Recognition and Enforcement of Foreign Judgments in Asia
Recognition and Enforcement of Foreign Judgments in Japan
Last updated: 1 December 2017
Reporter: Toshiyuki Kono, Professor, Faculty of Law, Kyushu University
A. LEGAL SOURCES FOR RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS IN JAPAN
Japan is a civil law country where statutes are the main source of law. Japan is not a signatory to any multilateral or bilateral treaty dealing with the recognition and enforcement of foreign judgments; thus the effect of foreign judgments in Japan is determined in accordance with the rules entrenched in the Code of Civil Procedure1 (CCP) and Civil Execution Act2 (CEA). Article 118 of the CCP and Article 24 of the CEA set out the general principles for the recognition and enforcement of foreign judgments in Japan. However, since those two statutes contain general rules on recognition and enforcement of foreign judgments, Japanese courts have developed extensive jurisprudence and procedures over time and, although court decisions are not granted official status as law in Japan, they do have strong precedential value.
This report focuses on the practice of Japanese courts in recognising and enforcing judgments rendered by the courts of countries in Asia in civil and commercial matters. It should be noted at the outset that there is no clear distinction between in personam and in rem judgments in Japanese law. Therefore, this report will begin by outlining the general principles of recognition of in personam judgments in Japan,3 highlight the main enforcement procedures of in personam judgments,4 and touch upon the peculiarities related to the recognition and enforcement of in rem judgments.5
B. RECOGNITION OF IN PERSONAM JUDGMENTS
In Japan, a foreign judgment will be recognised if it is final and satisfies all of the following four requirements set out in Article 118 of the CCP:
- the foreign court should have jurisdiction over the case based on Japanese law or a treaty to which Japan is a party;
- the process was duly served on the unsuccessful party, or the unsuccessful party voluntarily answered the complaint;
- the foreign judgment and the foreign court proceedings are not incompatible with public policy in Japan; and
- the foreign country would recognise a similar judgment rendered in Japan (reciprocity requirement).
These requirements are considered to strike the appropriate balance between the respect of foreign judgments, the interests of the Japanese party against whom the judgment is to be enforced, and the public policy interests of Japan.
i. Notion of final judgment of foreign court
The “judgment of a foreign court” means any judgment, decision, order or decree rendered by a foreign court in a dispute on private law matters.6 Judgments may be monetary7 or non-monetary8 and include summary judgments which have been issued in adversarial proceedings.9 Japanese courts also recognise court costs orders.10 Judgments issued in proceedings where the defendant failed to appear before the court,11 ie, default judgments, could also be recognised provided the Japanese courts consider that procedural fairness was satisfied by the rendering court.12 The Supreme Court of Japan has confirmed in its recent judgment that a permanent injunction order could be recognised.13 There is no reported case dealing with the recognition of an interlocutory judgment, however, this reporter considers it unlikely that an interlocutory judgment would be a judgment for these purposes.14 On the other hand, the notion of judgment does not encompass judgments in administrative or insolvency cases. Similarly, admissions or waivers of claims, judicial settlements, demands for payment or notarial deeds are not considered to fall under the notion of “judgment” and therefore cannot be recognised and enforced in Japan.
Only final and binding foreign judgments can be recognised and enforced in Japan.15 Finality means that a judgment can no longer be appealed in accordance with the normal procedures of the relevant foreign country. Although the CCP does not contain a definition of a “foreign court”, a foreign court is understood to be a judicial body of a foreign state which has jurisdiction to hear civil disputes, irrespective of how it is named in the respective foreign country.
