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 in 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 the technical standards necessary to prevent the lives or health of general consumers for the specified products being endangered.
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 requirements. If a manufacturer or an importer of specified products has submitted the required notification, ensured the products conform to certain technical standards set by the competent authority, and inspected (and kept the inspection record of) the product, they can affix the PSC mark on the specified products. The sale or display, for the purpose of selling, of 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 with such products, are expected 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 (METI).
For serious product accidents, the Secretary General of the CAA will publish certain information related to the relevant product and accident, if the Secretary General finds this necessary to prevent serious danger, or the increase of 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 these specified maintenance products, a manufacturer or importer must set:
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 is approaching. Furthermore, 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, warning labels on deterioration and the design standard period of use must be affixed.
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 remained with the relevant ministries which then had jurisdiction. Due to this arrangement, the CAA has 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 METI. As the METI has jurisdiction over the CPSA, under which most consumer products are regulated, the METI has broad jurisdiction over 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 doing so 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 (MLIT) regulates automobiles. The Ministry of Health, Labour and Welfare (MHLW) regulates medical products, cosmetics and medical devices. The MHLW also 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 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 product incidents have originated with those consumer products, investigate the cause of these product incidents, and if the person finds doing this necessary to prevent the occurrence and increase of safety hazards, they 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, holders of a 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 have 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 Trucking 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 MLIT certain matters specified in the Act. A recent update to this is that, under the amended Road Trucking Vehicle Act, which came into effect on 1 April 2020, automated driving devices, as defined by Item 2 of Article 41, which are used in autonomous vehicles, have been added to the equipment covered under the necessary safety standards.
Under the FSA, if a food business operator find it necessary to prevent food sanitation hazards resulting from the sale of food, etc, it must endeavour to take any necessary measures appropriately and immediately, such as the provision of a certain record to the relevant state or prefectures and the disposal of the food for sale that 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 authorisations 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 to each medical institution, etc, provide such information using the internet. Furthermore, under the Road Trucking 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 of 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 expected by an official notice issued by the METI that business operators involved in such consumer products – such as manufacturers, importers and retailers – report the information of the accident to NITE, which is an independent administrative agency, in the format provided for on NITE’s website.
The FSA, which was amended on 13 June 2018 and came into force on 1 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 the initiation of the 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 a food hygiene hazard. When the prefectural governor has 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 Obligations to Notify Regulatory Authorities, if the competent minister finds it necessary for securing the safety of the consumer products manufactured or imported by that manufacturer or importer, the competent minister may order the manufacturer or importer to develop a system necessary for collecting information on serious product accidents that occur in relation to the consumer products manufactured or imported by it and for the proper management or provision of that information. Failure to observe such an 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 JPY1 million. However, failure to report to the CAA in itself, pursuant to the obligation explained in 1.4 Obligations to Notify 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 them for any loss or damage caused by that 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 a 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 contract law under the Civil Code, make a claim against the seller for compensation for damages, the repair of a defect, or the delivery of a substitute for the product.
Contractual liability requires the following conditions to be met:
Until the end of March 2020, in special cases where the buyer and the seller engaged in a transaction focusing on the individuality of the specific 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 the seller’s obligation, a different rule applied (eg, the scope of damages to be compensated became different). However, the Civil Code was amended, which amendment became effective on 1 April 2020, and by this amendment, the rules were unified and the rule for the above special cases was abolished.
Tort – a person whose right or legally protected interest has been violated has the standing to bring the claims for product liability listed in 2.1 Product Liability Causes of Action and Sources of Law.
Product Liability Act – (i) the person who has been injured because of the defect, or (ii) the person whose property, excluding the defective 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.
