The Consumer Product Safety Act (CPSA) is the main law for product safety in Japan. Consumer products are subject to the CPSA generally. The term 'consumer products', as used in the CPSA, has a very broad scope and means any product supplied mainly for use by general consumers for their everyday lives, excluding certain products listed in the table appended to the CPSA. The excluded products include:
Consumer products that are found to be highly likely to cause harm, particularly to the lives or health of general consumers, are defined as 'specified products' under the CPSA; these include climbing ropes, autoclaves and pressure cookers for household use, riding helmets and portable laser application devices. The relevant competent authority establishes technical standards necessary for preventing endangering the lives or health of general consumers for the specified products.
The regulatory framework under the CPSA is as described below.
Product Safety of Consumer Products (PSC) Mark System
The PSC mark system is a pre-marketing method to ensure product safety by regulating the sale and display of specified products for sale purposes through labelling requirement. If a manufacturer or an importer of specified products has submitted the required notification and if the products conform to certain technical standards set by the competent authority, they can affix the PSC mark on the specified products. The sale or display for the purpose of selling these products is prohibited, unless the PSC mark is placed on the specified products.
A manufacturer or importer of consumer products that becomes aware of a serious product accident that has occurred in relation to a consumer product that it manufactures or imports, must report to the Secretary General of the Consumer Affairs Agency (CAA), within ten days, certain information related to the product and the accident. For non-serious product accidents, manufacturers and importers of consumer products, as well as retailers and other parties who are involved in such products, are encouraged to report the accident to the National Institute of Technology and Evaluation (NITE), an independent administrative agency, by an official notice issued by the Ministry of Economy, Trade and Industry. For serious product accident, the Secretary General of the CAA publishes certain information related to the relevant product and accident, if the Secretary General finds it necessary to prevent serious danger or increase in such danger to consumers. For non-serious product accidents, NITE generally publishes limited details of the accident.
Inspection and Labelling Requirements to Prevent Accidents Due to Deterioration
Under the CPSA, consumer products that have a high likelihood of causing a serious accident due to degradation over time, such as hot water heaters and bathroom dryers, are called 'specified maintenance products'. For the specified maintenance products, a manufacturer or importer must set (i) a standard period of use during which there will be no safety issue if used under the standard conditions of use, which is called 'design standard use period', and (ii) an inspection period to prevent injury due to age-related deterioration once the design standard use period has expired. The manufacturer or the importer must place labelling which shows, among other information, the design standard use period and the time of commencement and expiration of the inspection period. The manufacturer or the importer must send a notification to the user of the specified maintenance product when the end of the design standard use period approaches. Further, when requested within the inspection period, it must conduct an inspection on the specified maintenance product. For consumer products that do not have a high likelihood of causing a serious accident but that have a high volume of accident reports due to deterioration over time, such as electric fans and air conditioners, these products must bear warning labels on deterioration and a design standard period of use.
In addition to the CPSA, some consumer products may be subject to other laws, such as the Electrical Appliances and Materials Safety Act, the Gas Business Act and the Act on the Securing of Safety and the Optimisation of Transaction of Liquefied Petroleum Gas.
No regulator has general jurisdiction over product safety issues in Japan. When the CAA was established, jurisdiction over existing legislation involving the safety of the lives and health of people would remain with the relevant ministries which then had jurisdiction. Due to this arrangement, the CAA has a limited power to regulate business operators with respect to consumer safety matters. However, serious product accidents shall be reported by manufacturers and importers to the Secretary General of the CAA under the CPSA.
One of the main regulators for product safety in Japan is the Ministry of Economy, Trade and Industry (METI). As the METI has jurisdiction over the CPSA, under which most consumer products are regulated, the METI has broad jurisdiction over the consumer products.
A ban on the sale of a specific consumer product can be imposed by the competent authority. For example, if certain specified products fail to conform to the technical requirements established by the competent authority and the competent authority finds it particularly necessary to prevent the occurrence of harm to the lives or health of general consumers, the competent authority can prohibit the manufacturer and the importer of the products from affixing the PSC mark on the products for a period of not more than one year. This effectively results in a ban on the sale of the specific consumer products, as no person engaged in the manufacture, import or sale of the specific consumer product may sell, or display such products for the purpose of selling them, without affixing the PSC mark under the CPSA.
