected by cookies (eg, user browsing histories, interests, preferences) to third parties, with the knowledge that the data will be personal data in the hands of the recipient. The PPC was concerned by the expansion of this kind of data sharing without the involvement of (or control by) the data subjects. As a result, the concept of personally referable information was introduced in April 2022, defined as a collective set of information comprising information relating to living individuals that does not fall under personal information or pseudonymously or anonymously processed information but that has been systematically organised to be searchable using a computer for specific personally referable information or similar information prescribed by Cabinet Order.
The APPI regulates the provision of personally referable information if the provider assumes that a recipient will acquire a database of the provided personally referable information as personal data. In such cases, the transferor must confirm that the transferee has obtained the data subjects’ consent to transfer their data as personal data.
Behavioural advertising is not directly regulated under the APPI, but any personal information collected to provide such advertising is subject to the law. For example, the APPI has regulations for certain cookies, web beacons and other tracking technology underlying behavioural or targeted advertising (please see 4.1 Use of Cookies). It is good practice to have a cookie policy and to offer an opt-out from using cookies (especially for behavioural advertising). The Japan Interactive Advertising Association’s guidelines are useful for gaining an understanding of good practices in Japan.
Effective since June 2023, the TBA imposed new obligations on TSPs, which have a non-trivial impact on users’ interests. More specifically, a TSP is an entity that provides:
When a TSP makes users send their information (typically including cookies) to an external party, the TSP is required to make a notification or public announcement, obtain opt-in consent or provide an opt-out mechanism with respect to certain information, including the content of the information, the name of the recipient party and the recipient’s purpose of use of the information.
Unsolicited marketing by email is regulated principally by the Act on the Regulation of Transmission of Specified Electronic Mail (Anti-Spam Act), under which marketing emails can only be sent to recipients who:
The Anti-Spam Act also requires the sender to allow the recipients to opt out.
Furthermore, the Act on Specified Commercial Transactions restricts marketing regarding mail order businesses, including online shopping, but does not provide exceptions similar to the last three items above.
There are special restrictions on telecommunications business operators regarding location information under MIC’s guidelines on personal information for telecommunications businesses. Under these guidelines, telecommunications business operators can obtain or transfer location information from mobile devices only with the data subjects’ prior consent or if there is a justifiable cause.
The Ministry of Health, Labour and Welfare has issued a notice regarding the handling of health information of employees by employers, including a condition that the employer shall not handle such information beyond the scope necessary to secure their employees’ health.
Furthermore, to prevent discrimination, the Employment Security Act has special restrictions on obtaining information on job applicants during their recruitment.
The employer has the right to monitor workplace communications in relation to work and to use cybersecurity tools, insider threat detection and prevention programmes, and digital loss prevention technologies, but privacy issues may arise regarding private communications and other privacy matters at the workplace. Thus, employers are recommended to establish internal rules prohibiting the use of company PCs and email addresses for private use, and to disclose the possibility of monitoring those devices and data, including emails.
In principle, there is no special role for labour organisations or works councils regarding employment-related data privacy, but there is a general requirement for employers to obtain the opinion of the employee representative in establishing work rules.
See 3.1 Objectives and Scope of Data Regulation for the regulations on transferring personal data to other entities.
Basic Regulation
There are special restrictions on the transfer of personal data to foreign countries. In principle, the APPI requires the transferor to obtain the prior consent of individuals whose personal data will be transferred to third parties located in foreign countries (Article 28). Thus, overseas transfer restrictions will apply if a foreign company transfers user data to another company outside Japan. However, if it does so to a company in Japan, overseas transfer restrictions will not apply. These restrictions apply even in cases of entrustment and joint use, which are exceptions to local third-party data transfer restrictions.
Data subjects’ consent to overseas data transfers is not necessary only if either of the following applies:
Implementation of the PPC Ordinance is provided for in the PPC Guidelines, under which the “appropriate and reasonable methodologies” referred to above include agreements between the data importer and exporter, or intergroup privacy rules, which ensure that the data importer will treat the disclosed personal data in accordance with the spirit of the APPI. With respect to recognised international arrangements, the PPC Guidelines have identified the APEC Cross Border Privacy Rules (CBPR) as a recognised international framework for the handling of personal information.
Please also refer to 5.5 Recent Developments for additional obligations effective since April 2022.
Overseas data transfer restrictions do not require government notification or approval.
There are no data localisation requirements under the APPI.
There are no blocking statutes under Japanese law.
