Litigation 2024

Last Updated December 05, 2023


Law and Practice


Anderson Mori & Tomotsune is a full-service law firm formed by the winning combination of three leading law firms in Japan: Anderson Mori, known for serving overseas companies doing business in Japan since the early 1950s; Tomotsune & Kimura, particularly well known for its expertise in international finance transactions; and Bingham Sakai Mimura Aizawa, a premier international insolvency/restructuring and crisis-management firm. Anderson Mori & Tomotsune has a long tradition of serving the international business and legal communities and is one of the largest law firms in Japan. The firm’s expertise enables the delivery of comprehensive advice on virtually all legal issues that may arise from a corporate transaction. The majority of the firm’s lawyers are bilingual and experienced in communicating, drafting and negotiating around the globe.

The modern Japanese legal system is primarily based on the civil law system, with partial modifications engrafted under the influence of the US legal system after World War 2. Japanese civil proceedings, which are now regulated by the Code of Civil Procedure (1996 Law No 109, or CCP), follow a combination of the inquisitorial model and the adversarial model.

The CCP provides for oral arguments in which parties may submit their allegations and evidence to the court. Written briefs are submitted in preparation for oral arguments. In most cases, however, oral arguments are regarded as a mere formality and the parties are deemed to have presented their arguments in written briefs and documentary evidence submitted in advance.

All courts in Japan are national courts. There is a unified hierarchy in the Japanese civil court system, which consists of four tiers. Litigants are given opportunities to go through up to three of these four tiers.

At the top is the Supreme Court of Japan which, as the final appellate court, hears appeals from high courts functioning as intermediate appellate courts. High courts not only hear, as intermediate appellate courts, appeals from district courts or family courts functioning as courts of first instance, but also hear, as the final appellate courts, appeals from district courts in cases where a summary court was the court of first instance. District courts function as the courts of first instance, as well as intermediate appellate courts, hearing appeals from summary courts.

Among the courts of first instance, district courts handle all civil cases, including ordinary civil cases, commercial cases and administrative cases, except for those cases in which family courts or summary courts have jurisdiction. Summary courts have jurisdiction over civil cases involving an amount in controversy not exceeding JPY1.4 million.

Court filings and proceedings in formal litigations are generally open to the public. As an exception, a trade secret or confidential and detrimental information about the private life of a party may be protected from public disclosure by a court ruling issued in response to the party’s motion (Article 92 of the CCP). 

In addition, examination of a party or their legal representative or a witness about matters concerning a serious family-related secret in personal status litigations may be protected from public audience by a court order (Article 22 of the Personal Status Litigation Act). In such a case, the court record of the examination will be automatically protected from public disclosure and may be inspected only by a party to, or a third party who has shown a legal interest in, the litigation (Article 91 of the CCP).

In any courts other than summary courts, a legal representative needs to be either an attorney-at-law licensed in Japan or a person who is authorised to act in court for the principal pursuant to law or regulation, such as a registered manager of a corporation or a captain of a ship. In summary courts, a certified judicial scrivener or a person who has obtained the court’s permission may also appear as a legal representative (Article 54 of the CCP).

There is no statutory rule which specifically prohibits third-party funding. As such, it is generally considered to be permitted unless it is made in a manner that violates the relevant laws or regulations, such as the Attorney Act or the Trust Act.

There is no statutory rule or established practice regarding third-party funding.

Third-party funding is generally considered to be available for both parties.

There is no statutory rule or established practice regarding maximum or minimum amounts of third-party funding.

There is no statutory rule or established practice regarding what costs a third party may fund, but they usually cover legal fees and also out-of-pocket expenses required for lawsuits.

Contingency fees are generally permitted, and there is no specific restriction universally applicable to all types of cases. However, the Bar Association has set some rules about the maximum percentage in cases where lawyers work for consumers on their multiple debts.

There is no statutory rule or established practice regarding time limits for obtaining third-party funding.

Generally, no pre-action conduct is required. There are some exceptions in certain categories of matters, such as family cases where filing for conciliation procedures is required prior to the initiation of a lawsuit. Generally, a potential plaintiff may or may not send an enquiry letter to a potential defendant prior to the initiation of a lawsuit. If the potential defendant receives the enquiry letter and if such letter is in a form prescribed in the CCP, such potential defendant is obliged to respond to that enquiry. However, no specific sanction of the potential defendant is provided for in the statute.

Under the current rule of the Civol Code (1985 Law No 89) which came into force on 1 April 2020, in principle, the statute of limitations period (or prescriptive period) is five years from the time a potential plaintiff became aware that a certain right was exercisable, or ten years from the time when the right became exercisable, whichever comes earlier. There are exceptions depending on the nature of the claims. For example, as regards damages compensation claims arising from tortious acts, the period is three years (five years in the case of a claim for bodily injury) from the time a potential plaintiff became aware that the tort claim was exercisable, or 20 years from the time the tortious act took place, whichever comes earlier.

The CCP lists certain requirements for determining whether Japanese courts have jurisdiction over a particular case, such as:

  • that the defendant is located in Japan;
  • that, in the case of a contract dispute, the obligation is supposed to be performed in Japan; and
  • that, in the case of a tort, the tort took place in Japan.

This rule is generally applicable to first instance cases to be filed with district courts and summary courts. However, cases to be filed with family courts are subject to a modified rule.

A plaintiff has to submit a complaint to initiate a lawsuit. It is possible for the plaintiff to amend the complaint later as long as it does not fundamentally change the claim, and so doing will not substantially delay the litigation proceedings. However, the plaintiff cannot add defendants later in the same proceeding. So, if the plaintiff wants to extend their claims to other parties who are not named defendants in the complaint, the plaintiff has to file another lawsuit against those parties, and ask the court to consolidate those proceedings at its discretion.

Once a plaintiff has filed a complaint with a court, the court clerk is responsible for serving the summons and the complaint upon the defendant. In most cases, the court clerk will engage the Japanese postal service to serve the defendant. It is possible for a plaintiff to sue a defendant located outside of Japan, in which case, the service will be made through diplomatic channels, including those provided for in the Hague Service Convention. 