Certain specific products are exclusively regulated by other regulators. For examples, the Ministry of Land, Infrastructure, Transport and Tourism regulates automobiles. The Ministry of Health, Labour and Welfare (MHLW) regulates medical products, cosmetics, medical devices. Also, MHLW regulates food, food additives and cleaning agents. These regulators have the power to establish technical or other relevant standards. If certain conditions are met, these regulators can order the manufacturer to implement remedial measures, including the implementation of product recalls.
The Basic Consumer Act provides that the Japanese government must take necessary measures to ensure the safety of people as consumers, such as by:
Business operators are expected to implement a product recall if a product that they manufacture, import or sell might be detrimental to the safety of its consumers.
Under the CPSA, any person engaged in the manufacture or import of consumer products must, in cases where the product incidents have originated with the consumer products that the person manufactured or imported, investigate the cause of these product incidents, and if the person finds it necessary to prevent the occurrence and increase of safety hazards, the person must endeavour to recall the consumer products or otherwise take measures to prevent the occurrence and increase of safety hazards.
Under the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, when holders of marketing authorisation for pharmaceuticals, quasi-pharmaceutical products, cosmetics, medical devices or regenerative medicine products, or persons with special approval regarding foreign manufacturing must, when they learn of the occurrence or spread of hazards in health and hygiene suspected to be caused by using the pharmaceuticals, quasi-pharmaceutical products, cosmetics, medical devices or regenerative medicine products that they manufactured and sold or received a certain approval for, dispose of, recall, discontinue selling and provide information on such products, and take other necessary measures for the prevention of the occurrence or spread of hazards in health and hygiene.
Under the Road Tracking Vehicle Act (including a guideline established thereunder), in cases where the structure, mechanism or performance of a certain range of automobiles of the same model is not, or is likely to not be, in conformity with the necessary safety standards, and the cause relates to the design or manufacture of the automobiles, a manufacturer or importer must promptly recall the automobiles and report to the Minister of Land, Infrastructure, Transport and Tourism certain matters specified in the Act.
Under the Food Sanitation Act (FSA), if a food business operator find it necessary to prevent food sanitation hazards resulting from food for sale, etc, it must endeavour to take any necessary measures appropriately and immediately, such as the provision of a certain record to the state or prefectures, etc, and the disposal of the food for sale, etc, which had caused the food sanitation hazards.
There is no mandatory advertising requirement under the CPSA and FSA. However, under the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, in cases where holders of marketing authorisation for pharmaceuticals, quasi-pharmaceutical products, cosmetics, medical devices or regenerative medicine products, or persons with special approval regarding foreign manufacturing file for a recall, they must, in addition to promptly providing the information on the recall with each medical institution, etc, provide such information using the internet. Further, under the Road Tracking Vehicle Act, if manufacturers of automobiles file for a recall, they must have the filing published in the journal of the Japan Automobile Service Promotion Association to disseminate information on the recall to providers of automobile repair services.
The CPSA sets out incident-based reporting. If a manufacturer or importer of consumer products comes to know that a serious product accident that has originated with a consumer product that it manufactures or imports, it must report to the CAA certain information related to the product and the accident. The report must be submitted in the format provided for in the Cabinet Office Order within ten days from the date of knowing that a serious product accident has occurred.
Even if an accident in relation to the consumer product is not serious, it is encouraged by an official notice issued by METI that business operators involved in such consumer products, such as manufacturers, importers and retailers, report the information of the accident to the National Institute of Technology and Evaluation (NITE), which is an independent administrative agency, in the format provided for on the NITE’s website.
The FSA, which was amended on 13 June 2018 and comes into force by no later than 12 June 2021, provides a reporting obligation for food recalls. Under the amended FSA, if a business operator recalls the food, additives, apparatus, or containers and packaging which are or are expected to be in violation of the FSA, it must notify the prefectural governor of initiation progress of the recall without delay, except in cases where the MHLW or a prefectural governor order the business operator to recall them or there is no risk of food hygiene hazard. When the prefectural governor received the report, it must report it to the MHLW.
