Japan: Legal environment

In this page: Business Contract | Intellectual Property | Legal Framework of Business | International Dispute Resolution

Business Contract

General Observation: You must state precisely in the contract the obligations of the vendor and the methods of quality control.
Law Applicable to the Contract: You must be particularly vigilant about the law applicable to the contract and the methods of conflict resolution. Indeed, Japan is not a signatory to the Vienna Convention on International Contracts. Click here to see the list of signatory countries.
The Japanese legal system is not easy for a foreigner to understand so you are advised to choose international law or a system of settlement by arbitration.
The laws and courts of America, England and Switzerland provide fair justice and are understandable in English, which is likely to be accepted by your Japanese supplier.
Advisable Incoterms: Choose FOB or CIF, or more. Avoid EXW if you do not want to be involved in organizing domestic transport in Japan, as this is quite a complex operation.
Language of Domestic Contract: Japanese, English
Other Laws Which Can Be Used in Domestic Contracts: The laws and courts of America, England and Switzerland provide fair justice and are understandable in English, and are likely to be accepted by your Japanese supplier.

Intellectual Property

National Organisations: Japan Patent Organisation (JPO)
Japan Patent Information Organisation (JAPIO).
Regional Organisations: Intellectual Property Rights Experts Group (IPEG), intellectual property resource of each member economy of the APEC community
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Patent Law of 1999	20 years, renewable	Patent Cooperation Treaty (PCT)
Trademark The Trademarks Law of 1997 is the basis of trademark protection, but the Unfair Competition Prevention Law enforced by the METI provides additional protection.	10 years, renewable every 10 years	Trademark Law Treaty Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design Design Law of 1997	15 years
Copyright Copyright Law of 2006		Berne convention For the Protection of Literary and Artistic Works Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations WIPO Copyright Treaty WIPO Performances and Phonograms Treaty
Industrial Models Utility Model Law of 1997	10 years

Legal Framework of Business

Equity of Judgments

Equal Treatment of Nationals and Foreigners: While there is no legal basis for discrimination against foreigners in the Japanese legal system, not being able to speak Japanese may lead to a lack of equity.
The Language of Justice: Japanese
Recourse to an Interpreter: There are no guidelines to ensure effective communication between judges, lawyers and non Japanese-speaking defendants. No standard licensing or qualification system exists for court interpreters and trials proceed even if no translation or interpretation is provided for the accused.
Legal Similarities: The system is modeled on European systems with Anglo-American influences.

The Different Legal Codes

The Constitution of Japan (Nippon-koku-kenpo, 1946)	Foundation of the State, rights of individuals, right of possession
The Civil Code (Minpo, 1896)	Contract law, right of possession
The Code of Civil Procedure (Minji-sosho-ho, 1996)	Company law
The Criminal Code (Keiho, 1907, revised in 2004)	Criminal law
The Code of Criminal Procedure (Keiji-sosho-ho, 1948)	Criminal procedures
Companies Act (2005) which replaces the former Commercial Code (Shoho, 1899)	Corporate status, rights of managers, commercial agents’ rights, etc.

Checking National Laws Online: Japan (Lexadin, the World Law Guide)
Other Useful Resources: Library of Congress
Country Guides: Practical Law Company, Guide to doing business in Japan: legal system

The Jurisdictions

The Supreme Court	Final appellate court (second appeal, named “Jokoku” in Japanese) To access the website of the Supreme Court and get further information about the organization of the Japanese legal system, click here.
8 High courts	Territorial jurisdiction of the eight major cities in Japan Intermediate appellate courts (first appeal, named “Koso” in Japanese)
2 Intellectual Property High courts	Special branches of the Tokyo and Osaka High Courts. Handles only cases relating to intellectual property in first instance and appeals (only in Tokyo) against decisions made by district courts or by the Japan Patent Office. To access the website of the Intellectual Property High Court of Tokyo, click here.
50 District courts	Territorial jurisdiction First instance (exercising general jurisdiction over all actions, criminal, civil) and appellate jurisdiction over the decision of the Summary courts. Between one and three judges depending on the cases
438 Summary courts	First instance over civil cases involving claims for amounts not exceeding 1,400,000 yen and criminal cases for offences punishable by fines or lighter punishment and other offences, such as habitual gambling and embezzlement. The summary court cannot impose imprisonment or graver punishment as a general rule. When the summary court deems it appropriate to impose a punishment exceeding the limit, it must transfer the case to the district court. Single judge court
77 Family courts	First instance, dealing comprehensively with domestic relations cases and juvenile delinquency cases

Court Officials

Practicing attorneys: They are registered with a regional bar association affiliated to the Japan Federation of Bar Associations.
Attorneys at law (bengoshi) are distinguished from attorneys at foreign law (gaiben) who are lawyers from foreign countries licensed to practice law in Japan.
Gaiben can only give advice pertaining to the law of their home jurisdiction. They are generally involved in intermediating between foreign clients and Japanese lawyers, intermediating between foreign and Japanese clients, or assisting Japanese clients with foreign legal matters. For further information, visit the web pages of the Ministry of Justice devoted to Gaiben.
Some attorneys, called Benrishi, are specialized in the field of intellectual property. Click here to find a list of specialized practices.
Lower court judges: Career public servants appointed for a renewable ten-year term
Public prosecutors: Public servants who serve until retirement

International Dispute Resolution

Arbitration: Recognized under Japanese law as a legitimate method for settling disputes, used specifically in the field of international transactions
Arbitration Law: Law N°138 of 2003, modeled on the UNICITRAL Model law on international Commercial Arbitration
Conformity to International Commercial Arbitration Rules: Party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Party to the Geneva Protocol on Arbitration Clauses.
Party to the Geneva Convention of the Execution of Foreign Arbitral Awards.
Appointment of Arbitrators: Free determination of the number (minimum three) and the method of appointment by the parties.
Arbitration Procedure: After hearing the parties, the arbitrator makes an award.
No appeal is allowed against an award except if it has been made on false evidence. In this case, it can be annulled by the law.
Permanent Arbitration Bodies: Japan Shipping Exchange (Sectors Covered: Maritime disputes)
Japan Commercial Arbitration Association (Sectors Covered: International transactions)
National Committee of the International Chamber of commerce ( ICC) (Sectors Covered: International transactions)
Japan Intellectual Property Arbitration Center (Sectors Covered: Disputes involving intellectual property and resolution procedures for “.jp” domain names)

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