If the defendant fails to appear at the court hearing and submit its answer to the court despite having been duly served, the court may deem that the defendant has admitted to all the allegations in the complaint, and as such enter a default judgment in the plaintiff’s favour, unless the court thinks it lacks jurisdiction over the case.

Japan has its own class action system which has an opt-in format. However, the claims that may be made in a class action are limited to those arising from consumer contracts and the damages to be recovered through the system are limited. Furthermore, the parties who can be plaintiffs in a class action are limited to organisations licensed by the government. In fact, this class action system has rarely been used. There is also a system by which persons with a common interest may appoint one or more persons from among themselves to act as the plaintiff or defendant, but this system has also rarely been used.

The Bar Association rule requires a lawyer to give an estimate when so requested by a client.

Parties may make an interim application regarding case management issues under the CCP and/or provisional remedies under the Civil Provisional Remedies Act (1989 Law No 91, or CPRA). An application regarding case management issues is normally handled by the same judge overseeing the substantive claim; however, for provisional remedies the application may be handled by a different court as a request for such provisional remedies can be filed at another court with jurisdiction due to the presence of the subject assets (Article 12 of the CPRA).

Generally, all issues on the procedures and merits are assessed in the same process. However, if it is obvious that a certain procedural requirement is not met, as challenged by the counterparty, the judge may give an interim decision on the specific procedural issue and may also conclude the process without admitting evidence on the merits – such as witness examinations – and dismiss the case. Refer also to 7.2 Case Management Hearings

Motions to dismiss the case due to lack of international jurisdiction, the existence of an arbitration agreement, and lack of standing are dispositive motions that are commonly made before trial.

Interested parties may join a lawsuit through one of the following procedures.

  • By filing a written petition with the court, a third party with an interest in the outcome of the litigation may intervene in the litigation in order to assist either party (Article 42 of the CCP).
  • By filing a written petition with the court, a third party asserting that a right will be prejudiced by the outcome of the litigation or a third party asserting entitlement to the whole or part of the subject matter of the litigation, may intervene in the litigation as a party, designating either or both of the parties to the litigation as an adverse party (Article 47 of the CCP).
  • By filing a written petition with the court, a third party may intervene in the litigation as a co-plaintiff/defendant if the subject matter of the litigation is to be determined for one of the original parties and a third party only as a unified matter (Article 52 of the CCP).

If the plaintiff is not a resident of Japan or other countries that are signatories to the Hague Convention on Civil Procedure, the defendants may apply for an order to provide security for the court costs, which include court filing fees, fees for court-appointed professionals, and very limited costs of the defendants, excluding attorney’s fee (Article 75 of the CCP).

Separate from the above, in a case where interim relief is granted, the court normally requires the applicant to make a security deposit for potential damage due to that interim relief (Article 14 of the CPRA).

Interim applications/motions will be handled in the same way as procedures on the full merits of the case. Normally, court fees are not required or not expensive for interim applications and if there are indeed such fees, they (excluding the attorney’s fee) will be borne by the defeated party. 

If a party requests urgent interim relief, the court may deal with the application/motion within a timeframe corresponding to the urgency of such relief. In any case, the court will deal with such an application/motion on a case-by-case basis.

The CPP provides limited scope for document production. A litigant must file a petition with the court, clarifying the indication, the purport, the holder of and the facts to be proven by the documents sought, as well as the grounds for the obligation to submit the documents (Article 221 of the CCP). Deposition (taking of witness testimony in advance of the evidentiary hearing) is not available in ordinary circumstances. Having said that, if the court finds that there are extraordinary circumstances under which it would be difficult to examine the witness at the evidentiary hearing, it may examine the witness in advance (Article 234 of the CCP).

A litigant can file a petition for document production against a third party. Where the court intends to order a third party to submit a document, it will hear the third party prior to the ruling (Article 223(2) of the CCP).

The scope of discovery is very limited, in that the CCP does not provide for deposition per se and it allows various exceptions to the obligation to produce documents. 

As in other civil law jurisdictions, litigants are expected to rely primarily on the evidence that they already have in their hands prior to the litigation. 

In civil litigation, no legal privilege is recognised per se, but lawyers may refuse to testify or produce documents relating to any fact which they have learnt in the course of providing legal services and which should be kept confidential (Article 197 and Article 220 of the CCP).

Article 220 of the CCP provides that a person may refuse to disclose any of the following:

  • a document relating to matters for which they or their close relative are likely to be subject to criminal prosecution or conviction;
  • a document concerning a secret in relation to a public officer’s duties, which is, if submitted, likely to harm the public interest or substantially hinder the performance of their public duties;
  • a document stating:
    1. any fact that a doctor, dentist, pharmacist, pharmaceuticals distributor, birth assistant, attorney at law (including a registered foreign lawyer), patent attorney, defence counsel, notary or person engaged in a religious occupation, or a person who was any of these professionals has learnt in the course of their duties and which should be kept confidential; or
    2. matters concerning technical or professional secrets.
  • a document prepared exclusively for use by the holder thereof (excluding a document held by the state or a local public entity, which is used by a public officer for an organisational purpose); or
  • a document concerning a suit pertaining to a criminal case or the record of a juvenile case, or a document seized in these cases.

Injunctive relief can be sought through normal litigation as well as a provisional remedy process in urgent cases. Injunctions freezing assets are commonly requested through this provisional remedy process for the purpose of the future enforcement of monetary claims. However, unlike a freezing injunction (formerly known as a Mareva injunction) in common law jurisdictions, the petitioner typically has to identify the assets to be seized.

Injunctions to prevent certain actions damaging the interest of another party (eg, publication on the internet/other media or corporate action such as security issuances) are relatively common. However, as far as is known, an injunction to prevent parallel proceedings in another jurisdiction (ie, an anti-suit injunction) has not been granted in Japan.

As mentioned in 6.1 Circumstances of Injunctive Relief, the court may respond to an urgent request. The court normally has an out-of-hours window; however, there are no out-of-hours judges for civil cases in Japan. In practice, some courts in big cities which are used to handling urgent commercial cases are likely to respond more quickly but that also depends on the nature of the case.

