Toshiaki Iimura - Stanford University

Copyright 2015 by Stanford University

Toshiaki Iimura

Former Chief Judge, Intellectual Property High Court, Japan

Ryu Takabayashi Professor, Waseda University, Japan

Christoph Rademacher Associate Professor, Waseda University, Japan

The Binding Nature of Court Decisions in Japan’s Civil Law System

CHINA GUIDING CASES PROJECT

June 30, 2015 (Final Edition)*

* The citation of this Commentary is: Toshiaki Iimura, Ryu Takabayashi, and Christoph Rademacher, The Binding Nature of Court Decisions in Japan’s Civil Law System, STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, June 30, 2015, http://cgc.law.stanford.edu/commentaries/14-Iimura-Takabayashi-Rademacher. This Commentary was written in English and was edited by Dimitri Phillips, Jordan Corrente Beck, and Dr. Mei Gechlik. This Commentary is also available in Chinese at the above hyperlink.

About the Authors: Toshiaki Iimura served for 40 years as a Japanese civil law judge. During his career as a judge, he worked as an examiner at the Supreme Court of Japan and as presiding judge at IP divisions at the Tokyo District Court and the IP High Court. From 2012 to 2014, Judge Iimura served as Chief Judge of the IP High Court. After retiring from the bench in 2014, he joined the law firm Yuasa & Hara as a partner. Ryu Takabayashi served for 17 years as a Japanese civil law judge, most noted for his work in the area of intellectual property. He also served as an examiner at the Supreme Court of Japan. He joined the School of Law at Waseda University in 1996 and is the founder and director of the Waseda University Research Center of the Legal System in Intellectual Property (RCLIP). Christoph Rademacher serves as associate professor for intellectual property and business law at the School of Law at Waseda University. He is a former research fellow of the Trans-Atlantic Technology Law Forum at and a graduate from Stanford Law School.

The information and views set out in this Commentary are the responsibility of the authors and do not necessarily reflect the work or views of the China Guiding Cases Project.

2

Final Edition


I. Japan’s Court System

Japan is a civil law country whose major statutes are largely based on the laws of other countries, mainly Germany and France, as well as, more recently, the United States.1 Article 76 of the Constitution of Japan (日本国憲法, nihonkoku kenpō; “Constitution”) vests the Supreme Court of Japan (最高裁判所, saikō saibansho) (“Supreme Court”) and its inferior courts with “whole judicial power” (“すべて司法権”, “subete shihōken”).2

Japan has a unitary court system. In contrast to countries like the United States and Germany, Japan does not have a separate system of state courts. The Supreme Court is the highest-ranking court in Japan. It is composed of 15 judges and is “the court of last resort with power to determine the constitutionality of any law, order, regulation or official act”.3 Below the Supreme Court is a three-tiered court system, consisting of the following courts:

• Summary Courts (簡易裁判所, kani saibansho): Summary Courts adjudicate small claims civil cases (in which the value of the dispute does not exceed JPY 1,400,000) as well as minor criminal offenses. A Summary Court is presided over by a single judge, who is not a regular career judge. Summary Court decisions in civil cases are to be appealed to District Courts, whereas criminal cases are to be appealed to High Courts.

• District Courts (地方裁判所, chihō saibansho): Generally District Courts are the court of first instance for all cases for which Summary Courts do not have jurisdiction, i.e., felony cases as well as civil cases where the value of the dispute exceeds JPY 1,400,000. A trial at the District Court is presided over by at least one career judge. Only for significant cases, i.e., cases involving substantial amounts of money, appellate cases from the Summary Court, or criminal cases where the maximum penalty would exceed one year in prison, do two associate judges (also career judges) join the presiding judge to form a three-judge panel. Decisions of the District Courts are to be appealed to the High Court located in the High Court circuit of the respective District Court.

1 While French and German laws were used as models for Japan’s civil code, civil procedure code, commercial code, and criminal laws, U.S. laws have gained influence, in particular in the recent revision of the Japanese corporate law, but also to some degree in procedural laws. 2 NIHONKOKU KENPŌ (KENPŌ) (CONSTITUTION), Article 76. An unofficial English translation, as quoted here and throughout, can be found on the website of the Prime Minister of Japan and His Cabinet, at http://japan.kantei.go.jp/constitution_and_government_of_japan/constitution_e.html. Article 76 of the Constitution provides in full:

The whole judicial power is vested in a Supreme Court and in such inferior courts as are established by law. No extraordinary tribunal shall be established, nor shall any organ or agency of the Executive be given final judicial power. All judges shall be independent in the exercise of their conscience and shall be bound only by this Constitution and the laws.