In cases where a manufacturer or an importer of consumer products fails to make a report to the CAA or has made a false report to the CAA in violation of the obligations explained above in 1.4 Notification to Regulatory Authorities, if the competent minister finds it necessary for securing the safety of the consumer products manufactured or imported by such manufacturer or importer, the competent minister may order the manufacturer or importer of consumer products to develop a system necessary for collecting information on serious product accidents that occur in relation to the consumer products manufactured or imported by the manufacturers or importers and for the proper management or provision of said information. Failure to observe such order issued by the competent minister may subject the manufacturer or importer and their representative to imprisonment for up to one year and/or a fine of up to JPY1million. However, failure to report to the CAA by itself pursuant to the obligation explained in 1.4 Notification to Regulatory Authorities does not trigger criminal penalties.
The main causes of action for product liability are tort and contract.
The general principle of tort is provided in Article 709 of the Civil Code – namely, that a person who intentionally or negligently infringes another person's right or legally protected interest is liable to compensate for any loss or damage caused by such infringement. The tort liability under Article 709 of the Civil Code requires the following conditions to be met:
In addition, a special rule to the general principle of tort is added by Article 3 of the Product Liability Act. The special rule is that a person who is injured by defects of the product can demand compensation from the manufacturer and other involved parties without having to prove intent or negligence. Product liability under Article 3 of the Product Liability Act requires the following conditions to be met:
Buyers of defective products may, in accordance with the contract law under the Civil Code, make a claim against the seller for compensation for damages.
The contractual liability requires the following conditions to meet:
In special cases where the buyer and the seller engaged in a transaction focusing on the individuality of the products (eg, a transactions of used products) or where the buyer acknowledged the existence of a defect and permitted the delivery of defective products as the performance of seller’s obligation, a different rule applies (eg, the scope of damages to be compensated becomes different). However, the Civil Code will be amended, which amendment shall be effective on 1 April 2020, and after the amendment, the rules will be unified.
The following sections assume normal cases (ie, cases where the buyer and the seller conducted a transaction of unascertained products and the buyer did not acknowledge the existence of a defect at the time of the transaction).
Tort – the person whose right or legally protected interest has been violated has the standing to bring the above claims for product liability.
Product Liability Act – (i) the person who has been injured because of the defect, or (ii) the person whose property excluding the defected product itself has been damaged because of the defect has the standing to bring the above claims for product liability.
Contract law – the buyer has the standing to bring the above claims for product liability.
Further, in Japan, the Act on Special Measures Concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers has been enacted. This act allows a specified qualified consumer organisation to bring lawsuits against a company on behalf of unspecified and multiple individual consumers in certain cases.
This act establishes two phased proceedings for the collective redress for property damage incurred by consumers. On the first proceeding, a specified qualified consumer organisation files an action for declaratory judgment on common obligations, which is an action seeking a declaratory judgment that a company owes monetary payment obligations to unspecified and multiple consumers based on factual and legal causes common to the consumers, except the cases where a claim for a payment of money filed by a consumer who has no grounds due to circumstances specific to the consumer, where property damage is incurred by a considerable number of consumers in connection with consumer contracts. On the second proceeding, simplified determination proceedings to determine the presence or absence and the contents of a claim for payment of money are carried out by the district court which made the final judgment in the first instance of the action for declaratory judgment on common obligations.
A specified qualified consumer organisation may file an action with regard to monetary payment obligations which pertain to the following claims:
However, the action may not be filed when the damage incurred is any of the following:
Since the damage which is subject to the above claims correspond to “(a) damage due to the loss or damage of property other than the objects of a consumer contract resulting from the nonperformance of a contractual obligation, a defect of goods, rights, or any other object of a consumer contract, or a tort”, “(b) damage due to the loss of profit which would have been gained through the disposition or use of the object of a consumer contract if the object had been provided”, “(e) damage due to harm done to the life or body of a person” or “(f) damage due to mental suffering”, a specified qualified consumer organisation cannot bring a collective redress action with respect to a claim under the Product Liability Act.
The right to seek compensation for damages in tort shall be extinguished by the completion of prescription if the victim or his/her legal representative does not exercise the right within three years from the time when he/she realises the damages and the identity of the perpetrator. In addition, the right shall be extinguished when 20 years have elapsed from the time of the act of tort.