Injunctions obtained through a provisional remedy process to maintain the status quo (eg, freezing assets) will usually be granted by the courts on an ex parte basis (Article 3 of the CPRA). However, injunctions that determine a provisional status due to that status being necessary in order to avoid any substantial detriment or imminent danger that would occur to the applicant with regard to the rights in dispute cannot, in principle, be granted on an ex parte basis (Article 23 of the CPRA).

If the respondent suffers any damages from a provisional injunction which is later discharged, the applicant is liable for the damages. However, the applicant may argue against its negligence and liability if it can demonstrate its reasonable ground to apply and obtain the order. For such potential liability, the applicant is ordinarily required to provide a security deposit, except in cases where such potential liability cannot be assumed (Article 14 of the CPRA).

As long as a Japanese court has the jurisdiction to adjudicate the merits of a case, that Japanese court can grant injunctive relief against the worldwide assets of the respondent (Article 11 of the CPRA), although the enforceability of such relief outside Japan depends on its recognition in the country where the assets are located.

Where an applicant has a monetary claim against a defendant and the defendant in turn has a monetary claim against a third party, injunctive relief can be obtained against the third party. In the application for the injunctive relief, the applicant is deemed to concurrently seek a provisional court order to garnish the defendant's monetary claim and to prevent the third party from paying the defendant.

If a respondent fails to comply with the terms of an injunction, the applicant may, depending on the type of the injunction, be entitled to disregard such act of the respondent or to see for an additional court order that the respondent must pay a daily penalty during the period of non-compliance. In addition, such non-compliance can itself be a tort against the applicant.

In general, several weeks after the complaint is filed, the court will hold the first oral hearing, during which the plaintiff will plead the complaint and the defendant, the answer. After that, in the case of relatively complicated business disputes, the court will hold several oral hearings, or preparatory hearings if the court deems appropriate, every four to eight weeks. During such pleading period, both parties will submit their legal briefs and supporting written evidence to advance their arguments, and the court will try to narrow down the issues to be determined. At the end of this pleading period, if the court finds it necessary to examine witnesses/experts in person to determine the issues, the court will proceed to hold the trial (ie, evidentiary hearing).

At the evidentiary hearing, counsel for the parties are primarily responsible for conducting the examination-in-chief and cross-examination, while the judge may ask supplementary questions at any time. It is very rare for the parties to present opening/closing oral arguments at the evidentiary hearing. In some cases, however, the court holds another hearing after the evidentiary hearing, at which the parties present their respective closing arguments in writing.

Interim petitions, such as a petition to transfer a case, a petition to challenge/disqualify the judge, and a petition for document production, are usually heard at, and ruled upon at or after, an oral hearing or a preparatory hearing at the pleading stage.

Where the court finds it necessary to examine witnesses/experts in person, the court usually consults with the parties as to the logistics relating to the trial (ie, evidentiary hearing).

No jury trials are available in civil cases.

There is no particular rule governing the admissibility of evidence in civil cases. Unless the evidence has been obtained in an extremely unethical way (eg, stolen by the litigant), any evidence (including hearsay evidence) is admissible as a general rule.

Expert testimony is permitted at trial. An expert witness is appointed by the court, either upon introduction by a party or upon the court’s own selection.

Oral hearings (including the evidentiary hearing) are open to the public, while preparatory hearings are not. In patent/know-how litigation and divorce/filiation litigation, the court may decide not to open the evidentiary hearing to the public to safeguard the party’s proprietary know-how or shield sensitive personal matters.

During a trial (ie, an evidentiary hearing), a judge may put questions to the witnesses at any time. The judge may also intervene in counsel’s examination of witnesses, if the court finds it inappropriate or confusing.

At the evidentiary hearing, the judge will rule on the objections on examination (such as leading, repetitive or insulting questions). Such rulings are not subject to appeal. If a witness refuses to testify, the court will rule on whether such refusal is based on a good reason. Such rulings are subject to appeal in a higher court.

Typically, a commercial dispute between reasonably sophisticated companies will, on average, take 12–18 months from the filing of the complaint to the trial (evidentiary hearing). The trial (evidentiary hearing) will usually last half a day or one full day. However, if there are multiple witnesses, the hearing could extend over two or more days, with sessions scheduled weeks apart.

Parties may settle a lawsuit either in court or outside the court. 

An out-of-court settlement requires no court approval. An in-court (judicial) settlement is established when its details are recorded in the record of settlement prepared by the court. In this sense, an in-court settlement is regulated to a certain extent, although it need not be approved by the court.

Judicial Settlement

For a judicial settlement, the record of settlement, which is a part of the court record, is generally open to the public, with exceptional protection from public disclosure as set forth in 1.3 Court Filings and Proceedings. However, even under exceptional protection, it is virtually impossible to protect the fact of the settlement itself from public disclosure as it is not classed as a protected secret under Article 92 of the CCP.

Out-of-Court Settlement

As for an out-of-court settlement, which is usually followed by a withdrawal of the lawsuit, only the fact of the withdrawal is open to the public. The reason for the withdrawal (ie, an out-of-court settlement) remains unknown. Accordingly, the out-of-court settlement can remain confidential, as long as the parties comply with the confidentiality clause, if any, in the settlement agreement.

The record of a judicial settlement has the same effect as a final and binding judgment (Article 269 of the CCP), so the party may commence enforcement procedures by submitting the record to the enforcement court. 

An out-of-court settlement agreement may be similarly enforceable only if it takes the form of a notarial deed prepared by a notary public and if the following two conditions are met:

  • the claim to be enforced is a claim for payment of a certain amount of money or any other fungible thing or a certain amount of securities; and
  • the agreement contains a statement to the effect that the obligor will immediately accept compulsory execution.

A judicial settlement may be set aside upon certain action by a party which demonstrates that the settlement is null and void for certain reasons, such as fraud or a material mistake. Such action includes the party’s motion for the re-opening of oral proceedings for the lawsuit which was settled, the party’s objection to the enforcement of the judicial settlement, and the party’s filing of a new lawsuit seeking a declaratory judgment to confirm that the judicial settlement is null and void.