Furthermore, 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. In 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 where property damage is incurred by a considerable number of consumers in connection with consumer contracts. In 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:
(i) damage due to the loss or damage of property other than goods, rights, or any other object of a consumer contract resulting from the non-performance of a contractual obligation or a tort;
(ii) 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 that object had been provided;
(iii) damage due to the loss or damage of property other than goods pertaining to manufacturing, processing, repair, transport, or retention under a consumer contract or any other subject of the service which was the object of a consumer contract, resulting from the non-performance of a contractual obligation or a tort;
(iv) damage due to the loss of profit which would have been gained through the use of the service that is the object of a consumer contract or through the disposition or use of the subject of the service if the service had been provided;
(v) damage due to harm done to the life or body of a person; or
(vi) damage due to mental suffering.
Since the damage which is subject to the claims described in 2.1 Product Liability Causes of Action and Sources of Law correspond to (i), (ii), (v) and (vi) above, 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 their legal representative, does not exercise the right within three years from the time when they realised 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 their legal representative, does not exercise the right within three years (if death or injury occur, the prescription term is extended to five years) from the time when they realised 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 start from the time of the occurrence of (i) the damage caused by substances which become harmful to human health when they accumulate in the body, or (ii) symptoms that appear after a certain latent period.
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 depending on the 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 consequences 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 applying to tort above, the courts of Japan will have jurisdiction over 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 of performance of the obligation under the contract is within Japan, or if it is determined that the place of performance of the obligation is within Japan in accordance with the law of the place selected under the contract. In the case of an action regarding a contract concluded between a consumer and an enterprise, which is brought by the consumer against that 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 for the preservation of evidence, under which parties to a lawsuit can file a petition with the court, either prior to or after filing 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 has provided notice of an action to the would-be defendant of the action in advance, that 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 has received advance notice, has responded to the said notifying person with a written response to that advance notice, under certain circumstances, such a would-be defendant may themselves 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.
Furthermore, 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 that document when it is found that the petitioner will have difficulty in obtaining that document by themselves and where that document will be clearly necessary for proving the facts to be shown 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 2.6 Rules for Preservation of Evidence in Product Liability Claims) 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, however, obliged to do so.
Order to Submit Documents
After filing an action, the parties may request that the court issue an order for the submission of a document against the opposing party or a third party who holds that document. The holder of the 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 an enquiry should submit a report on the inquired matters, unless there are justifiable grounds not to do so.
Upon the request of a party, the court may hear expert testimony to obtain the expertise of an expert, who shall be designated by the court. The expert shall state their opinion in writing or orally. When the expert is to state their opinion orally, the court may ask questions to the expert, followed by questions from 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, a party may submit an expert report, prepared by an expert that that 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 an 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 expert evidence. However, the technical advisor system is worth noting here because a technical advisor is expected to provide an explanation of technical matters to the court, which may affect the judgement.
In product liability cases, highly technical matters often become central issues. In such cases, the court may, after hearing opinions of the parties, have a technical advisor 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 advisor participate in the proceedings (the technical advisors may not participate on a date when the court attempts to arrange a settlement without the consent of the parties, however). 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). Accordingly, it is unlikely that the court will have a technical advisor participate in the proceedings in the first place when it is clear that the both parties are against it.
The court may have a technical advisor give an explanation on the technical matters in writing or orally. When a technical advisor submits the explanation in writing, that 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 judgment 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, with the consent of the parties, allow a technical advisor to put questions to witnesses, the parties, or the expert (Article 92–2 (2) of the Code of Civil Procedure). The answers to such questions by a witness, the parties, or the expert will constitute a part of the evidence and a basis for the judgment.
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 rise 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, which constitute 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 trials in Japan, where citizens selected as judges participate in trials, but not to civil cases. As such, product liability cases are decided without the involvement of a jury and 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 of 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 that other product, and the manufacturer and other relevant parties are not negligent with respect to the occurrence of the defect.
Furthermore, 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 has been successfully applied).