Additional Obligations Since April 2022
Effective since April 2022, international data transfers are permitted only when additional requirements are met. First, when handling operators transfer personal data to foreign countries based on the consent mechanism, they will be required to provide data subjects with certain information, as specified by the amended Ordinance issued by the PPC (Article 28.2). According to the PPC Ordinance, the foreign country’s name, information about its personal information protection system and the measures to be taken by the recipient party to protect personal information are required to be provided to the data subjects.
Second, when handling operators transfer personal data relying on the recipient’s equivalent system of data protection, they will be required to take the necessary steps to ensure that the overseas recipient continuously takes equivalent measures and to provide data subjects with certain information about the measures to be taken upon request under the amended PPC Ordinance (Article 28.3). In this regard, according to the PPC Ordinance, one of two assurance measures is to periodically confirm the implementation status of the equivalent measures taken by the recipient and the presence or absence of systems in the foreign country that might affect the implementation of the equivalent measures. The other measure is to take necessary and appropriate measures if the recipient party’s implementation of the equivalent measures is interfered with in some way, and to suspend the provision of personal data if it becomes difficult to ensure the continuous implementation of the equivalent measures.
The PPC Ordinance also states that the following information must be provided to data subjects upon request:
As a result, data transfers to countries where proper government access is not implemented can be difficult. An example of this difficulty is the international data transfer regulations under the GDPR raised by the Schrems II case.
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info@morihamada.com www.morihamada.comData Protection and Privacy in Japan: an Introduction
The Act on the Protection of Personal Information (APPI) serves as Japan's fundamental and comprehensive data protection legislation.
When the APPI underwent significant amendments in 2020, it was stipulated that its provisions should be reviewed approximately every three years following the implementation of the amended law. Therefore, the Personal Information Protection Commission (PPC), established as the data protection authority under the APPI, initiated its review in November 2023 and published an Interim Report in June 2024. Subsequently, the PPC established a Study Group, comprising experts in data protection, to discuss matters that the Interim Report identified as requiring further consideration. Specifically, the Study Group discussed the potential introduction of an administrative monetary penalty system, and the potential introduction of injunctive relief and damage recovery systems through qualified consumer organisations. The Study Group published a report summarising its discussions in December 2024.
Meanwhile, the PPC conducted hearings with experts and other stakeholders to examine specific institutional designs and priorities for issues identified in the Interim Report but not discussed by the Study Group, and to prepare for medium-term comprehensive reform of the system. Based on these hearing results, the PPC published the “Next Steps” in January 2025, outlining the issues requiring short-term consideration.
The Interim Report, the Study Group's report and the Next Steps are crucial documents for anticipating future APPI amendments. This chapter provides an overview of the prospective APPI amendments as gleaned from these documents.
As discussed below, these three documents primarily address the administrative monetary penalty system, and injunctive relief and damage recovery systems through qualified consumer organisations, and other pertinent issues. However, the implementation requirements for these items vary: some clearly necessitate APPI amendments, while others could be achieved through modifications to enforcement regulations or guidelines alone. Furthermore, no clear timeline has been established for implementing these various issues.
Consequently, while specific proposed amendments to the APPI may be published as early as this spring, it remains uncertain whether all issues discussed in this chapter will be incorporated. Nevertheless, the introduction of the administrative monetary penalty system and the injunctive relief and damage recovery systems through qualified consumer organisations would undoubtedly represent the most significant enforcement-related amendment since the APPI's implementation in 2005.
Note that one unique aspect of the APPI compared to other countries' data protection regulations is that it defines concepts such as “Personal Information”, “Personal Data” and “Personal Data the Business Holds”. Since most of the data processed by businesses falls under “Personal Data”, this chapter will use the term “Personal Data” without making strict distinctions between these terms.
Administrative Monetary Penalty System
Sanctions under the current system
The current APPI provides the following primary sanctions for APPI violations.
Criminal penalty provisions are subject to dual liability. Specifically, when an employee commits a violation under Article 178 or 179 in connection with the business's operation, the business may be subject to a fine of up to JPY100 million; when an employee commits a violation under Article 182, the business may be subject to a fine of up to JPY500,000 (Article 184).
According to the PPC reports on enforcement activities, several hundred cases of guidance and advice are issued annually, with several dozen of these cases being publicly disclosed by the PPC, including disclosure of the relevant business names. While recommendations are limited to a few cases per year, all such cases are made public, and there are instances where they have been issued to major companies. No orders have yet been issued against businesses conducting normal business activities.
Regarding criminal penalties, there have been cases resulting in convictions, particularly in instances where employees misappropriated and sold personal data. However, no criminal penalties have yet been imposed on businesses.