Product Liability Act
The right to claim damages provided under the Product Liability Act shall be extinguished by the completion of prescription if the victim or his/her legal representative does not exercise the right within three years (after the amendment of the Product Liability Act that will come into force on 1 April 2020, if death or injury occur, the prescription term is extended to five years.) from the time when he/she realises the damages and the person liable for the damages. In addition, the right shall be extinguished when ten years have elapsed from the time when the manufacturer, etc, delivered the product. However, this ten-year period shall be started from the time of the occurrence of (i) the damages caused by substances which become harmful to human health when they accumulate in the body, or (ii) the damages that the symptoms appear after a certain latent period.
Before the amendment of the Civil Code comes into force on 1 April 2020, the right to claim compensation for loss or damage shall be extinguished if not exercised for ten years.
After the amendment comes into force on 1 April 2020, if the buyer fails to notify the seller of the defect within one year from the time the buyer became aware of the defect, the buyer cannot make a claim against the seller unless the seller was aware of the existence of the defect at the time of delivery or was not aware of the existence of the defect through gross negligence. Even if the notice is given within one year, the right to claim shall be extinguished by prescription if it is not exercised within five years from the time when it becomes known that the right can be exercised or if it is not exercised within ten years (in the case of the claim for damages caused by injuries of life or body, this period shall be extended for 20 years.) from the time it becomes exercisable.
The courts of Japan shall have jurisdiction over an action that is brought (i) against a corporation whose principal office or business office is located in Japan, and (ii) against a corporation whose representative or other person principally in charge of its business is domiciled in Japan if the corporation does not have a business office or other office in Japan, or if the location of business office or other office is unknown. In addition, the courts of Japan shall have jurisdiction in the following cases for each grounds of the claim.
The courts of Japan will have jurisdiction if the place where the wrongful act was committed or the place where the consequence occurred are in Japan (excluding the case in which the consequence of the wrongful act committed in a foreign country have occurred within Japan but it would not ordinarily have been possible to forecast that such consequences could have occurred within Japan).
Product Liability Act
In line with the principle of the tort above, the courts of Japan will have jurisdiction on the product liability case if the place where the wrongful act was committed or the place where the consequences occurred was within Japan. In relation to the product liability case, “the place where the wrongful act was committed” is interpreted as the place of manufacture.
The courts of Japan will have jurisdiction if the place for performance of the obligation under the contract is within Japan, or if it is determined that the place for performance of the obligation is within Japan in accordance with the law of the place selected under the contract. In case of an action regarding a contract concluded between a consumer and an enterprise, which is brought by the consumer against the enterprise, the courts of Japan shall have jurisdiction if the consumer is domiciled in Japan at the time when the action is brought or at the time the consumer contract is concluded.
There are no mandatory steps that must be taken before proceedings can be commenced formally for product liability cases.
The Code of Civil Procedure provides the preservation of evidence, under which parties to a lawsuit can file a petition with the court, either prior to or after filing of the lawsuit, to conduct an examination of the evidence including documentary evidence, testimony and the product itself.
Enquiry Prior to Filing of Action
If a person who has provided notice of an action to the would-be defendant of the action in advance, the notifying person may make an enquiry in writing to the would-be defendant who received the notice, regarding particular matters that are obviously necessary for the preparation of the allegations or proof if the action is filed. When the would-be defendant who received advance notice has responded to the said notifying person with a written response to that advance notice, under certain circumstances, such would-be defendant may make a written enquiry to the notifying person regarding particulars that will clearly be necessary for preparing allegations or proof if the action is filed.
Further, upon petition by the notifying person or the would-be defendant who received the notice, the court may commission the holder of a document (including any other objects prepared for the purpose of indicating information) to send the document when it is found for the petitioner to have difficulty in obtaining by him/herself such document that will be clearly necessary for proving the facts to be proved in the action intended to be filed. The holder of the document does not need to be the notifying person or the would-be defendant here. However, this petition is not widely used.
Preservation of Evidence
Preservation of evidence (see above, 2.6 Rules for Preservation of Evidence) is often used for the purpose of collecting documentary and other evidence.
Commissioning Sending of Document
After filing an action, the parties may petition the court to commission the person who holds a document to send the document. The holder of the document is not obliged to do so, though.
