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Litigation

Procedure

What is the procedure for filing a product liability claim before the courts in your jurisdiction?

A plaintiff submits a written statement of claim to a court to commence civil proceedings. The court reviews the description made therein and serves on the defendant a copy thereof and a writ of summons specifying the date of the first hearing. Service is performed under the court’s authority. Service via courier or direct delivery by a plaintiff is not valid (Article 98 of the Code of Civil Procedure). Usually, a post office clerk instructed by a court delivers documents to a representative or employee of the defendant company. Service outside of Japan is commissioned by the court and conducted by the competent foreign government agency, Japanese ambassador or consul (Article 108).

Interlocutory motions

Can the court issue interlocutory orders or judgments in product liability cases? If so, what rules and procedures apply?

Significant powers to conduct proceedings are vested in the courts and judges may decide to close proceedings and enter a judgment at any time. Unless the matter is straightforward, various procedures are available under the Code of Civil Procedure designed to facilitate pre-trial arrangements (eg, preliminary proceedings, preparatory proceedings for oral argument and preparatory proceedings by document, such as briefs).

Pre-trial disclosure

What pre-trial disclosure/discovery mechanisms are available in product liability cases, if any?

Under Japanese law, there are no disclosure obligations or extensive discovery processes. Documents submitted as evidence are typically collected by the parties through their own efforts. In a product liability case, if a manufacturer is not cooperating, critical evidence may be concealed from the plaintiff, which is both relevant and admissible, including

  • notice to the manufacturer of the existence of a defect in its products;
  • causation;
  • the existence of a defect; and
  • the feasibility of safer alternate designs.

However, it is possible to petition a court to issue an order to submit documents after an action has commenced by providing valid reasons to compel the counterparty or third party keeping certain documents listed in Article 220 of the Code of Civil Procedure in its possession to submit them. The party filing a motion must, if possible, indicate:

  • the document;
  • the identity of the person holding the document;
  • the document’s significance; and
  • what must be proven in respect of the document and why it is necessary. 

The obligation has been recognised in a number of situations, although there are exceptions.

Before filing an action, if the plaintiff has given advance notice of the filing to the defendant, the plaintiff or recipient of the notice may, within four months of the date of the notice, make inquiries to the other party on matters necessary to substantiate its allegations or collect evidence (Article 132-2 of the Code of Civil Procedure). In addition, the court may order the submission of documents and the commissioning of examinations when a motion is filed by a party and it is difficult for that party to collect documentary evidence that would be necessary to prove its case (Article 132-4).

Evidence standards

What evidence is accepted to support claims in product liability cases? What formalities apply to evidence submission?

There are no strict rules to exclude evidence. In principle, there are no restrictions to admissibility in evidence. Any person or item, including hearsay evidence and expert opinions, can be called or submitted as evidence. Judges can determine whether evidence is admissible at their own discretion. In a product liability case, the defective product is key to proving the plaintiff’s case. Sometimes a defective product is destroyed through its malfunction, but the plaintiff often relies on the use of circumstantial rather than direct evidence to prove the defect.

Expert evidence

Under what circumstances will the court appoint an expert to assist it in examining the merits of the case? What rules and procedures apply?

The court may order the appointment of expert witnesses. Under the expert commissioner system (Article 92-2 of the Code of Civil Procedure), expert commissioners can be appointed to support judges and provide support in:

  • arranging the contested issues;
  • taking charge of and assisting in reconciliation;
  • conducting research and providing opinions on issues requiring specialised knowledge; and
  • participating in the examination of evidence in their own specialised field.

Can the parties rely on expert witness testimony to support their claims? If so, what rules and procedures apply?

In principle, there are no restrictions to admissibility in evidence. Any person or item, including hearsay evidence and expert opinions, can be called or submitted as evidence, and judges can determine whether evidence is admissible at their own discretion. Evidence that violates confession agreements between the parties or agreements restricting methods of evidence gathering are inadmissible. The examination of witnesses is performed in an open court after the parties have filed petitions with the court and after the court has designated the witnesses to be admitted and summoned them to be examined on the examination date (Articles 180 and 181 of the Code of Civil Procedure). Written witness statements are often exchanged instead of direct oral examination at the hearing.

Class actions

Are class actions or any other collective proceedings available for product liability claims in your jurisdiction? If so, what is the procedure for their formation and what benefits do they afford claimants? Are class actions formed on an opt-in or an opt-out basis?