3 Id. Article 81.

3

Final Edition


• High Courts (高等裁判所, kōtō saibansho): High Courts are appellate-level courts. Japan is divided into eight High Court circuits, i.e., from north to south, Sapporo, Sendai, Tokyo, Nagoya, Osaka, Hiroshima, Takamatsu, and Fukuoka.4 Each High Court trial is presided over by a panel of three career judges.

Decisions of various High Courts can be appealed to the Supreme Court. The Supreme Court allows only a fraction of these cases to be reviewed by it, similar to the practice of the U.S. Supreme Court. Therefore, it is not uncommon to have differences amongst High Court circuits concerning certain details of the interpretation and application of laws. This is again somewhat similar to the situation in U.S. federal law.

Special courts in Japan are interspersed throughout this tiered system and include Family Courts (家庭裁判所, katei saibansho) and the Intellectual Property High Court (知的財産高等裁

判所, chiteki zaisan kōtō saibansho) (“IP High Court”). Family Courts form part of the District Courts and hear, inter alia, divorce cases and matters related to juvenile delinquencies. The IP High Court is a special branch of the Tokyo High Court and has nationwide jurisdiction to hear appellate cases in the field of patent law, trademark law, and other intellectual property laws. Using the model of the United States Court of Appeals for the Federal Circuit as a reference, Japan created the IP High Court in 2005 as an appellate court with nationwide jurisdiction over intellectual property cases to achieve a greater harmonization in intellectual property law (see Chart 1).

Chart 1: Courts in the United States and Japan with Jurisdiction Over Intellectual Property Cases

The United States Japan

4 For a geographic overview of the judicial circuits in Japan, see the graphic “Location of Courts in Japan” made available on the Courts of Japan website, at http://www.courts.go.jp/english/judicial_sys/overview_of/overview/index.html#03.

Supreme Court

Court of Appeals for the

Federal Circuit

Federal District Courts (94 courts)

Supreme Court

IP High Court

District Courts (Tokyo & Osaka)

4

Final Edition


Japan’s court system is served primarily by career judges, most of whom join the bench

directly upon completion of their legal training. During their career, they are usually transferred between courts every three years to allow them to gain experience in handling a variety of subject matter within either civil or criminal law. This, however, also means that it is less common to have judges with decades of experience in a very specific area of law in Japan than it is in, e.g., Germany or the United Kingdom, where judges are hardly ever transferred unless a transfer is desired by the judge. The Administrative Office of the Supreme Court handles the transfer system and the career development of each Japanese judge, and therefore exercises considerable influence on the career of every judge in Japan.

II. Binding Nature of Court Decisions

Pursuant to Article 76(3) of the Constitution, when exercising their judicial power, judges are to be “bound only by [the] Constitution and the laws”5 of Japan. Furthermore, Article 41 of the Constitution provides that Japan’s bicameral national legislature, the Diet, is the sole law-making organ. The Diet can, however, delegate the power to issue additional guidelines, orders, or ordinances to organs of the executive branch, such as the prime minister or specific ministries. Such guidelines, orders, and ordinances also constitute sources of law. Court decisions, on the other hand, only become a source of law if handed down as decisions by the Supreme Court. Decisions issued by lower courts do not become a source of law, and therefore technically do not bind other judges or courts. The principle of stare decisis thus applies only to decisions of the Supreme Court.6

1. Supreme Court Decisions

Supreme Court decisions, which are binding, play a vital role in providing guidance when legislation is interpreted. Frequently, laws are drafted in a very general way, making it essential to

5 The term “laws” as used in this provision is to be understood broadly, i.e., to include government guidelines, orders, and ordinances. That said, in their decisions, judges usually only give deference to laws formally passed by the national legislature, the Diet. 6 This special role of Supreme Court decisions is indirectly provided for by Article 318(1) of the Code of Civil Procedure, which reads as follows:

With regard to a case in which the judgment in prior instance contains a determination that is inconsistent with precedents rendered by the Supreme Court (or precedents rendered by the former Supreme Court or those rendered by high courts as the final appellate court or the court of second instance, if there are no precedents rendered by the Supreme Court) or any other case in which the judgment in prior instance is found to involve material matters concerning the construction of laws and regulations, where the court with which a final appeal shall be filed is the Supreme Court, the Supreme Court, upon petition, by an order, may accept such case as the final appellate court.