Depending on the type of claim pursued by the successful litigant, the court’s judgment takes one of the following three forms:

  • a judgment ordering specific performance (such as paying money, evacuating premises, surrendering movables, or otherwise doing or refraining from doing a certain act);
  • a formative judgment creating, altering or nullifying a certain legal relationship; or
  • a declaratory judgment. 

In all types of judgments, the defeated party is ordered to bear all or part of the court fees (such as filing fees or witnesses’ expenses) disbursed by the successful party. A judgment ordering specific performance is accompanied by an order to pay delinquency charges until full performance by the defeated party.

The court determines the amount of damages based on the actual damage incurred by the party which has convinced the court that the other party is liable. No punitive damages are available. There is no rule limiting the maximum damages, except that the amount awarded in the court judgment may not exceed the amount claimed by the successful party.

The successful party may collect interest from the day on which the defeated party becomes delinquent in its monetary obligation until the date on which the defeated party has fully performed the monetary obligation. In calculating both pre and post-judgment interest, the court generally uses a statutory rate, which is currently 3% per annum until 31 March 2026 and will be reviewed as of 1 April 2026, and every three years thereafter. In cases where the claim is based on a contract that provides a different interest rate, the court uses the contractual rate.

The Civil Execution Act (Act No 4 of 1979, or CEA) provides the mechanism for enforcement of judgments. Under the CEA, a domestic judgment ordering payment of money is enforced by attachment of the defeated party’s assets (such as bank accounts, accounts receivable, lease deposit, real estate and movables). A judgment ordering the evacuation of premises or surrendering of movables is enforced by physical coercion by a court execution officer. Other types of non-monetary judgments are likewise enforced in accordance with the CEA.

To enforce a foreign judgment in Japan, the enforcing party needs to file a lawsuit with a Japanese court seeking an execution judgment (Article 24 of the CEA). The court cannot review the merits of the foreign judgment, and must grant the execution judgment if all of the following conditions provided for in Article 118 of the CCP are satisfied:

  • the foreign judgment is final and conclusive;
  • the jurisdiction of the foreign court is recognised pursuant to laws and regulations, conventions, or treaties;
  • the defeated party has been properly served or has appeared without being so served;
  • the content of the judgment and the litigation proceedings are not contrary to public policy in Japan; and
  • a guarantee of reciprocity is in place.

Once the execution judgment is rendered and becomes final and conclusive, the enforcing party is able to proceed with enforcement of the foreign judgment in Japan in the same manner as set forth in 9.4 Enforcement Mechanisms of a Domestic Judgment.

As a general rule, an aggrieved party before a court of first instance can appeal to a court of second instance and in the second instance may appeal to the final appellate court. In the case where a district court or a family court is the court of first instance, a high court is the second instance and the Supreme Court is the final appellate court. In the case where a summary court is the court of first instance, a district court is the second instance and a high court is the final appellate court.

As an exception, an aggrieved party in the first instance can appeal directly to the final appellate court if, after the judgment in the first instance is rendered, the parties agree to circumvent the proceedings in the second instance (Articles 311 and 281 of the CCP).

An aggrieved party at the court of first instance may appeal to the court of second instance as a right (Article 281 of the CCP). There is no need to secure a grant or leave to proceed to the second instance, nor are there any limitations on the grounds for such appeal. 

In contrast, the grounds for a final appeal are narrowly stipulated in the CCP. A litigant may appeal to the court of third instance as a right only where the court of second instance misinterpreted the constitution of Japan or committed a fatal procedural error (eg, the judge not being qualified to hear the case) (Article 312 of the CCP). In addition, where a high court is the court of second instance, the Supreme Court may, at its discretion, accept the case if it involves significant issues regarding the interpretation of laws and regulations (Article 318 of the CCP). Upon acceptance of the case, a final appeal is deemed to have been filed.

An aggrieved party in the first instance may make an appeal to the court of second instance, by submitting a written appeal to the court of first instance within two weeks from the date of service of the written judgment on the party. If the grounds for appeal are not stated in the written appeal, the appellant is required to submit a brief stating the grounds for appeal to the court of second instance within 50 days from the date of submission of the petition. Failure to comply with the deadline for submission of the written statement is not, however, sanctioned by an automatic dismissal of the appeal.

The procedures for making an appeal (including a petition to accept the case) from the judgment of the second instance to the final appellate court are essentially the same as set out above, except that failure to submit a brief stating the grounds for the final appeal or for the petition to accept the case within 50 days is sanctioned by automatic dismissal (Articles 315, 316 and 318 of the CCP).

Proceedings in the second instance are considered to be a continuation of those in the first instance. The appeal court rehears the case and considers whether there is an error in the first instance judgment in terms of fact-finding or application of the law. In addition, new issues which were not explored at first instance may be examined at the appeal. However, presentation of those issues which could have been raised in the first instance and raising which will delay conclusion of the proceedings in the second instance may be rejected by the court (Article 157 of the CCP).

When the Supreme Court grants a petition to accept a case (see 10.2 Rules Concerning Appeals of Judgments), it may determine which grounds for the petition are to be reviewed. Other grounds are excluded from the court’s review (Article 318 of the CCP).

Once the court of second instance closes the oral proceedings, it may render a judgment either reversing the judgment in the first instance or dismissing the appeal. When reversing the judgment, the court may adjudicate the case by itself or may remand the case to the lower court. It may also encourage the parties to settle the case at any time before rendering a judgment (Article 89 of the CCP). 

“Court costs” paid to the court and “legal fees” paid to lawyers are clearly distinguished from each other. Court costs are subject to the CCP rules and are composed of out-of-pocket expenses, such as revenue stamps put on a complaint, document translation costs (if a document written in a language other than Japanese is submitted as evidence), etc. Court costs shall be borne, in principle, by the defeated party. In other words, the winning party is entitled to recuperate these costs from the defeated party. However, legal fees are not treated as part of court costs. Thus, legal fees are not subject to the CCP rules, and shall be borne, in principle, by each party respectively, regardless of the result of the lawsuit.