Order to Submit Documents
After filing an action, the parties may request the court to issue an order to submit a document against the opposing party or a third party who hold such document. The holder of such document may not refuse to submit the document to the court when:
If the document does not fall under the foregoing, the holder of the document may refuse to submit the document when the document falls under the categories set forth by Article 220 of the Code of Civil Procedure, which includes the categories of a document concerning confidential information in connection with a public officer’s duties, and a document prepared exclusively for use by the holder of the document.
Request for Information through the Bar Association
An attorney registered in Japan may request the bar association to make enquiries to public offices or public or private organisations for information necessary for their case. It is understood that those who have received such enquiry should submit a report on the inquired matters, unless there are justifiable ground.
Upon the request by a party, the court may implement an expert testimony to obtain the expertise of the expert, who shall be designated by the court. The expert shall state his/her opinion in writing or orally. When the expert is to state his/her opinion orally, the court may ask questions to the expert, followed by questions by the parties.
As an exception to the foregoing, by its own authority and without the request by a party, the court may commission a government agency or public office, a foreign government agency or public office, or a corporation to give expert testimony.
Apart from the foregoing, the parties may submit an expert report prepared by the expert that such party appointed to the court as documentary evidence. It is also possible to request the court to conduct a witness examination of the experts. If the opposing party wishes to rebut the content of such expert report, the opposing party may request the court to conduct an examination against the expert, or submit another expert report prepared by their expert.
The technical advisor system does not directly relate to expert evidence as this system does not necessarily aim at obtaining the expert evidence. However, a technical advisor is to provide an explanation as to technical matters to the court, as explained below.
In product liability cases, highly technical matters often become main issues. In such cases, the court may, after hearing opinions of the parties, have a technical adviser participate in the proceedings to assist the judge in understanding technical matters (Article 92–2 of the Code of Civil Procedure).
While the court shall hear the opinion of the parties about the involvement of the technical advisors in advance, the consent of the parties is not required for the court to have a technical advisors to participate in the proceedings (the technical advisors may not participate in a date when the court will attempt to arrange a settlement without the consent of the parties, though). Having said that, upon the petition of both parties, the court is required to revoke its determination for the participation of a technical advisor (Article 92–4 of the Code of Civil Procedure). It is unlikely that the court has a technical advisor to participate in the proceedings against the both parties’ clear opposition.
The court may have a technical advisor give an explanation on the technical matters in writing or orally on a date for trial. When a technical advisor submit the explanation in writing, such document is sent to both parties (Article 34-3 of the Rules of Civil Procedure), and both parties may state their opinions on the explanation of a technical advisor (Article 34-5 of the Rules of Civil Procedure). The explanation of an expert is not treated as an evidence, but it is pointed out that the court may base its judgement on such explanation if both parties so agree. Therefore, a party should carefully examine the content of the explanation given by a technical advisor to see if it contains erroneous or inappropriate descriptions.
In addition, the court may, upon the consent of the parties, allow a technical advisor to ask questions to witnesses, the parties, or the expert on a date for the examination of a witness, the parties, or a date for the questioning of an expert (Article 92–2 (2) of the Code of Civil Procedure). The answers to such questions by a witness, the parties, or the expert constitute a part of the evidence and a basis for the judgement.
In principle, a party who benefits from the legal consequences bears the burden of proof of the facts which give rise to such legal consequence.
A plaintiff who claims compensation for damage suffered in product liability cases in tort bears the burden of proving the facts that give rises to the plaintiff’s right to seek damages in tort under Article 709 of the Civil Code, including:
A plaintiff in product liability cases, who seeks the benefit from the occurrence of the legal effect of the Product Liability Act, bears the burden of proving the facts that give rise to the plaintiff’s right of claim under the Product Safety Act, including:
Even if the plaintiff proves the above facts, the defendant may be relieved of liability by proving the following facts that constitute exemptions of liability under the Product Safety Act:
A plaintiff who seeks compensation for the loss or damage suffered in product liability cases, as a contractual liability, bears the burden of proof of the following facts that constitutes the right to claim such compensation:
Product liability cases shall be filed with a district court or summary court as a court of first instance. As the summary courts are to handle civil cases that involve claims not exceeding JPY1.4 million, product liability cases which involve more than this amount shall be filed with a district court.