Other general defences, such as comparative negligence and extinguished prescription (time barring), 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 CPSA, the Road Trucking Vehicle Act, the FSA, the Pharmaceutical Affairs Act and the Building Standards Act. Since the purpose and objective of these regulations is only to establish minimum safety standards, and differ from the purpose and objective of the Product Liability Act, it is commonly understood that conformity or non-conformity with these regulations will be regarded as nothing more than one of the factors to be taken into account in product liability cases. Furthermore, with respect to voluntary regulations concerning the safety of products, it is also commonly understood that conformity or non-conformity with such regulations will similarly be regarded as merely one of the factors to be 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, at its own 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 the fees of any court-designated expert witnesses. Court costs do not include costs relating to party-appointed expert witnesses and such costs are borne by each party, although they may be recovered as part of damages.
Court costs do not include legal costs and these 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:
Furthermore, under the Attorney Act, no person may engage in the business of obtaining the rights of others by assignment and enforcing those 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 1 October 2016. It 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 a two-phased procedure. In the first phase, a special qualified consumer organisation files an action for a declaratory judgment on common obligations. This action seeks a declaratory judgment 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 an individual consumer has no grounds to claim a payment of money due to circumstances specific to that 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 (Simple Determination Proceedings) are carried out by the district court that rendered the final judgment at first instance for a declaratory judgment on common obligations. On 6 March 2020, the Tokyo District Court rendered a declaratory judgment that a defendant owed monetary obligations to a considerable number of consumers in the first lawsuits seeking a declaratory judgment on common obligations, which became final and biding. On 10 July 2020, the Tokyo District Court made an order of commencement of Simple Determination Proceedings. 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 its scope. For more details, see 2.2 Standing to Bring Product Liability Claims.
There have been no particularly significant product liability cases in Japan in the recent years.
The METI has been paying close attention to, and collecting information on, product recalls implemented in other jurisdictions. The METI has recently become more active in encouraging business operators to implement product recalls in Japan at the same time as, or closely co-ordinated with, those implemented in other jurisdictions. Business operators should realise afresh the importance of well-coordinated implementation of worldwide product recalls.
Internet of Things Devices
On 28 April 2021, the METI issued a guideline on how to ensure the safety of internet of things (IoT) devices such as electrical appliances and materials or gas equipment. This guideline was issued in response to the spread of IoT devices and the related increase in the risk of a product incident caused by a cyber-attack or due to inadequate security protocols.
The main points required by the guideline are as follows.
Electronic Filing and Abolition of Seal
On 17 February 2020, the METI newly commenced electronic filing for some procedures under 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 to promote operational efficiency. Covered procedures are:
It is expected that the commencement of electronic filing will reduce costs associated with the correction of paperwork and visits and inquiries from relevant authorities.
In addition, on 28 December 2021, the METI abolished provisions that require a seal in some application procedure forms under 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.
Pharmaceuticals and Medical Devices
Under the amended Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, which will come into effect on 1 August 2021, an administrative surcharge of an amount equivalent to 4.5% of the sales amount of pharmaceuticals, etc, shall be imposed on a person who advertises, describes or circulates false or exaggerated statements regarding the name, manufacturing process, efficacy and effects or performance of pharmaceuticals, etc.
Furthermore, under the amended Act, precautions and explanations for pharmaceuticals (excluding pharmaceuticals requiring guidance, and over-the-counter pharmaceuticals) shall be provided electronically.
On 15 January 2021, the AI Governance in Japan Ver. 1.0 INTERIM REPORT was disclosed by the Expert Group on Architecture for AI Principles to be Practiced. This interim report discusses the AI governance regime that would be ideal in Japan at the moment, taking the trends in AI governance in Japan and around the world into account.
In this report, AI governance is defined as “design and operation of technological, organizational, and social systems by stakeholders for the purpose of managing risks posed by the use of AI at levels acceptable to stakeholders and maximizing their positive impact.”