MINJI SOSHŌSHŌ (CODE OF CIVIL PROCEDURE) 1996, Article 318, Paragraph 1. An unofficial translation of the Code of Civil Procedure is made available on the Japanese Law Translation website, at http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=02&dn=1&yo=&ia=03&x=18&y=19&kn[]=%E3%81%BF&ky=&page=9.

5

Final Edition


study cases. Principles developed through lower court decisions and finally accepted by the Supreme Court often serve as bases for legislative codification.

As a primary source of law, decisions of the Supreme Court need to be strictly followed. A lower court’s deviation from existing case law of the Supreme Court is grounds for appeal, in both civil and criminal cases. Lower courts occasionally issue decisions that clearly conflict with existing Supreme Court case law. If a lower court is of the opinion that the underlying Supreme Court case law is, for example, outdated and no longer appropriate, it will usually try to distinguish the facts at issue from the underlying facts of the Supreme Court case law, making it less difficult for the Supreme Court to affirm the lower court’s decision. If the lower court does not make such a distinction, the Supreme Court has to decide whether to correct its own case law or to revoke the lower court’s decision. To overturn valid Supreme Court case law, the Grand Bench of the Supreme Court has to render a decision,7 which rarely happens.8

2. Other Court Decisions

The degree to which prior non-binding cases are followed by later court decisions and therefore acquire a de facto binding character varies and depends significantly on the subject matter of the law at issue. As outlined above, judges are frequently transferred between courts and thus often find themselves handling subject matter new to them. In particular, a judge without substantial experience in a complex area, such as securities law, bankruptcy law, or patent law, may be inclined to follow an earlier decision issued by a court or a judge well-respected in the particular subject matter. For example, decisions issued by the Grand Panel of the IP High Court9 are virtually always followed by the District Courts in deciding intellectual property cases. 10 Though such decisions are technically not binding on lower courts, they certainly constitute a de facto source of law. Also, in more general areas of law, decisions issued by High Courts can become de facto binding on District Courts throughout the country, as long as the Supreme Court has not rendered a decision to provide an interpretation of the relevant legal question.11

Despite their lack of de jure binding status, lower court decisions have on a few occasions triggered revisions of legislation or codification of principles developed through cases. A 7 A decision rendered by the Grand Bench is one issued by a majority of all 15 Supreme Court judges. 8 The last Grand Bench decision of the Supreme Court which explicitly amended a prior decision of the Supreme Court was its Judgment of September 10, 2008. Supreme Court Sept. 10, 2008, 62 SAIKŌ SAIBANSHO MINJI HANREISHŪ 2029. An unofficial English translation is made available on the Court’s website, at http://www.courts.go.jp/app/hanrei_en/detail?id=968. 9 Grand Panel decisions of the IP High Court, i.e., decisions issued by judges from different divisions within the IP High Court, are somewhat comparable to en banc decisions of the United States Court of Appeals for the Federal Circuit. The IP High Court consists of four divisions, with three to five judges allocated to each division. 10 See Ryu Takabayashi, Saikōsai soshite Chizaikōsai no chitekizaisanhōhanrei no jūyōsei (The Importance of IP Law Decisions by the Supreme Court and the IP High Court), 4 SOKUHŌ HANREI KAISETSU 184 (2009). 11 In practice, if a High Court renders a judgment that is in conflict with a prior judgment issued by another High Court, the Supreme Court usually makes a decision to resolve the conflict. As long as only one High Court has issued a decision on the legal matter (and no Supreme Court decision exists), District Courts generally follow the High Court’s decision.