In light of these circumstances, concerns have been raised about the APPI's deterrent effect. Furthermore, given that many other countries have implemented administrative monetary penalty systems, the appropriateness of introducing such a system in the APPI has been debated for several years.
Introducing an administrative monetaryl penalty system
Based on the background discussed above, the Study Group is considering introducing an administrative monetary penalty system into the APPI, which would require a balance to be struck between deterring violations while avoiding discouraging lawful activities. The Study Group is considering two categories of violations subject to administrative monetary penalties:
It will incorporate limitations based on the following three elements to achieve the appropriate balance:
Violations likely to lead to serious infringement of rights and interests
Specific examples
The Study Group identified acts that generate benefits or compensation through violations of the following provisions as specific examples of acts likely to lead to serious infringement of rights and interests:
Consideration of elements
The Study Group is considering striking a balance by taking the following three points into account:
These proposals have raised concerns such as that “the requirements for reasonable care and concrete risk are unclear” and that “serious harm could occur even in cases involving fewer than 1,000 individuals”, warranting further detailed consideration.
Penalty calculation method
The Study Group is considering setting the penalty amount to be equal to the full amount of the financial benefits gained from the violation, or, even further, setting the surcharge amount in excess of this sum, with an emphasis on the importance of the deterrent effect of such penalty. Here, “financial benefit” refers to the “sales” received as a result of the violation, not “profit”. On this point, referring to the Certified Public Accountants Act, where a fine of 1.5 times the audit fee is imposed in cases of intentional false certification, an opinion has been raised suggesting that a fine exceeding the actual monetary gain by a certain extent should also be considered.
The Study Group is also considering introducing presumptive provisions for cases where accurate calculation of such “financial benefit” proves difficult. Such presumptive provisions are said to be effective with respect to businesses that fail to accurately report their sales.
Violations of security management measures
Specific examples and element considerations
Data breaches resulting from insufficient security management measures occur frequently in Japan, and the Study Group considers it appropriate to subject certain of such data breaches to penalties.
Similar to the three elements discussed above (under Consideration of elements), the Study Group is considering imposing penalties in cases where there was “a severe failure to exercise reasonable care”, “individual rights and interests have been infringed or there is a concrete risk of infringement”, and the data breach affects 1,000 or more data subjects.
Penalty calculation method
The Study Group is considering calculating penalties by applying a specific calculation rate to the sales generated during the period of the violation through the business’s activities. An example of a similar specific calculation rate being adopted is seen in the Antitrust Act, which stipulates a range of 10% to 1% of the sales generated during the period of the violation through the business’s activities (Articles 7-2, 7-9, 20-2 and 20-6), and in the Act Against Unjustifiable Premiums and Misleading Representations, which sets the rate at 3% (Article 8, Para 1).
Furthermore, the introduction of presumptive provisions is being considered, similar to those mentioned above.
Other rules related to administrative monetary penalties
Reduction for voluntary reporting
To incentivise businesses to address violations immediately upon discovery, the Study Group is considering implementing reduction provisions (like a leniency system) for violators who voluntarily report, thereby encouraging early detection of violations and the development of compliance systems.
Increase for repeated violations
The Study Group is considering imposing 1.5 times the standard penalty amount on entities that have received a penalty payment order within ten years before the date of the provision of the report or on-site inspection related to the current violation.
Other considerations
Other matters under consideration include establishing a statute of limitations period from the cessation of the violation within which administrative authorities can take measures, and ensuring effectiveness against overseas businesses and those whose whereabouts are unknown.
Injunctive Relief and Damage Recovery Systems Through Qualified Consumer Organisations
Current rights protection for data subjects
Currently, the APPI provides that data subjects may request the cessation of use or erasure of their personal data from businesses that have unlawfully processed such data (Article 35).
In addition, data subjects may claim damages from businesses that have intentionally or negligently unlawfully infringed their rights related to personal data, including privacy (Article 709 of the Civil Code).
Japanese courts award compensation for mental distress in data breach cases even without proof of financial damage. However, for less sensitive information such as names, addresses and email addresses, the mental distress compensation typically amounts to only USD10–20 per person. Consequently, many cases are abandoned due to litigation costs exceeding potential compensation. Moreover, even if one data subject pursues such claims, it cannot prevent the likelihood of similar harm occurring to numerous other data subjects in the future.
To address these issues, Japan's consumer law includes a consumer organisation lawsuit system, which allows consumer organisations certified by the Prime Minister to file lawsuits against businesses on behalf of consumers. The consumer organisation lawsuit system includes both injunctive relief and damage recovery systems.