If a plaintiff wants to recover a certain portion of its legal fees, the plaintiff should explicitly include them in the complaint as additional damages to be compensated. However, this is not generally granted by the court even if the plaintiff wins the other portions of the claim, except in certain types of tort cases where the plaintiff seeks damages compensation arising from patent infringement, medical malpractice, car accidents, etc. Furthermore, even if “legal fees” are granted as additional damages to be compensated, the amount is usually 10% or less of the amount of the damages sought other than “legal fees”.

In principle, the defeated party bears the court costs. For example, if 70% of a plaintiff’s claim is granted, the plaintiff and the defendant will be ordered to bear the court costs on a 30:70 basis, respectively.

Regarding court costs, in principle, no interest is awarded. As to legal fees, if they are granted in the judgment, 3% per annum will be awarded in principle. However, if they are considered to have started to accrue before 1 April 2020 (ie, before the amendments to the Civil Code took effect), then 5% per annum will be awarded. On the other hand, the current rate of 3% per annum will be reviewed as of 1 April 2026 and every three years thereafter.

In the context of international dispute resolution, the popularity of arbitration is rising. For domestic disputes, mediation presided over by the court and mediation offered by industrial associations (eg, the Security Company Association) are popular. In general, the government encourages and promotes the use of ADR, particularly in specific industries such as financial trading. In addition, the government published an action plan for online dispute resolution presided over by private organisations (ie, NPOs) in March 2022, which is expected to function as a more easily accessible and less expensive form of ADR, especially for disputes involving smaller amounts.

ADR is promoted by a law called the ADR Promotion Act. In general, ADR is not compulsory. ADR in Japan includes court-administered mediation which is a part of court procedures. While refusal to participate in ADR may not result in sanctions generally, under certain rules of mediation offered by industrial associations, a member of the association (ie, the industry side) is obligated to respond and there is a penalty for unreasonable refusal.

As mentioned in 12.1 Views of ADR Within the Country, certain forms of ADR are offered and promoted by industrial associations and those associations are well organised. For international arbitrations, the Japan Commercial Arbitration Association provides standard international arbitration institution services.

In November 2018, the Japan International Mediation Center in Kyoto (JIMC-Kyoto) was established to provide world-class mediation services for various kinds of cross-border disputes between foreign and Japanese parties.

The Arbitration Act (Act No 138 of 2003), which was enacted based on the UNICITRAL Model Law (1985), governs how arbitrations are conducted, and the recognition or enforcement of arbitral awards.

An arbitration agreement is enforceable only when the subject thereof is a civil dispute (excluding those related to divorce or dissolution of adoptive relationships) that can be settled between the parties (Article 13(1) of the Arbitration Act). In addition, until otherwise enacted, an arbitration agreement concluded on or after 1 March 2004, the subject of which constitutes individual labour-related disputes that may arise in the future, will be null and void (Article 4 of the supplemental provisions to the Arbitration Act). Further, an arbitration agreement concluded on or after 1 March 2004, the subject of which constitutes consumer disputes that may arise in the future, is effective, but can be cancelled by the consumer and is subject to other regulations (Article 3 of the supplemental provisions to the Arbitration Act).

If the arbitration was seated in Japan, the parties may file a petition with a Japanese court to set aside the arbitral award. The petition must be filed within three months from the date on which notice was given through the sending of a copy of the written arbitral award.

The grounds for setting aside an arbitral award (Article 44 of the Arbitration Act) are identical in substance to those set forth in Article 34 of the UNCITRAL Model Law.

Article 46 of the Arbitration Act provides the same mechanism to enforce domestic and foreign arbitral awards. To enforce an arbitral award, the enforcing party must file a petition with a court for an execution order (meaning an order allowing civil execution based on an arbitral award). The court is required to make an execution order unless it finds grounds to refuse enforcement as set forth in Article 45(2) of the Arbitration Act, which are identical in substance to those set forth in Article 36 of the UNCITRAL Model Law. In addition, under the amendments to the Arbitration Act in April 2023, which will take effect in or before April 2024, it will be possible for the court to issue, upon a petition from a party granted an order for interim measures in an arbitration, an enforcement approval order, such as one permitting civil enforcement based on the order for interim measures (new Article 47(1)(6)), unless the court finds grounds to refuse enforcement as set forth in the new Article 47(7)(8).

Since June 2020, the Legislative Council has been deliberating over a reform of civil procedure utilising information technology. It aims to amend various laws concerning civil procedures to enable e-filing (ie, online court filing), e-case management (ie, online access to the court record) and e-courts (ie, web hearings). For this purpose, following the amendment of the CCP in May 2022, several civil procedure-related laws (eg, the Bankruptcy Law, the Civil Execution Act, etc) were amended in June 2023 and are set to become operational gradually over the next five years. The new amendment enables:

  • online submission of new cases and service of court documents;
  • attending court sessions via the internet or other telecommunication methods, like video or phone conferencing; and
  • online access to court records.

However, it is not clarified whether or not (and to what extent) the new legislation allows individuals located outside Japan to take part in proceedings online. In practice, the feasibility of such participation is likely to necessitate considerable further discussion.

In addition, the Arbitration Act was amended in April 2023 in line with the amendment to the UNCITRAL Model Law in 2006, as mentioned in 13.4 Procedure for Enforcing Domestic and Foreign Arbitration. Simultaneously, the Act for Implementation of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention on Mediation), as well as the amendment to the ADR Promotion Act, was enacted in April 2023 and will take effect at the same time as the said Convention enters into force in Japan on 1 April 2024. Together, these legislative changes support the enforcement in Japan of awards and agreements under international and domestic ADR legal norms.

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Trends and Developments


Miura & Partners was established in 2019 as an independent law firm in Tokyo with the aim of creating a new platform for innovative and business-minded professionals. Since its establishment, it has handled various cutting-edge cases in a range of practice areas, including litigation, with a rapidly growing team of around 100 lawyers in 2023. The firm has five offices in Japan as well as offices in San Francisco and Jakarta. Its litigators are trained at top Japanese law firms, having dealt with complex commercial disputes, and have represented corporations in numerous high-profile cases, such as successfully closing the first hostile takeover deal in J-REIT. The firm's knowledge of various legal systems, and experience in international environments, enables Miura & Partners to offer practical guidance to global businesses which may not necessarily be familiar with court proceedings in Japan.