There are no US-style class actions in Japan. The Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage Suffered by Consumers (96/2013) introduced a system which provides for a two-tier opt-in procedure. During the first stage, a qualified consumer organisation files a lawsuit requesting the court to confirm the liability of a business operator for a common obligation arising under a consumer contract on behalf of potential consumer claimants. If the action is confirmed, the quantum of damages will be determined based on individual claims filed by consumers having elected to opt in. However, claims cover only those situations arising from consumer contracts and to certain categories of property damage, including claims for performance based on:

  • contractual obligations;
  • unjust enrichment;
  • breach of contract;
  • warranty against defects; and
  • damages arising out of unlawful acts.

Damage to property other than the subject matter of the consumer contract, lost profits, personal injury and pain and suffering are expressly excluded by the act. 

There is also a so-called ‘appointed party’ mechanism under Article 30 of the Code of Civil Procedure, which allows certain plaintiffs (or defendants) appointed by other claimants (or defendants) to act on their behalf in pursuing (or defending) civil actions when enough claimants or defendants share a common interest (ie, the main allegations or defences). The appointed party can pursue the case on their behalf and the result will be binding on them, including a settlement.

Appeals

What rules and procedures govern appeals of court decisions?

kouso appeal can be filed with the appellate court against a final judgment rendered in trial by a first-instance court. In principle, it is possible to appeal judgments twice. The first appeal is for the ex post facto review of judgments entered by the first-instance courts. Whether claims made there are right is not directly reviewed. The parties may introduce new evidence or arguments. The appellate court (generally the High Court in a product liability case) may conduct its own fact finding within the scope of the complaint based on lower court materials or those submitted to the appellate court. A joukoku appeal against the final judgment rendered by a lower court (against kouso judgments rendered by a district court or the High Court) lies with the Supreme Court (or the High Court) as a second appeal. It is permitted only for a limited number of reasons, excluding questions of fact.

Statute of limitations

What is the statute of limitations for filing product liability claims?

Under the Product Liability Act, the right to seek damages based on product liability is extinguished by prescription if:

  • the victim or his or her legal representatives do not exercise such a right within three years from the date on which he or she became aware of the damage and identify the party liable for the damages (the responsible manufacturer); or
  • 10 years have elapsed since the delivery of the product by the manufacturer.

In the event that damage or injuries are caused by substances which become harmful to human health after accumulating in the body, or where the symptoms linked to damage or injury do not appear immediately, claims become time barred after 10 years of the occurrence of the damage.

Claims brought under Article 709 of the Civil Code follow a similar prescription pattern of three and 20 years, respectively. Under Article 724, the right to demand compensation for damages in tort is extinguished if it is not exercised by the victim or his or her legal representative within three years  from the time when he or she became aware of the damage and identified the perpetrator. The same applies if 20 years have elapsed after the tort has been committed.

Under Article 166 of the Civil Code, the extinctive prescription for contract claims starts running when the right can be exercised.  Generally, contract claims must be brought within 10 years, but this can vary with the identity of the parties and the nature of the contract.

The rights to claim damages based on liability for fault and liability for defects expire under the applicable statute of limitations if they are not exercised within 10 years (Article 167). If the seller is a merchant, the right to demand compensation for breach of contract expires if it is not exercised within five years.

Unless otherwise provided in the Commercial Code, claims arising from a commercial transaction will expire if they are not brought within five years. However, in the event that a prescription period shorter than five years is provided in other laws and regulations, these provisions will prevail (Article 522).

With respect to latent defects, unless the sale and purchase contract provides otherwise, the buyer must make a claim within one year from the time it becomes aware of the defect (Articles 570 and 566 of the Civil Code). This does not apply where the buyer had knowledge of the defect or had no knowledge of the defect due to gross negligence. In a transaction between business operators, the buyer may not bring a claim against the seller for a defect that is not immediately obvious unless it gives notice of the defect to the seller within six months of receipt of the goods. The buyer may not pursue remedies against the seller for other defects unless the buyer notifies the seller of the defect immediately after receiving the goods (Article 526-2 of the Commercial Code).

Notwithstanding the above rules, a court may still decide to set aside the statute of limitations in cases of fraud or concealment of evidence.

Timeframe

What is the typical duration of proceedings in product liability cases?

One objective of the 1996 Code of Civil Procedure was to speed up trials. Under the Law Concerning the Speeding Up of Trials enacted in 2003, proceedings must be closed within two years of their commencement. First-instance proceedings can last eight months on average, but complex cases can take longer. Generally, the courts schedule the initial hearing within one to one-and-a-half months after the plaintiff has submitted a statement of claims and require the defendant to submit an answer about a week before the hearing.

Costs, fees and funding

Can the successful party to the litigation recover court and attorneys’ fees and any other related expenses from the losing party? If so, what rules and procedures apply?