Japan has adopted seven principles in “Social Principles of Human-centric AI”, which was disclosed by the Integrated Innovation Strategy Promotion Council in March 2019:
From the perspective of balancing respect for these AI principles and the promotion of innovation, the interim report concerning AI governance aims to enforce AI governance mainly through soft law. In other words, the interim report suggests setting an intermediate rule such as a guideline, which is not operated in a legally binding manner like regulations.
However, in certain areas, such as the automotive and healthcare sectors, the interim report indicates that it is deemed desirable for the organisations responsible for the specific industry laws to be involved in rule-making, considering the existing regulatory regime and design philosophy rather than the perspective of the information technology.
Business operators that provide a market for transactions such as online shopping malls, internet auctions and online flea markets to other business operators and consumers (hereinafter referred to as "mall operators, etc"), are not subject to the regulations of the four laws related to product safety (listed in 3.3 Crisis Management/Situations/Business Disruption and Product Liability and Product Safety Laws) unless they are manufacturers, importers and retailers. However, with the expansion of the scale of e-commerce, both the number of violations of the four product safety laws by internet sales business operators and the proportion of serious product accidents caused by products purchased via the internet are increasing.
Therefore, in June 2020, the METI compiled a proposal on product safety in online transactions. This proposal describes efforts, co-operation and collaboration between the government and mall operators, etc to ensure the safety of products sold at online shopping malls, etc.
In response to the proposal, the METI issued requests to specific mall operators, etc to confirm the presence of labelling as stipulated in the four product safety laws and not to allow internet sales business operators to sell products without labelling, etc. Also, the METI has established a co-operative system with eight mall operators regarding product safety and response to suspected violations.
In addition, to deal with consumer troubles, such as the distribution of harmful products through internet transactions and the difficulty of resolving disputes due to the inability to identify distributors, the CAA is proceeding with the examination of a new bill regarding transactional digital platforms, where transactions are conducted between business operators and consumers (eg, online malls) regardless of the scale or subject of the transaction. Under the new bill, the transactional-digital-platform providers (such as mall operators, etc) are requested to take the necessary measures to prevent regulatory violations by sales-business operators and to remedy consumer damages. For example:
On 7 April 2020, the Japanese government declared a state of emergency for the COVID-19 pandemic.
In response to this, the METI decided that it would, in principle, refuse to receive in person notification under the four laws related to product safety:
The notifications under these laws must be submitted by mail, email or on the prescribed website. In addition, the METI does not accept face-to-face inquiries regarding product safety in principal. Therefore, it is recommended that the inquiries be made by e-mail or telephone.
Furthermore, following the declaration of the state of emergency issued by the government on 7 April 2020, some courts limited their services. However, although the Japanese government declared a third state of emergency on 23 April 2021, in principal, courts are operating as usual.
In addition, the Pharmaceuticals and Medical Devices Agency, which conducts scientific reviews of marketing authorisation applications for pharmaceuticals and medical devices, has started priority review for pharmaceuticals, medical devices, in-vitro diagnostics and regenerative medical products targeting COVID-19 infections and related symptoms.
Changes in Laws Concerning Product Liability
The Product Liability Law in Japan is a special law for the regulation of illegal acts under the Civil Code. Under the Product Liability Law, where a product defect causes damage to a person's life, body or property, the maker, etc, may be held liable for damages even if there is no negligence on their part.
Various administrative laws such as (i) the Act against Unjustifiable Premiums and Misleading Representations, and (ii) the Unfair Competition Prevention Act (in particular, regulations on misleading acts) have been enacted which cover the entire product. In addition, the Industrial Standardisation Act (targeting industrial products), the Act on Securing Quality, Efficacy and Safety of Products including Pharmaceuticals and Medical Devices (Pharmaceutical and Medical Devices Act), the Food Sanitation Act, the Electrical Appliances and Materials Safety Act, the Consumer Product Safety Act, and the Building Standards Act have been enacted to cover specific products.
These laws have recently been revised, as discussed below.