6

Final Edition


prominent example is the doctrine of abusive dismissal, which was first developed by Japanese courts in the 1970s. Article 627 of the Civil Code,12 enacted in 1896, made it possible for an employer to terminate an employment relationship with no specific term of employment by simply giving a two-week notice. After the Second World War, the Labor Standards Act, which was promulgated in 1947, added more provisions to protect the interests of certain groups of employees, making it more difficult for an employer to, for example, dismiss employees who were on maternity leave or suffering from a disease or inability to work caused by an incident related to the employment.13

To further limit the effect of Article 627 of the Civil Code, courts in Japan gradually developed the doctrine of abusive dismissal through the cases of Nihon Shokuen14 and Kōchi Hōsō.15 According to this doctrine, the dismissal of an employee could be made void if it was not objectively reasonable and socially appropriate. The courts developed this doctrine by resorting to the general principle against the abuse of rights set forth in Article 1 of the Civil Code.16 The efforts of the courts in these two cases were reinforced in 1979 by the Tokyo High Court, which embraced the doctrine of abusive dismissal,17 holding that the dismissal of an employee was void if the employer could not satisfy the following conditions:

12 According to Article 627(1) of the Civil Code: “If the parties have not specified the term of employment, either party may request to terminate [it] at any time. In such cases, employment shall terminate on the expiration of two weeks from the day of the request to terminate.” MINPŌ (CIVIL CODE) 1896, Article 627, Paragraph 1. Full text of the Civil Code is available in both Japanese and an unofficial English translation on the Japanese Law Translation website, at http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=02&dn=1&yo=&ia=03&x=17&y=12&kn[]=%E3%81%BF&ky=&page=13. 13 For example, according to Article 19 of the Labor Standards Act: “An employer shall not dismiss a worker during a period of absence from work for medical treatment with respect to injuries or illnesses suffered in the course of employment nor within 30 days thereafter, and shall not dismiss a woman during a period of absence from work before and after childbirth in accordance with the provisions of Article 65 nor within 30 days thereafter; provided, however, that this shall not apply in the event that the employer pays compensation for discontinuance in accordance with Article 81 nor when the continuance of the enterprise has been made impossible by a natural disaster or other unavoidable reason.” Rōdōkijun hō (Labor Standards Act), Act No. 49 of 1947, Article 19. The full text of the Labor Standards Act and an unofficial English translation, as quoted here and throughout, is made available on the Japan Institute for Labour Policy and Training website, at http://www.jil.go.jp/english/laws/documents/l.standards2012.pdf. 14 Yokohama District Court Mar. 1, 1967, 213 HANREI TIMES 189; aff’d Tokyo High Court Feb. 23, 1968, 21 KŌTŌ SAIBANSHO HANREISHŪ 1, 96; aff’d Supreme Court Apr. 25, 1975, 667 SAIBANSHO JIHŌ 4. 15 Kōchi District Court July 3, 1968, 20 RŌDŌ KANKEI MINJI SAIBAN REISHŪ 5, 895; aff’d Takamatsu High Court Dec. 19, 1973, 239 HANREI TIMES 178; aff’d Supreme Court Jan. 31, 1977, 268 RŌDŌ HANREI 17. 16 Article 1 of the Civil Code provides:

(1) Private rights must conform to the public welfare. (2) The exercise of rights and performance of duties must be done in good faith. (3) No abuse of rights is permitted.

MINPŌ (CIVIL CODE) 1896, Article 1. 17 Shimazaki v. Toyo Sanso, Tokyo High Court Oct. 29, 1979, 30 RŌDŌ KANKEI MINJI SAIBAN REISHŪ 5, 1002. The High Court’s approach in this case was confirmed by the Supreme Court in its Judgment of Sept. 8, 1983. See Kansai Denryoku, Supreme Court Sept. 8, 1983, 121 HANRREI JIHO 1094.

7

Final Edition


• The employer must have provided to the court a reasonable explanation of the need to reduce the number of workers;

• The dismissal must have been the last resort to adjust the workforce to the needs of the employer;

• The selection of the persons to be dismissed must have been proper;

• The dismissal procedure must have been reasonable.