Court costs are generally borne by the losing party if they consist of:

  • court filing fees;
  • costs associated with service of process;
  • documentary fees;
  • costs incurred for the examination of evidence;
  • accommodation and travel expenses; and
  • daily allowances paid to witnesses and interpreters and the remuneration of experts under the Law on Costs of Civil Procedure (40/1971).

Court costs do not include legal fees which are borne by each party respectively in the absence of an attorneys’ fees clause. Apart from these costs, the rule is that litigation costs are borne by the party incurring them. In the context of tort claims, the court may award a small part of the prevailing party’s attorneys’ fees as part of the damages when there is a reasonable nexus between tort and fees. The allocation of court costs is ordered as part of the court’s decision.

What rules and restrictions (if any) govern contingency fee arrangements?

Attorneys’ fees may be freely agreed on between attorneys and clients, while lawyers can charge part of their fees on a contingency basis. Many firms continue to determine their fees based on a combination of retainer fees and success fees listed in the now repealed legal fee table of the Japanese Federation of Bar Associations.

Is third-party litigation funding permitted in your jurisdiction? If so, do any rules or restrictions apply?

Third-party funding is not yet common in Japanese litigation practice. Its lawfulness is still a moot point, although not prohibited per se. The assignment of claims or causes of action is generally permitted but the entrustment of a claim for litigation purposes is prohibited under the Trust Law (108/2006). Third-party funding could still be regarded as a criminal act under the Lawyers’ Law, which prohibits any person who is not an attorney from engaging in legal business (including lawsuits, arbitration and conciliation) and from acting as an intermediary in such matters (ie, referring cases to attorneys to obtain compensation for their business activities).

Is legal aid (ie, public funding) available to claimants in product liability cases? If so, what rules, restrictions and procedures apply?

The Japan Legal Support Centre provides civil legal aid services including free legal consultations and loans for attorneys' fees for people who require the assistance of legal experts but who, for economic reasons, are unable to pay for attorneys’ fees and court costs. Criminal matters are excluded from the scheme. 

The government operates special compensation schemes for pharmaceuticals and products deemed to have specific risks. One scheme compensates victims of inoculations. An industry-funded scheme provides compensation covering the medical and funeral expenses of individuals and their families in the event of illness, disability or death caused by side effects. 

Another scheme is the safe goods mark (known as the ‘SG mark’) administered by the Consumer Product Safety Association under the Consumer Product Safety Act. The association prescribes stringent safety standards covering products that could be dangerous and cause injuries or death and only products complying with its safety requirements can bear the mark. The consumer compensation scheme operates for the benefit of persons injured by these products.

Settlement

What rules and procedures govern the settlement of product liability cases?

Settlements can be made before or outside the courts. There are no specific requirements on content or procedures. Settlements before the courts have the same claim preclusive effect as judgments.

How common are settlements in product liability cases?

Settlements in product liability cases are very common.

Alternative dispute resolution

Are any alternative dispute resolution (ADR) methods required or advised before or in lieu of proceeding with litigation?

Japanese people typically prefer amicable settlements through negotiation over court litigation. Even then, a negotiated settlement (wakai) can be made at any time before or during court proceedings. Alternative dispute resolution (ADR) is available on a voluntary basis in the form of civil mediation under the Law Concerning the Promotion of the Use of Alternative Dispute Resolution Procedures (151/2004). If the parties can reach an agreement before the court proceedings, this agreement is put on record by the court and becomes enforceable in the same manner as a final judgment. Civil mediation procedures are simple and cost-effective and proceedings are confidential.  

Civil litigants can also agree to refer their dispute to civil conciliation (chotei) under the Civil Conciliation Law (222/1951), conducted by a conciliation committee composed of one judge and two or more civil conciliation commissioners appointed from among knowledgeable and experienced citizens. The committee assists the parties in finding an amicable settlement. Any agreement is put on record by the court with the same effect as a judgment. Failing an agreement, the plaintiff must file a suit before the ordinary courts to pursue their claims. Arbitration (chusai) is available.

A number of product-specific trade associations have established permanent dispute resolution organisations, including:

  • the Federation of Pharmaceutical Manufacturers Associations of Japan;
  • the Japan Chemical Industry Association;
  • the Association for Electric Home Appliances;
  • the Japan Automobile Manufacturers Association Inc;
  • the Centre for Housing Renovation and Dispute Settlement Support;
  • the Consumer Product Safety Association;
  • the Japan General Merchandise Promotion Centre;
  • the Japan Cosmetic Industry Association; and
  • the Japan Construction Material and Housing Equipment Industries Federation.

The National Consumer Affairs Center of Japan manages an ADR system and deals with product liability matters.

How commonly is ADR used in relation to product liability cases in your jurisdiction?

ADR used in relation to product liability is not particularly common. The main avenues are court litigation and amicable settlement through negotiations. 

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