Major Legislative Changes in Japanese Dispute Resolution

The years 2022 and 2023 have seen significant developments in the modernisation of dispute resolution mechanisms in Japan. The developments include legislative changes in the Code of Civil Procedure and the Arbitration Act, as well as the arrival of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”). These legislative efforts and the developments in judicial decisions described below are expected to provide more effective means of dispute resolution in the coming years.

Legislative Changes in the Dispute Resolution Mechanisms

E-Litigation will finally be available in Japan

In 2022, the Diet, the legislative body of Japan, passed a bill to reform the Code of Civil Procedure (the “Reform”; the pre-Reform version of the Code of Civil Procedure will be referred to as the “Unamended Law”). The Reform aims to implement e-litigation in Japanese courts. In principle, the Unamended Law does not allow e-filing or online hearings. The litigants must submit their written submissions to the courts by hand, post or fax. Online witness hearings are only available under limited circumstances. Unfortunately, court proceedings were almost shut down in 2020 due to the COVID-19 pandemic, and litigants had to wait much longer for justice from the courts because of the limited availability of online procedures under the law at that time. The Reform is expected to take effect by 2026 in several phases. Some amendments have already taken effect (as of November 2023). The Reform implements a fast-track procedure in addition to e-litigation (ie, e-filing, e-court and e-records) and is expected to make court proceedings more flexible, expeditious and cost-effective. This section describes the central components of the Reform.


The Reform introduces e-filing as the new standard procedure. The courts will use a new online platform. The Reform requires parties to submit their complaint or other written submissions to the court online if the party is represented by counsel. The Reform also requires the courts to serve documents to the parties online if the party is represented by counsel. The e-filing mechanism will make the submission of documents more efficient and convenient. 


Once the Reform fully comes into force, the litigants and their counsel will be able to participate in oral arguments including witness hearings and proceedings for settlement via a web conferencing system, none of which were, in principle, available under the Unamended Law. The Unamended Law did allow the courts to conduct limited court procedures via a web conferencing system, but the litigants or their counsel could not officially submit their written submissions or evidence at such web conferences. The Reform allows court hearings to be held online without needing both parties or their counsel to appear physically before the court. The relevant part of the Reform regarding proceedings for online settlement and preparatory proceedings has already come into force. The Reform will allow witness hearings via a web conference if the parties do not object and the court finds it appropriate. 


Under the Unamended Law, it is necessary to visit a courthouse to access the case records, which are stored in a physical format. Although anyone can access the case records under the Unamended Law, only the litigants and the interested parties are allowed to obtain copies of the original documents. The new online records which will be implemented as part of the Reform will store, among other things, the written submissions of the litigants, the records of court hearings and judgments in an online database. Therefore, the e-records will enable the litigants of the case and the interested parties to access them online. A government advisory committee is discussing whether civil court judgments could be made available as open data. 

Fast-track procedure 

The Unamended Law does not provide a standard time limit for reaching a judgment in a civil procedure. The Reform establishes a fast-track procedure (FTP), which is a procedure whereby the court decides within a certain statutory period, if both parties wish to do so. Under the FTP, the court shall conclude oral arguments within six months of the date of the first hearing under the FTP, and render a judgment within one month of the date of conclusion of the oral arguments. The FTP enables court proceedings to be concluded in a much shorter timeframe. The FTP is likely to be used in domestic litigation, as the language for court proceedings is Japanese and international parties may need more time to prepare their submissions in Japanese than the FTP would allow. 

Legislative changes in ADR

The reform of the Arbitration Act and the arrival of the Singapore Convention also reflect an effort by the Japanese government to enhance Japan’s reputation as a favourable seat for international dispute resolution. 

The revision of the Arbitration Act finally passed at the Diet in 2023. It aimed to revitalise international arbitration in Japan by aligning the legal system with the latest international standards and to facilitate Japan’s development as an international arbitration seat. The reform of the Act will empower Japanese courts to recognise and enforce interim measures issued by arbitral tribunals. Currently, a party enforcing an arbitral award in a foreign language must provide the court with a Japanese translation of the award. The reform enables the Japanese courts to enforce awards without a Japanese translation at their discretion.

With the launch of the Singapore Convention in 2020, international mediation as a means for dispute resolution is also attracting increasing attention in Japan. In October 2023, Japan submitted the instrument of accession to the Singapore Convention. Japan will become a contracting party to the Convention in 2024. A related, newly passed act on mediation includes an enforcement process for settlement agreements resulting from international mediation before Japanese courts, while different legislation covers settlement agreements resulting from domestic mediation. 

Case Developments

In recent years, the markets, as well as regulators, have had higher expectations regarding corporate governance in Japan. As the standards expected of management at listed companies become higher, the liabilities on corporate misconduct have become more disputed through court proceedings. Another note-worthy trend from recent years is that businesses have become more active in using litigation to test and challenge government decisions such as decisions by tax authorities.

Investigations fuelled some actions against companies’ liabilities; companies contest authorities' decisions before courts 

In Japan, when a company discovers signs of accounting fraud or other misconduct on its own, it is common to establish a special committee to carry out a voluntary investigation even before the authorities conduct their investigation. The report of the special committee is usually published for public access. Likewise, the findings of the regulator’s investigation are frequently made available on its website. As Japan does not have discovery in court proceedings, in some cases potential claimants give up initiating an action due to a lack of evidence. These investigation reports may provide important clues when potential claimants consider filing a lawsuit. 

A series of litigations following accounting fraud at Toshiba 

Toshiba Corporation ("Toshiba"), a prominent listed manufacturing company in Japan, is reported to be delisted at the end of 2023. A major accounting scandal that came to light in 2015 was the beginning of their delisting process. Through voluntary and regulatory investigations, it was revealed that accounting misconduct, involving profit inflation, had occurred over many years at the company. This accounting misconduct resulted in various damages, including monetary penalties from the regulatory body and the stock exchange, and additional fees for accounting firms required to prepare a series of corrected financial statements to be submitted to the authorities. After a series of investigations, based on the recommendation of one of the investigation reports, Toshiba itself initiated legal action against some of former executives to hold them liable for the damages. Its shareholders separately initiated derivative lawsuits against other former executives not sued by Toshiba. These lawsuits were consolidated, and the Tokyo District Court rendered a judgment acknowledging the liabilities of some of the executives. The case is now pending before the appellate court. 

