Legal complications in Japan

view of downtown Tokyo

We spent several hours with a group of Western lawyers in Tokyo yesterday, learning how the legal system works and the complexities of being a non-Japanese lawyer in Japan.

Basically, non-Japanese lawyers can only advise on foreign laws, not argue cases in Japanese courts.  Western firms could not hire Japanese lawyers until about a decade ago when they were allowed to form joint ventures with Japanese firms.  But, they still had to bill clients separately, have separate letterheads and other nuisances.  Now, Western firms are allowed to form joint ventures which enable them to employ Japanese attorneys, use their own names, with a Japanese addition tacked on to the end, bill jointly and practice Japanese (Japanese lawyers only) and foreign law.

Foreign lawyers must have practiced in their home jurisdictions for at least 3 years before they can be registered in Japan.  They can't become partners without being registered.  There are quite a few lawyers who have lived in Japan their entire lives so have not practiced in their "home" jurisdictions and therefore cannot really practice law or become partners.  They act as advisors to registered lawyers.  But, they can't really attend meetings with clients.  A bit of a problem.  To get registered requires a lot of time (8 or 9 months) and paperwork.  Plus, if you're a foreign lawyer, you pay a monthly fee of about $600 for the privilege of being registered.

Only a Japanese qualified attorney can advise on Japanese law or argue in court.  Japan is a civil law country, not a common law country, so precedent carries no weight.  The legal code is based on German law, but has morphed over the years to be unique to Japan.

Disputes involving arbitration are usually resolved in Singapore, particularly if the dispute is with a company from a country with a weak legal system.  Japanese companies hate litigation.  Their preference is to sit down and work out a dispute.  Their contracts, if they have them at all, are very short--only a few pages--compared to the massive documents that American firms require to do a deal.  Japanese firms don't care about contracts because they believe they can and should resolve disputes among the participants, not in court.

Court cases are very short, usually only a few hours.  Jury trials are uncommon and have only been used for the last few years in civil cases.

Japanese companies are weak negotiators regarding the choice of law that will govern any lawsuit or arbitration.  There is no discovery in a lawsuit--you really have to know what documents an adversary has that you might want in order to request them.  Judges tend to grill witnesses in court.  Most arguments are made via documents, not oral arguments.  And, there is no easy way to prove your case since you don't have depositions or documents you don't know about. 

The vast majority of Japanese companies act in good faith.  If you just go talk to them about a problem, they will generally respond reasonably.  They value good relationships and resolving disputes informally.

Becoming a lawyer in Japan is difficult.  It's more prestigious to work in a private law firm than be an inside counsel to a company.  But, being a judge is most prestigious.  Judges aren't selected from the ranks of practicing lawyers.  Becoming a judge is a separate track in law school.  Judges get rotated every three years and can be moved long distances, obviously a hardship for their families.  Being a judge is a big status job, but not a "big pay" job.  Usually panels of judges hear cases.

There is a specific appellate court for intellectual property.  Cases go there from either the district court or the Patent Office.  Judges don't grant preliminary injunctions lightly--it usually takes 8 or 9 months to get one, by which time a lot of damage can be done to a company's IP.  Even more reason to try to work things out informally.

The system reflects the critical Japanese value of harmony.