Amendment of the Product Liability Law in line with the revision of the Civil Code
On 26 May 2017, the Act on the Arrangement, etc, of Related Acts in Line with the Enforcement of the Act for Partial Revision of the Civil Code (Act No 45 of 2017) was enacted (it was proclaimed on June 2 of the same year), and a partial revision of the Product Liability Law came into effect on 1 April 2020.
While the statute of limitations for claims for damages based on tort under the former Civil Code was fixed at "[t]hree years since the victim discovered them", the statute of limitations for claims for damages based on the Product Liability Law due to the infringement of human life or bodily health was amended to "[f]ive years … since the victim discovered them".
Regarding the nature of the defeasance period, which is a lengthy period of ten years with respect to the right to claim damages under the Product Liability Law, it was interpreted under the old Civil Code as a period of exclusion where rights will be automatically extinguished with the passage of ten years. Under the new Civil Code, it is specified as a period of prescription whereby the occurrence of any claim, acknowledgement, attachment, provisional seizure, or provisional disposition would nullify the completion of ten years.
Revision of the Industrial Standardisation Law
In recent years, especially since 2017, there have been a series of large-scale quality data corruption cases involving falsification of product quality inspection results (Nissan, Kobe Steel, Subaru, Mitsubishi Materials, Toray, etc), and there have been a series of JIS mark certification cancellations. Therefore, as part of the revision of the Industrial Standardisation Law, the maximum fine for corporations that use JIS marks without certification was raised from JPY1 million to JPY100 million to ensure the reliability of business transactions using JIS marks. The revised law came into effect on 1 July 2019.
Amendment of the Act against Unjustifiable Premiums and Misleading Representations
The Act against Unjustifiable Premiums and Misleading Representations was amended to introduce a surcharge system, and came into effect on 1 April 2016. Prior to the introduction of the surcharge system, the Consumer Affairs Agency regulated business operators who made misleading representations by:
However, as profits often increased due to misleading representations and general consumers were unable to subsequently recover damages, a surcharge system was introduced for misleading representations of substance of goods or services (yuryo gonin hyoji) and misleading representations of advantageous terms.
The amount of the surcharge is calculated by multiplying the amount of sales, which is calculated using the method specified by the Cabinet Order, for goods or services pertaining to acts subject to the surcharge, with which transactions were carried out during the period subject to the surcharge by 3% (main clause of Article 8.1 of the Act against Unjustifiable Premiums and Misleading Representations). Recently, there have been cases where surcharges of more than JPY100 million have been imposed, and in cases where labelling related to e-cigarette discount campaigns has become a problem, surcharges of more than JPY500 million have been imposed.
Revision of the Pharmaceutical and Medical Devices Law
As for the Pharmaceutical and Medical Devices Act, a surcharge system was introduced for false or exaggerated advertising of pharmaceuticals, medical devices, etc, (Article 66 (1)) (Promulgation date: 4 December 2019, enforcement date: 1 August 2021). The purpose of introducing the surcharge system is to deter violations by collecting economic gains resulting from false and exaggerated advertisements and preventing violators from retaining them, thereby ensuring the effectiveness of regulations.
The actions covered by the surcharge payment order (Article 75 quinquies bis) are false or exaggerated advertising campaigns regarding the name, manufacturing method, efficacy, effect or performance of pharmaceuticals or medical devices (paragraph 1 of the said Article). In principle, the surcharge shall be an amount calculated by multiplying the sales amount of the products during the period of violation by 4.5% (same as above).
Recent Trends in Court Decisions Regarding the Product Liability Law
Under the Product Liability Law, unlike the usual tort requirements, the success of a claim is often determined by the presence or absence of a "defect" that infringes on the life, body or property of a person. Therefore, in many of the court cases, the existence of this "defect" has been disputed. The Supreme Court's decision of 12 April 2013, which was the only Supreme Court decision that made a substantive judgment on the Product Liability Law, also disputed the existence of "defect" concerning side effects of lung cancer drugs.