According to the prevailing academic view and case law, provisional measures and preliminary judgments do not fall within the notion of a “judgment”. Therefore, Japanese courts will refuse to give effect to such measures.16 It is also questionable whether the Japanese courts would recognise a freezing order as an order in personam, since, in order to apply for kari-sashiosae order with freezing effects under Japanese law, the assets to be frozen must be specifically identified except movable goods.17
ii. Jurisdiction of rendering court
First, the question as to whether a foreign court has jurisdiction to render a judgment is determined under Japanese law or treaties that have been ratified by Japan. Until now, Japan has not entered into bilateral or multilateral treaties with any foreign nations in respect of the recognition and enforcement of foreign judgments. Therefore, the Japanese courts adhere to “*Jōri*”, ie, the general principles of reason, fairness between the parties and the need to facilitate swift adjudication of disputes. In the light of such considerations, Japanese courts have usually checked whether the rendering court had jurisdiction under the international jurisdiction rules from the Japanese viewpoint (the so-called “mirror-image” approach).18 Since there were no provisions in respect of international jurisdiction in the CCP, the Japanese courts referred to the provisions on domestic jurisdiction. The Japanese courts have concretely upheld international jurisdiction in situations where the foreign court's jurisdiction was based on the domicile of the defendant19 or the principal place of business of the defendant in the forum state,20 where the performance of a contractual obligation is in the forum state,21 where a tort occurred in the state of the rendering court,22 or where the parties have made a choice of court agreement in favour of that rendering court,23 as well as in cases where the defendant submitted to the jurisdiction by appearing in the proceedings in the rendering court.24
It should be noted that the above practice of the Japanese courts must be considered in the light of the recent amendment to the Code of Civil Procedure. In 2012, the Code of Civil Procedure was amended25 by adding a set of international jurisdiction rules which set out a list of grounds on which Japanese courts can assert jurisdiction in cases with a foreign element.26 The Supreme Court of Japan has recently clarified that these newly introduced provisions on international jurisdictions should, in principle, be thresholds to judge if the requirement of jurisdiction of foreign courts in Article 118(i) of the CCP could be satisfied.27 As a consequence, foreign judgments on matters which would fall under the scope of the exclusive jurisdiction28 of the Japanese courts, such as actions involving “the existence or absence or the validity of an intellectual property right ... that arises through a registration establishing ... if that registration was made in Japan”,29 could not be recognised in Japan.
Second, the Japanese courts have to verify whether the unsuccessful party has been served with the summons that is necessary to initiate court proceedings or whether the unsuccessful party has availed itself even without being served with the summons of an official order. In one of its landmark judgments, the Supreme Court of Japan held that service must be such that the defendant understood that legal proceedings were commenced against him and that the defendant's defence was not prevented.30 On several occasions, the lower instance courts have held that the service of complaints by post without attaching a Japanese translation is not valid under Article 118(ii) of the CCP.31 Service by public notice is not sufficient.32
Japan is a member of the Hague Service Convention33 which mandates service through diplomatic channels.34 The Supreme Court of Japan has held that if there is a treaty on judicial co-operation between Japan and the country of the rendering court, the service must fulfil the requirements of that treaty.35 In this regard, the Supreme Court of Japan held that direct delivery of service documents by a consignee privately hired by the plaintiff did not comply with the Hague Service Convention nor the Consular Convention between the UK and Japan,36 so that such service was not valid under Article 118(ii) of the CCP.37
Japan has not declared that it objects to service by post (which is permissible under Article 10(a) of the Hague Service Convention); however, Japan will only accept such service if it occurred as a matter of fact,38 but not as a new lawful service.39 Whether service by post would satisfy Article 118 of the CCP would need to be independently examined.
iv. Public policy
Article 118(iii) of the CCP requires that a foreign judgment whose recognition is sought must not be contrary to the public policy or good morals of Japan. The notion of public policy encompasses both the substance of the judgment as well as the litigation proceedings at the end of which that judgment is made.40 It is well-settled law that foreign in personam judgments that require the unsuccessful party to pay punitive damages in addition to compensatory damages and costs are against the public policy of Japan and cannot be recognised in Japan in respect of the punitive portion.41 The recognition and execution of a foreign judgment ordering a payment of gambling debts might be problematic as it could be seen as being contrary to Japanese substantive public policy.42
Procedural public policy would be deemed as being undermined and would thereby prevent the recognition and enforcement of a foreign judgment which was obtained by fraudulent means (eg, falsification of deeds or certificates)43 or if there had been other procedural defects, where the tribunal was acting in an unfair manner,44 where principles of due process have been violated, or where the defendant was not given timely notice about important procedural matters.