Injunctive relief system
The injunctive relief system allows consumer organisations to seek the cessation of improper acts by businesses to protect the interests of unspecified numerous consumers (Article 12 of the Consumer Contract Act).
However, the system's scope is limited to acts violating the Consumer Contract Act and does not cover APPI violations.
Damage recovery system
The damage recovery system – sometimes referred to as a “Japanese Class Action” – allows consumer organisations to seek collective recovery through litigation on behalf of consumers when numerous consumers have suffered a common financial loss due to a business’s improper acts. Unlike the injunctive relief system, there are no limitations on the types of acts covered.
However, damage from APPI violations typically involves mental distress rather than “financial loss”. Recovery of mental distress damages through the damage recovery system is possible only when combined with financial loss claims or when caused by intentional act of businesses (Article 3, Para 2, Item 6 of the Act on Special Measures Concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers). Therefore, mental distress suffered by data subjects due to negligent data breaches cannot be recovered independently through the damage recovery system.
Consideration of new rights protection systems
As outlined above, the current consumer organisation lawsuit system is incomplete from the perspective of protecting data subjects from acts violating APPI or otherwise infringing their rights related to personal data, including privacy.
Therefore, the Study Group is considering establishing:
Regarding the first system being considered, the Study Group proposes limiting its scope to acts with a high likelihood of infringing individual rights and interests. Specifically, in addition to violations of Articles 18, 19, 20 and 27 being considered for administrative monetary penalties (see above), the Study Group is also considering adding violations of Article 28, which stipulates that, when providing personal data to a third party in a foreign country, businesses must either obtain prior consent from the data subject for such provision or ensure that the recipient implements protection equivalent to the APPI.
While the PPC currently publishes guidelines on what constitutes a violation of these provisions, some aspects remain unclear. If the two systems are established, court decisions are expected to provide clearer guidance on what acts by a business constitute a violation of these provisions and what circumstances constitute negligence in data breach cases.
Other Discussion Points
Short-term consideration issues
Beyond administrative monetary penalties and systems for injunctive relief and damage recovery through qualified consumer organisations, the PPC is discussing amendments based on past APPI violation cases and international personal data protection law trends. Discussion points were initially presented in the Interim Report and subsequently prioritised in the Next Steps. The following issues are identified for consideration in the short term.
Framework for data subject involvement in personal data processing: consent requirements
Currently, the APPI requires businesses to obtain the consent of a data subject when collecting sensitive personal data such as race, medical history or criminal record or when providing personal data to third parties (Article 20, Para 2 and Article 27, Para 1). However, there are concerns that it might be excessive to require consent even in cases where there is no direct impact on data subjects' rights and interests.
For example, AI-trained models may be developed using training datasets containing personal data. Trained models typically do not contain information linked to specific individuals, so their development itself might not directly impact data subjects' rights and interests. However, there are concerns that requiring data subject consent whenever using data available online including sensitive personal data for AI development, or when using personal data received from third parties, could hinder innovation.
Therefore, the Next Steps propose clarifying exemptions from data subject consent requirements for personal data processing in the following cases:
Data breach notification requirements
Currently, the APPI requires businesses to report to the PPC and notify data subjects of certain types of data breaches (Article 26). When sensitive personal data such as race, medical history or criminal record is involved, or when data breaches occur due to unauthorised third-party access, businesses must report to the PPC and notify data subjects even if only one data subject is affected.
However, there are concerns that it might be excessive to require reports and notifications in all such cases.
Therefore, the Interim Report and Next Steps propose reasonably limiting the scope and content of reporting and notification based on the degree of risk to data subjects' rights and interests. Proposals include:
Governance framework
The APPI currently requires businesses to obtain data subject consent when providing personal data to third parties, as discussed above, but there are some exceptions. Specifically, data subject consent is not required when personal data is provided to a third party for the purpose of entrusting personal data processing (Article 27, Para 5, Item 1). Instead, businesses must exercise necessary and appropriate supervision over such third-party processors (Article 25).
For instance, cloud service usage may be categorised as entrusted personal data processing. In such cases, cloud service users must supervise service providers, such as through requiring periodic reports on the status of personal data processing. However, such supervision may be impractical when small-scale businesses use large-scale cloud services.
Therefore, the Next Steps propose reviewing regulations for entities entrusted with personal data processing based on practical realities.
Other issues
The Interim Report and Next Steps identify the following additional issues for consideration, although the specific directions and timelines for examining these issues remain largely unclear:
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