The lay-judge system has been introduced to criminal trial in Japan, where citizens selected as judges participate in trials, but not to civil cases. As such, the product liability cases are decided by judges only.
As with ordinary proceedings of civil cases, the proceedings of product liability cases are governed by the Code of Civil Procedure and the Rules of Civil Procedure.
Court of Second Instance
An appeal to the court of second instance can be filed with the high courts in response to a final judgment made by a district court as the court of first instance, and with the district courts in response to a final judgment made by a summary court. An appeal to the court of second instance shall be filed within two weeks from the day on which the written judgment is served to the parties. Even after the right to appeal to the court of second instance is extinguished, an appellee may file an incidental appeal until oral arguments are concluded in the second instance.
A final appeal can be filed with the Supreme Court in response to a final judgment made by a high court as the court of second instance, and with a high court in response to a final judgment made by a district court as the court of second instance. A final appeal in response to a high court’s judgment shall be filed within two weeks from the day on which the written judgment is served to the parties. As with the first level appeal, an appellee may file an incidental final appeal. A final appeal can be filed on the grounds that the judgment reflects an error in the interpretation of the Constitution or that it is otherwise unconstitutional. A final appeal can also be filed on the grounds that the existence of a material violation of the proceedings under Article 312(2) of the Code of Civil Procedure. A final appeal to a high court can also be filed on the grounds of a violation of law or regulation that has clearly influenced the judgment.
Petition for Acceptance of Final Appeal
If the Supreme Court is the court with which the final appeal should be filed, and the prior judgment contains a decision that is inconsistent with precedents rendered by the Supreme Court or involves other material matters concerning the interpretation of laws and regulations, the Supreme Court can, on a petition, accept the case as the final appellate court.
The manufacturer and other relevant parties are not liable where the product is used as a component or raw material of another product, and a defect occurred primarily because of compliance with the instructions concerning the design given by the manufacturer of such another product, and the manufacturer and other relevant parties is not negligent with respect to the occurrence of such defect.
Further, the manufacturer and other relevant parties are not liable where a defect in the product could not have been discovered given the state of scientific or technical knowledge at the time when it was delivered. As the 'state of scientific or technical knowledge' is generally interpreted as the highest level of scientific or technical knowledge available when the product was manufactured, it is very difficult to successfully use this defence (there is currently no precedent in which the defence was successfully applied).
Other general defences such as comparative negligence and extinctive prescription are also available.
Adherence to regulatory requirements is a relevant consideration in product liability cases.
Various regulations concerning the safety of products are implemented under a variety of laws such as the Consumer Product Safety Act, the Road Vehicles Act, the Food Sanitation Act, the Pharmaceutical Affairs Act and the Building Standards Act. Since the purpose and objective of these regulations is only to establish minimum safety standard and differs from the purpose and objective of the Product Liability Act, it is commonly understood that the conformity or unconformity to these regulations is positioned as nothing more than one of the factors that are taken into account in product liability cases. Further, with respect to voluntary regulations concerning the safety of products, it is also commonly understood that the conformity or non-conformity to such regulations is positioned as nothing more than one of the factors that are taken into account in determining whether a product is defective.
In principle, the court costs are borne by the losing party. In the case of a partial defeat, the court determines by its discretion the burden of the court costs on each party. However, depending on the circumstances, the court can have one of the parties bear all the court costs.
Court costs include, among other things, filing fees, travel expenses, daily allowances, accommodation costs, expenses for the preparation and submission of documents and fee of any court designated expert witness. Court costs do not include costs relating to party-appointed expert witnesses and are borne by each party, although they may be recovered as part of damages.
Court costs do not include legal costs and legal costs are borne by each party, in principle. However, in practice, part (generally 10% of damages) of the prevailing party's legal costs can be awarded as part of the damages, for claims under the Product Liability Act and tort claims based on the Civil Code. For breach of contract claims, the legal costs cannot be included as part of the damages awarded to the prevailing party.