In relation to the scandal, both domestic and foreign investors filed nearly 40 securities lawsuits against Toshiba. Toshiba settled some of these cases for significant sums for the investors. It would be reasonable to assume that the findings of detailed investigation reports allowed potential claimants of derivative lawsuits or securities lawsuits to gain a better understanding of the scandals to support their claims. 

Companies operating in Japan should be aware that, in the event of a corporate scandal, there is a real risk of legal action against the management and the company. In fact, in October 2023, shareholders of a major power company, Kansai Electric Power Co., Inc., initiated a shareholder derivative action against the former directors of the company for the damages caused by a cartel among major power companies after the competition authority conducted an investigation into the company. 

The nuclear power plant meltdown and shareholder derivative actions 

A shareholder derivative action was initiated by the shareholders of Tokyo Electric Power Company, Inc. (TEPCO, currently known as Tokyo Electric Power Company Holdings, Incorporated) against the former executives for damages caused by the meltdown of nuclear power plants in Fukushima in 2011 following the earthquake and tsunami. The meltdown after the earthquake and tsunami caused disastrous damages. Due to the magnitude of the damages, not only did TEPCO itself conduct an investigation but numerous other investigations were conducted by organisations in the private and public sectors, including the Diet, their reports were made public. 

In 2012, some of the shareholders filed a shareholder derivative action against former directors, claiming compensation for damages caused by the meltdown at the Fukushima nuclear plants. It took a decade to reach a judgment. In 2022, the Tokyo District Court found that the former directors had breached their duty of care by failing to order the immediate implementation of tsunami countermeasures based on the  scientific tests that indicated the significant likelihood of a tsunami of sufficient height and magnitude to damage or destroy the nuclear power plant’s equipment, in accordance with the business judgement rule, which is also used in Japan as a framework for the assessment of directors’ liability. And the court awarded JPY13.3 trillion (equivalent to approximately USD90 billion) in damages, the highest amount ever awarded in Japan. It is noteworthy that intensive investigations by these various parties assisted the shareholders who did not have a compulsory method to gather evidence and materials to support their claims and did not necessarily have expert knowledge. The case is now being heard at the appellate court. 

Contesting authorities’ decisions through litigation 

In recent years, the courts have rendered a number of judgments to overturn orders by regulatory authorities, including tax authorities. This section introduces a couple of noteworthy rulings on tax litigation. 

In Japan, tax regulations are one of the most complicated and frequently changing areas. To offer more predictability, tax authorities covering the Tokyo area implemented consultation services in 2023, under which, upon receiving an inquiry from a company regarding an unprecedented transaction, the tax authority will provide a response regarding the tax treatment in a timely manner. 

The Supreme Court overturned the tax authority’s decision in a global restructuring case – Universal Music v government of Japan

In this case, the dispute revolved around the tax authority’s decision that interest payments on intra-group loans, arising from a global corporate restructuring within a global company group, fall within the scope of a “debt push-down” tax avoidance scheme. The tax authority’s decision denied the deductibility of the interest payments from the taxable income. The background facts of the case involved a Japanese subsidiary of a global music company based in France. This Japanese entity, as part of a worldwide group restructuring that included reducing the number of corporate entities in Japan, received loans from a foreign entity within the group to fund the purchase price of shares in Japanese companies belonging to the group and related expenses. The Japanese entity claimed that the interest accrued on these loans was a deductible expense, reducing the taxable income reported for corporate tax purposes. The tax authority contested this treatment, arguing that the loans and the treatment of interest arising from the corporate restructuring constituted a “debt push-down” tax avoidance scheme. Consequently, it disallowed the deduction of interest as expenses, imposed correction measures and additional taxes on the Japanese entity. In response, the Japanese entity filed a lawsuit against the tax authority, seeking to overturn these regulatory decisions, with the disputed amount totalling approximately JPY5.8 billion (approximately USD38.6 million).

The Supreme Court, in its judgment in 2022, focused on the overall economic rationale of the international corporate group’s restructuring. It recognised the economic validity or function of this restructuring, and the interest accrued on the loans that were part of the restructuring. In conclusion, the Supreme Court rejected the tax authority’s decision. 

The significance of this judgment lies in the principle that even in cases where reducing the tax amount is included as one of the goals of corporate actions, if there is a reasonable business purpose beyond tax reduction, the application of tax avoidance provisions (ie, a provision to regulate a “debt push-down” scheme) can be denied. This finding is important for companies engaged in international business.

The Supreme Court rendered a judgment on a regulation of the tax haven countermeasure – Mizuho v government of Japan

This case involves a significant legal matter which could influence the practice of the tax haven countermeasure in Japan. The tax haven countermeasure, which is the central issue of the case, is a system designed to prevent tax avoidance through the treatment of income from certain foreign subsidiaries, meeting specific conditions, as income of the Japanese parent company and subjecting it to taxation in Japan.

By way of background, Mizuho Bank, Ltd. (“Mizuho”), one of the Japan’s major banks, established multiple British Virgin Islands special purpose companies (SPCs). These SPCs issued preferred securities, raising approximately JPY360 billion (approximately USD2.4 billion) from investors to strengthen Mizuho’s capital. In the year under investigation for tax assessment, the preferred securities had already been redeemed, leaving only common shares held by Mizuho at the end of the fiscal year at issue. The tax authorities classified this arrangement as subject to the tax haven countermeasure and claimed that Mizuho had underreported profits of approximately JPY8.4 billion (approximately USD56.0 million). As a result, the authorities imposed additional taxes of about JPY2 billion (approximately USD13.3 million). Mizuho is contesting this decision by the tax authorities in the lawsuit.

The appellate court found that there were no justifiable grounds for applying the tax haven countermeasure in this case and that the additional tax assessment was illegal.