Even in recent court cases, the question of whether or not there is a "defect" is often disputed. For example, for some food products, the "defect" in the food has been contested, for example, because teeth were damaged by consuming the food product (Tokyo District Court’s decision of 20 March 2019 for the ice cream incident, Tokyo District Court’s decision of 12 April 2019 for the sandwiches incident, Tokyo District Court’s decision of 30 August 2019 for the rice crackers incident, etc). On the whole, there have been many food items for which "the defect" has been denied because it could not be said that they lacked the safety normally required for such food items, but there have been some food products for which the existence of a defect was admitted because of the absence of cautionary or warning signs, even if contamination with foreign substances was unavoidable. It is in line with the above Supreme Court judgment that the absence of an appropriate warning or warning sign regarding the use of a product can be treated as a defect.
In cases where issues other than the defectiveness of a product are at stake, the causal relationship between the damage and the defect (and the burden of allegation and proof involved in proving this) often becomes a point of contention. In a recent court case, the causal relationship between a defect in an outdoor air conditioning unit and a fire was disputed (Tokyo High Court’s decision of 27 February 2020). It was found that there was no need to prove the details of the scientific mechanism leading to ignition due to a defect or even to a fire. As long as there were short-circuit marks in the temperature sensor of the outdoor unit concerned, and while there were no other ignition sources, there were no circumstances to prevent the presumption that the outdoor unit was the cause of ignition. There was no evidence that the resident used the outdoor unit in an unusual manner, and a causal relationship between the defect and the fire was found.
According to reports, a lawsuit has been filed against Apple, alleging a fire and injury incident caused by a fire while an iPhone was charging. In this case as well, it is highly likely that causality as well as defect will be contested (there have been cases in which product liability has been recognised for thermal ignition of electronic devices and batteries).
Recent Trends in Quality Improprieties
Recent quality control scandals in Japan
In 2017, a series of incidents occurred in Japan, including:
In response, on 4 December 2017, the chairman of the Japan Business Federation (Keidanren) issued a statement calling on member companies to investigate irregularities and ensure strict compliance with laws and contracts. In March 2018, industry groups (Japan Aluminium Association, Japan Copper and Brass Association, Japan Rubber Industries Association, and Japan Chemical Fibres Association) formulated their own quality assurance guidelines, setting out overall quality assurance guidelines and separate guidelines for improving test reliability. However, a number of cases were subsequently disclosed, including falsification of inspection data on industrial lead-acid batteries, rewriting of measured fuel consumption and exhaust emissions of automobiles, poor quality of power transmission and distribution cables and communication cables, shipment of seismic isolation devices that did not conform to national standards, and improper inspection of automobile batteries.
In 2019, further issues arose:
In 2020–01, it was discovered that:
Enforcement by domestic and foreign authorities
In some cases of large-scale quality improprieties, corporations and individuals are prosecuted by the Public Prosecutor's Office and subjected to criminal punishment. In the case of quality improprieties at Kobe Steel, corporations were fined JPY100 million (2018) for violation of the Unfair Competition Prevention Act (misrepresentation), and in the case of Mitsubishi Materials, three subsidiaries were fined JPY110 million in total (2019).
In some cases, not only Japanese authorities, but also foreign authorities have imposed severe sanctions on companies that exported their products overseas. For example, in a plea bargain (Announced on 13 January 2017) with the US Department of Justice, Takata pleaded guilty to the crime of telegram racket (wire fraud) and paid USD1.025 billion in fines plus USD975 million to establish a restitution foundation. In the case of Kobe Steel, the US Department of Justice ordered the company to submit documents under a subpoena with penalty, and the company is conducting an investigation (no sanctions were imposed).
As described above, in recent cases of quality improprieties, a tendency for strict enforcement by domestic and foreign authorities has been witnessed.
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