In one case, the Osaka District Court refused to recognise a US judgment because there was a conflicting final Japanese judgment between the same parties on the same cause of action.45
There is no precedent as to which judgment would be recognised if there were two conflicting foreign judgments between the same parties and on the same subject matter before the Japanese court.46
Fourth, a judgment may only be recognised and enforced in Japan if the reciprocity requirement is satisfied. Japanese courts have generally been generous in finding reciprocity between Japan and foreign nations whose court judgments are to be recognised. The Supreme Court of Japan held that reciprocity exists if the conditions for the recognition of a similar type of Japanese judgment in that foreign country are not substantially different from the conditions set out in Article 118 of the CCP.47 Japanese courts have recognised judgments rendered by courts of Australia,48 Hong Kong,49 and Singapore.50 However, Japanese courts do not recognise judgments rendered by courts of the People's Republic of China.51
C. ENFORCEMENT OF IN PERSONAM JUDGMENTS
i. General principles of enforcing a foreign judgment in Japan
In order to enforce a foreign judgment in Japan, the successful party must file a suit in the court in Japan to obtain an enforcement judgment.52 In principle, such proceedings must be instituted in the court which has jurisdiction over the unsuccessful party. In cases where it is not possible to determine the residence of the judgment-debtor, an action for recognition and enforcement must be instituted in the district of the location of the subject matter of the claim or the property to be seised.53
The court which is petitioned for the recognition and enforcement of the foreign judgment will consider whether the conditions for recognition provided in Article 118 of the CCP are met and whether the judgment can be enforced in Japan.54 If those conditions for recognition and enforcement are satisfied, the recognising court will issue an enforcement judgment (shikkō hanketsu). The enforcement judgment serves as a title of debt which is necessary to institute enforcement proceedings in Japan.
Japanese law does not include any statutory limitations for the enforcement of foreign judgments. However, pursuant to Articles 157(2) and 174-2 of the Civil Code,55 the rights established by a judgment of a Japanese court are subject to a ten-year limitation period which commences from the time the judgment becomes final and binding. Accordingly, the recognition and enforcement of a foreign judgment which became final more than ten years prior to the commencement of the enforcement proceedings might be refused on the grounds of public policy.56
As a matter of principle, in deciding the questions of recognition and enforcement, Japanese courts will not review the merits of the case,57 nor would Japanese courts check whether the foreign law was correctly applied. The Tokyo District Court once recognised a judgment rendered by a foreign court, stating that to examine whether the rendering court applied the law which would have had to be applied in accordance with conflict of laws of Japan would violate this principle.58
ii. Possible defences by defendant
The defendant may raise challenges related to the conditions set out in Article 118 of the CCP, either in the enforcement proceedings if enforcement is necessary, or directly concerning judgments which do not need enforcement.59
The defendant may not raise merit-based defences concerning his liability or the scope of the award of the foreign court's judgment. On the other hand, the defendant may raise defences and challenge the recognition and enforcement of a foreign judgment if the claim has lapsed, become extinct, was discharged or was otherwise revised. Theoretically, a party against whom a judgment has been issued in a foreign court could institute proceedings before the Japanese courts seeking negative declaratory judgment in order to prevent the enforcement of such foreign judgment, as long as lis alibi pendens60 is not institutionalised in Japanese law.61
D. RECOGNITION AND ENFORCEMENT OF IN REM JUDGMENTS
As mentioned at the outset of this report, Japanese law does not contain a distinction between in personam and in rem judgments. However, as a matter of principle, Japanese courts are able to recognise only in personam judgments. In rem judgments cannot be recognised and enforced in Japan because in rem judgments usually concern the ownership of an object or asset and are supposed to have effects vis-à-vis the rest of the world.62 Public policy and sovereignty considerations usually mean that such matters are subject to the exclusive jurisdiction of the courts where such objects are located. This is also the case in Japanese law.63 If the foreign judgment deals with a matter which falls within the exclusive jurisdiction of the Japanese courts, it will be refused enforcement.64
ABLI's other Jurisdictional Guides
See ABLI's Jurisdictional Guides for other Asian jurisdictions.