Courts throughout Japan continued to rely on cases on this issue for more than 20 years. In 2004, the Diet amended the Labor Standards Act to include the doctrine of abusive dismissal.18

A more recent prominent example of courts changing legal practice and eventually laying the groundwork for the codification of principles emerging from their cases is the Kilby decision, which was rendered by the Tokyo High Court in 1997 19 and subsequently confirmed by the Supreme Court in 2000.20 Prior to Kilby, it was Japanese practice to bifurcate patent proceedings and have each part handled at the same time, i.e., to entrust the District Court with a first instance infringement analysis and to entrust the Japan Patent Office (“JPO”) with a first instance review of the validity of a patent-in-suit. In a groundbreaking decision, the Tokyo High Court changed this practice, allowing an alleged infringer to attack the validity of a patent-in-suit not only at the JPO, but also during the course of the infringement trial at the District Court. The Supreme Court confirmed the decision of the Tokyo High Court, which led to a fundamental change in the dynamics of Japanese patent litigation. The core element of the Tokyo High Court’s decision was codified as Article 104-3 of the Patent Act in 2004.21

The above discussion shows the importance of both Supreme Court decisions, which are de jure binding, and lower court decisions, which may assume de facto binding force. Given their importance, full text versions of Japanese court decisions are published in court reports and online databases, such as the case law database LEX/DB,22 to facilitate research conducted by scholars and practitioners.

18 This amendment took the form of Article 18-2: “A dismissal shall, where the dismissal lacks objectively reasonable grounds and is not considered to be appropriate in general societal terms, be treated as a misuse of that right and invalid.” Labor Standards Act, Article 18-2 (translation as provided by the Japanese Law Translation website, at http://www.japaneselawtranslation.go.jp/law/detail_main?vm=&id=5). 19 Fujitsu Co. v. Texas Instruments Inc., Tokyo High Court Sept. 10, 1997, 10 HANREI JIHO 1615. In Japan, this case is usually referred to as the Kilby case, named after the inventor of the patent at issue. 20 Fujitsu Co. v. Texas Instruments Inc., Supreme Court Apr. 11, 2000, 54 SAIKŌ SAIBANSHO MINJU HANREISHŪ 4, 1368. 21 Tokkyo hō (Patent Act), Act No. 121 of 1959, Article 104-3. The full text of the Patent Act and an unofficial English translation is made available on the World Intellectual Property Organization (WIPO) website, at http://www.wipo.int/wipolex/en/details.jsp?id=13137. 22 LEX/DB is the leading Japanese case database. It is available via a paid subscription and owned and administered by the TKC Corporation.

8

Final Edition


Civil law decisions of the Supreme Court are also published in the Minshū23 and on the website of the Supreme Court. Lower court decisions that are considered to be particularly important, or their summaries, are also selected for publication in widely-read journals such as the Hanrei Jihō (判例時報), the Hanrei Times (判例タイムズ), and the Shōji Hōmu (商事法務).

III. Concluding Remarks

Except for Supreme Court decisions, courts in Japan are technically not obligated to follow the principle of stare decisis. Nevertheless, cases play a vital role in understanding and interpreting codified statutes, and courts routinely rely on cases during adjudication. In addition, the characteristics of the career system of Japanese judgesthat many of these judges are frequently transferred from one court to another and thus lack the time needed to develop expertise in particular areas of lawat least implicitly encourage judges to issue decisions in line with influential court cases. Finally, while common law jurisdictions strictly distinguish different parts of a case as either ratio decidendi or obiter dictum, this distinction is not necessarily applied as strictly in Japan, where courts may refer to obiter dictum of existing cases as a de facto source of law. Some commentators have therefore argued that the principle of stare decisis is even more pronounced in Japan than in common law countries, especially if existing cases have been issued by the Supreme Court or by a court renowned for its expertise in a specific subject matter, such as the IP High Court.24

23 “Minshū” is the abbreviation for SAIKŌ SAIBANSHO MINJI HANREISHŪ, the Supreme Court reporter for all the Court’s decisions in the area of civil law. 24 See HIROSHI ODA, JAPANESE LAW (Oxford, 3rd Edition, 2009), 44; Yoichi Higuchi, Hanrei no kōsokuryoku no kō – toku ni kenpō no baai (On the Binding Force of Precedent – Especially in the Case of Constitutional Law) in NOBUYOSHI ASHIBE & MUTSUMI SHIMIZU (EDS.), NIHONKOKU KENPŌ NO RIRON (THEORIES OF THE CONSTITUTION OF JAPAN) (Tokyo, 1986), 675, at 683–84; TSUGIO NAKANO, HANREI TO SONO YOMIKATA (JUDICIAL PRECEDENT AND HOW TO READ IT) (Tokyo, 3rd Edition, 2009), 18–20.

Toshiaki Iimura - Stanford University

Documents