One of the main issues before the Supreme Court was whether certain provisions of the tax haven countermeasure, which designate tax authorities to use the ratio of shares in a foreign entity owned by a Japanese parent company at the end of a fiscal year when calculating the taxable income of the Japanese entity, shall be applied without considering the intentions of the company or other background facts. In November 2023, the Supreme Court handed down a decision reversing the judgment of the appellate court. The Supreme Court pointed out that the provisions setting a certain standard date to assess the ratio of shares owned by a Japanese entity are reasonable, and found that Mizuho could have arranged for the taxable amount in this regard to be JPY0 by scheduling the redemption of preferred securities for a different time. This case once again shows the importance of considering whether any disadvantages may arise when establishing a business scheme in light of the tax haven countermeasure.

The Upcoming Trends and Practical Considerations for Potential Parties of Japanese Litigation

ESG litigation

Both the regulators and markets have paid more attention to ESG-related matters in Japan in recent years. As an example, the government introduced new disclosure regulations in relation to the ESG initiative in 2023. Under the new requirement, a listed company needs to include "sustainability-related concepts and initiatives" and sustainability information in the annual securities report and other documents. This has made it necessary for companies in Japan to pay more attention to the ESG-related aspects of their operations. In line with this trend, ESG-related lawsuits are expected to be initiated more actively in the coming years. 

Climate change litigation

Climate change litigation typically includes cases that raise material issues of law or fact relating to climate change mitigation, adaptation or the science of climate change. While there have been active social movements and court actions (called “environmental litigation”) since the era of rapid economic growth in the 1960s, there have been five climate change litigation cases in Japan as of 31 December 2022, according to the Global Climate Litigation Report 2023 Status Review published by the UN Environment Programme. The case regarding Kobe Coal-Fired Plant is one example. In this case, residents claimed an injunction against the energy companies building and operating a coal-fired power plant on the grounds that (i) the air pollution from it could cause health hazards, and (ii) the operation of the coal-fired power plant could contribute to global warming and climate change. The first instance court dismissed the claims in 2023 on the grounds that (i) there was no concrete evidence that the operation of the plant would cause damage to the claimants’ health, and (ii) there was no concrete evidence of danger that their lives, bodies or health would be harmed by global warming, and that they were not entitled to legal protection at this time. It is generally the case that claims cannot be granted if there is no concrete danger, such as provable imminent damage to health. The case has been appealed, and the upcoming appellate decision could provide clearer guidance on climate change litigations going forward in Japan.

Business and human rights litigation 

Business and human rights is another crucial issue in Japan in recent years. The approach taken by the court in a case against American Express in 2023 shows that the court can also play an active role in this area. In this case, a female employee who worked as a team leader with about 40 subordinates in the sales department claimed that the employer changed her position from a team leader to the same level position in another department, but with no subordinates because of her maternity and parental leave, and that the treatment was illegal and invalid. The appellate court awarded the employee compensation of JPY2.2 million (approximately USD15,000) on the grounds that the employer’s action constituted unfavourable treatment, which is prohibited by a statute requiring the equal treatment of men and women in the workplace. Although the female employee was not dismissed or demoted, the appellate court found that the treatment was substantially disadvantageous because she lost her performance-related pay due to the relocation to a position without subordinates. 

Increased awareness of human rights makes it more likely that companies will face litigation risks as well as reputation risks in Japan if they mishandle this important issue. It has recently been revealed through the media and voluntary investigations that a major private company in the Japanese entertainment industry has been concealing a large number of instances of sexual abuse committed by the founder for years. If this had been revealed in a listed company, it would have faced substantial litigation risks from shareholders in addition to victims as well as face exclusion from the markets. 

Practical tips for potential users of Japanese litigation 

The government requires global companies to register in Japan 

Foreign established companies doing business in Japan have not necessarily had to register their presence in Japan, but they were required to appoint a representative in Japan and to register information such as the name and address of the representative in Japan under the Companies Act. The lack of that registration has made it difficult for potential claimants in Japan to serve court documents against such foreign companies. In response to this situation, the Japanese authorities recently reiterated their request that these foreign companies, such as Google and Microsoft, register the information and complete the registration in 2022. If a foreign company fails to register the necessary information based on the Companies Act, it may face a civil penalty, such as a fine. Once foreign companies complete the registration, court documents can be served in Japan without issues associated with international service process.

Fee arrangements for litigation in Japan 

In Japan, a combination of a retainer fee and a contingency fee agreement is one of the most common fee arrangements for civil litigation. Lawyers can act on a contingency fee basis provided that the fee does not amount to profiteering. Hourly rate fees are also common. A relatively new and lesser-known option is third-party litigation funding. There are no specific legislative or regulatory rules drafted for the purpose of regulating third-party litigation funding in Japan. While less common, third-party funding is used in litigation before Japanese courts as well as arbitration. As a funded party is neither obliged to disclose the identity of the funder nor the fact that the party is funded, the courts do not necessarily know whether the case is funded or not. 

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Anderson Mori & Tomotsune is a full-service law firm formed by the winning combination of three leading law firms in Japan: Anderson Mori, known for serving overseas companies doing business in Japan since the early 1950s; Tomotsune & Kimura, particularly well known for its expertise in international finance transactions; and Bingham Sakai Mimura Aizawa, a premier international insolvency/restructuring and crisis-management firm. Anderson Mori & Tomotsune has a long tradition of serving the international business and legal communities and is one of the largest law firms in Japan. The firm’s expertise enables the delivery of comprehensive advice on virtually all legal issues that may arise from a corporate transaction. The majority of the firm’s lawyers are bilingual and experienced in communicating, drafting and negotiating around the globe.

Trends and Developments


Miura & Partners was established in 2019 as an independent law firm in Tokyo with the aim of creating a new platform for innovative and business-minded professionals. Since its establishment, it has handled various cutting-edge cases in a range of practice areas, including litigation, with a rapidly growing team of around 100 lawyers in 2023. The firm has five offices in Japan as well as offices in San Francisco and Jakarta. Its litigators are trained at top Japanese law firms, having dealt with complex commercial disputes, and have represented corporations in numerous high-profile cases, such as successfully closing the first hostile takeover deal in J-REIT. The firm's knowledge of various legal systems, and experience in international environments, enables Miura & Partners to offer practical guidance to global businesses which may not necessarily be familiar with court proceedings in Japan.

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