There is no explicit provision permitting or prohibiting litigation funding. There are some provisions that relate to the legitimacy of litigation funding. Under the Trust Act, no trust is allowed to be created for the primary purpose of having another person conduct any procedural act. Under the Attorney Act, no person other than an attorney or a legal professional corporation may, for the purpose of obtaining compensation, engage in the business of providing legal advice or representation, handling arbitration matters, aiding in conciliation, or providing other legal services in connection with any lawsuits, non-contentious cases, or objections, requesting for re-examination, appeals and other petitions against administrative agencies, etc, or other general legal services, or acting as an intermediary in such matters. Further, under the Attorney Act, no person may engage in the business of obtaining the rights of others by assignment and enforcing such rights through lawsuits, mediation, conciliation or any other method. Whether litigation funding is allowed in light of this prohibition has not been legally tested and it is not clear whether litigation funding is permitted under Japanese law. Contingency fees or 'no-win, no-fee' arrangements are not prohibited, although pure contingency fees or 'no-win, no-fee' arrangements are rarely used.
The Act on Special Measures Concerning Civil Proceedings for the Collective Redress for Property Damage Incurred by Consumers (Act No 96 of 2013) came into effect on 16 October 2016, which introduced opt-in type collective action. Under the Act, a collective action can only be brought by a specified qualified consumer organisation, and not by a consumer.
The Act involves two-phased procedures. In the first phase, a special qualified consumer organisation files an action for a declaratory judgment on common obligations. This action seeks a declaratory judgement that a business operator owes monetary obligations to a considerable number of consumers, based on factual and legal causes common to these consumers (except where the individual consumer has no grounds to receive money due to circumstances specific to the consumer), where property damage is incurred by considerable number of consumers in connection with consumer contracts. In the second phase, simplified proceedings to determine the presence or absence and the contents of a claim of each opt-in consumer for the payment of money are carried out by the district court that rendered the final judgment at first instance for a declaratory judgment on common obligations. Recently, the first lawsuits seeking a declaratory judgment on common obligations have been filed in the Tokyo District Court. The scope of claims that can be brought under the Act is limited to those listed therein and compensatory claims under the Product Liability Act (Act No 85 of 1994) are out of the scope. For more details, see 2.2 Legal Standing to Bring Claims.
There have been no significant product liability cases in Japan in the past four to five years.
Concept of Legal Privilege
There are no recent notable trends in the development of product liability and safety law in Japan. However, there is an important development in the rule worth noting and monitoring. Up to now, there has been no general concept of legal privilege in Japan which protects from disclosure communications between clients and their legal counsel concerning legal advice. However, a new rule establishing a type of attorney-client privilege protection in the context of unfair restraint of trade investigations by the Japan Fair Trade Commission is expected to be introduced. While the scope of the proposed attorney-client privilege protection is limited, this development may be a catalyst to encourage further consideration and debate on whether Japan should adopt and recognise the concept of attorney-client privilege protection in general.
Regulations on Mobile Batteries
While lithium ion batteries are included in the scope of regulation under the Electrical Appliances and Materials Act, METI had expressed, in its notification dated as of 2 April 2012 as to the interpretation of the scope of the Act, its view that portable batteries in which lithium ion batteries were built were not included in the scope of regulation under the Act. However, in response to the increase of accidents that arise out of defective portable batteries, METI has revised its interpretation on the scope of the Act to include the mobile batteries with built-in lithium ion batteries after 1 February 2019. Upon such revision of the interpretation, from 1 February 2019, METI requires; among other matters, that (i) the manufacturers and importers of mobile batteries with built-in lithium ion batteries comply with certain technical standards to manufacture/import such products, and (ii) the PSE Mark be affixed for such product to be sold in Japan.
In recent years, product liability issues in respect of artificial intelligence (AI) including autonomous driving have been the focus of attention. In March 2018, the Ministry of Land, Infrastructure, Transport and Tourism publicised a report which detailed discussions held within the Committee on the Liability for Damages in relation to Autonomous Driving. The report considers various issues including under what circumstances a structural defect or functional impairment in an autonomous driving system should be found, and who should be held liable for an accident caused by the malfunctioning of an autonomous driving system due to hacking of the autonomous vehicle’s computer. While the immediate scope of the report is confined to liability under the Automobile Liability Security Act, the opinions stated in the report may serve as starting points when policy-makers consider the framework for product liability issues in respect of AI.