International Jurisdiction

International Jurisdiction

The Code of Civil Procedure provides provisions on international jurisdiction. It is common practice when conducting international transactions to include a provision regarding which country’s courts should resolve disputes. As a prerequisite to this, it is important to understand what the Japanese Code of Civil Procedure stipulates as to which country’s court a lawsuit may be filed. The following is an overview. If no specific law is cited, it is the Code of Civil Procedure.

Jurisdiction arising from the domicile of the defendant

With respect to a lawsuit against a person, jurisdiction is recognized by a court in Japan if (1) the person’s domicile is in Japan, (2) if the applicant does not have an address or when his/her address is unknown, his/her residence (temporary place of residence) is in Japan, or (3) if the person has no domicile or if the person has an address in Japan before the lawsuit is filed if the person has no domicile or if the person has no address in Japan. (Article 3-3, Paragraph 1).

Jurisdiction over Juridical Persons

In the case of a juridical person, a Japanese court shall have jurisdiction (Article 3-2, Paragraph 3) (i) if its principal office or business office is located in Japan, or (ii) if it has no office or business office or if its whereabouts are unknown, if the address of its representative or other person in charge of its principal business is in Japan.

Jurisdiction over Actions Relating to Business

An action against a person who has a business office or place of business in Japan, if the action relates to the business of the office or place of business, may be filed in Japan (Article 3-3, Item 4). In addition, an action against a person who conducts business in Japan may be filed in Japan if the action relates to the person’s business in Japan (Article 3-3, Item 5).

Jurisdiction over contract actions

If the place of performance of the obligation is in Japan, the action may be brought in Japan. Also, if the place of performance is in Japan according to the law selected in the contract, an action may be brought in Japan (Article 3-3, Item 1).

Jurisdiction over Consumer Contracts

An action from a consumer against a business can be filed with a Japanese court if the consumer’s address is in Japan when the action is filed or if the consumer’s address is in Japan when the contract is concluded (Article 3-4, Paragraph 1). On the other hand, with respect to an action from a business to a consumer in Japan, the defendant’s domicile rule applies, and in principle, the action must be filed in the court of the defendant’s domicile (Article 3-2).

Jurisdiction over Labor Contracts

When a worker sues his/her employer, he/she may file a lawsuit in a Japanese court if the place of labor provision is in Japan (Article 3-4, Paragraph 2). In cases where the place of labor provision has not been determined, such as immediately after hiring, the lawsuit can be filed in a Japanese court if the place of business where the worker was hired is in Japan (Article 3-4, Paragraph 2). In contrast, with regard to an action from an employer against a worker in Japan, the rule of domicile of defendant applies, and in principle, the action must be filed in a Japanese court in the domicile of the defendant (Article 3-2 of the Civil Procedure Code).

Location of Property

When the subject matter of the claim is located in Japan, jurisdiction is recognized in Japan (Article 3-3, Item 3).
In the case of an action on property right, where the claim is for payment of money, jurisdiction is recognized in Japan if the property that can be seized is located in Japan (Article 3-3, item (iii)). Regarding real estate, if the real estate is located in Japan, the lawsuit can be filed in Japan (Article 3-3, Item 11).

Tort

Japanese courts have jurisdiction when the place of the tortious act is in Japan (Article 3-3, Item 8). However, if the tortious act was committed in a foreign country and only the result of the tortious act occurred in Japan, Japanese jurisdiction will not be recognized if it is not ordinarily foreseeable (Article 3-3, Item 8).

Agreement of Jurisdiction (Consent Jurisdiction)

Generally, the Code of Civil Procedure recognizes the validity of an agreement on jurisdiction (Article 3-7, Paragraph 1). However, an agreement that grants exclusive jurisdiction to a foreign court that cannot exercise jurisdiction is considered invalid (Article 3-7, Paragraph 4). For example, if the judicial system of a foreign country is not functioning due to war or other reasons, an agreement that a lawsuit can only be filed in that foreign country is invalid.

Exclusive Jurisdiction

Other than an agreement of exclusive jurisdiction, there is a possibility that the action may be dismissed due to special circumstances (Article 3-9), by jurisdictional agreement, in order to ensure that jurisdiction is always recognized in Japan, it is necessary to make the agreement exclusive (an agreement to the effect that the action may be brought only in a Japanese court). The following special provisions apply to consumer contract disputes and labor contract disputes arising in the future, and unless these requirements are met, exclusive jurisdiction will not be recognized.

Special Provisions for Disputes Concerning Consumer Contracts (Article 3-7, Paragraph 5)

Unless one of the following requirements is met, the agreement is considered invalid.
(1) When the entrepreneur and the consumer agree that the consumer may sue in the court of the country where the consumer has his/her domicile at the time of conclusion of the consumer contract. However, this agreement is considered as an additional agreement even if it is an exclusive agreement (item 1).
(2) When the consumer has filed a lawsuit to a court in the agreed country based on the agreement on international jurisdiction, or when the business operator has filed a lawsuit and the consumer has availed himself of the agreement on international jurisdiction (item 2).

Special provisions for disputes concerning labor relations

Unless one of the following requirements is met, the agreement is considered invalid.
(1) When the agreement is made at the time of termination of the labor contract and the parties agree that the action may be brought before the court of the country where the labor is provided at that time. However, this agreement is considered as an additional agreement even if it is an exclusive agreement (item 1).
(2) When the worker has filed a lawsuit to a court in the agreed country based on the agreement on international jurisdiction, or when the employer has filed a lawsuit and the worker has availed himself of the agreement on international jurisdiction (item 2).

Dismissal of Action by Reason of Special Circumstances

Even in cases where jurisdiction is recognized in Japan, an action may be dismissed if, in consideration of the nature of the case, the extent of the burden on the defendant from responding to the suit, the location of evidence, or other circumstances, the equitable interests of the parties would be prejudiced or the realization of a proper and speedy trial would be hindered (Article 3-9). However, in the case of exclusive consensual jurisdiction, the action will not be dismissed.

Priority of Causes of Jurisdiction

Finally, in the event that more than one cause of jurisdiction is recognized, the superiority of the causes of jurisdiction will take precedence over the causes of jurisdiction recognized by law in the event of an exclusive agreement (except those that give rise to exclusive jurisdiction by law, which will be governed by the law of the state). (Article 3-10)). As for any cause of jurisdiction or agreement on jurisdiction that is not exclusive by law, there is no relation of priority, and if jurisdiction is recognized in Japan by either, the action may be filed in a Japanese court.

Determination of Governing Law by the General Rules

The question of which country’s law applies (governing law) is determined by the “Act on the General Rules for the Application of Laws” (the “General Rules Act”).