Jurisdictional theory "made in Japan": convergence of U.S. and Continental European approaches.

• Author: Hironaka, Akihiro

ABSTRACT

Recent Japanese cases concerning international jurisdiction illustrate a convergence of two distinct legal approaches to the treatment of jurisdictional issue--a rule-based, inflexible approach in Continental European countries and a standard-based, flexible approach in the United States. Japan's unique framework, as explained in this Article, might provide a useful perspective to solve the difficult question currently imposed on the Hague Conference: How is it possible to achieve comprehensive harmonization of the jurisdictional systems of the world?

TABLE OF CONTENTS I. INTRODUCTION II. JAPANESE VENUE PROVISIONS IN THE CODE OF CIVIL PROCEDURE A. Introductory Remarks B. General Venue C. Special Venue 1. Concept 2. Example of a Problematic Provision: Place of Performance of Obligation III. JAPANESE CASE LAW REGARDING INTERNATIONAL JURISDICTION A. Before Malaysian Airline B. Malaysian Airline System Berhad v. Goto C. Developments of Lower Court Decisions after Malaysian Airline 1. Introductory Remarks 2 Examples of the "Exceptional Circumstances" Approach a. Okuma v. Boeing Co b. Mukoda v. Boeing Co D. Family K.K. v. Miyahara IV. REFLECTIONS ON TENDENCIES IN RECENT JAPANESE COURT DECISIONS A. Shortfalls of Recent Tendencies and Proposals for Improvement 1. Unpredictability 2. The Unreasonableness of Importing the Doctrine of Forum Non Conveniens 3. The Different Roles of Judges in Civil and Common Law Countries B. The Potential of the Japanese Jurisdictional Framework V. CONCLUSION I. INTRODUCTION **

In designing legal systems that govern judicial decisions on jurisdictional issues, two competing underlying policies must be considered: one is predictability and ease of administration, and the other is fairness in litigation. (1) It is generally accepted that the former policy underlies the Continental European rule-based approach, while the latter policy underlies the U.S. standard-based approach. Jurisdictional issues under a rule-based approach are decided based on provisions codified by a legislature. Under this approach, as typified in Germany, judges are supposed to apply the provisions faithfully to each case and are given little discretion in deciding jurisdictional issues. Jurisdictional issues under a standard-based approach are decided in accordance with a certain standard, such as "minimum contacts." (2) Under this approach, typified in the United States, judges are supposed to evaluate various relevant factors presented in each case and decide whether each case falls within the given standard. Under the standard-based approach, judges are given broad discretion in evaluating the relevant factors. This approach occasionally results in similar fact patterns being decided in different ways by different judges. (3) In the negotiations for the Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, it was evident that the fundamental difference between these two major regimes is impeding efforts to harmonize jurisdictional systems globally and comprehensively. (4)

In Japan, the framers of the modern government created provisions concerning jurisdiction in 1890 in the Code of Civil Procedure, which was modeled after the German Code of Civil Procedure. (5) Even under the current Japanese Code of Civil Procedure (6) (Minji Sosho-ho or CCP), many jurisdictional provisions have their counterparts in the current German Code of Civil Procedure. (7) With this background, one might expect Japanese courts to take a Continental European approach in determining jurisdictional issues. In 1981, the Japanese Supreme Court used a rule-based, inflexible approach in applying the CCP provisions in its leading decision, Malaysian Airline System Berhad v. Goto. (8) The Japanese lower courts, however, gradually shifted their position from a formalistic rule-based approach to an ad hoc, standard-based approach, as is used by U.S. courts. Finally, in 1997, the Japanese Supreme Court endorsed this ad hoc approach in K.K. Family v. Miyahara. (9) But even under the current ad hoc approach, Japanese courts are generally supposed to consider the jurisdictional rules codified in the CCP. Thus. the current status of the Japanese jurisdictional system presents a unique convergence of two distinct legal regimes: that of Continental Europe and that of the United States. This Article describes Japan's unique jurisdictional system in order to provide a new perspective in this area.

2. JAPANESE VENUE PROVISIONS IN THE CODE OF CIVIL PROCEDURE

   1. Introductory Remarks

      The basic structure of the CCP's provisions concerning venue (10) (the geographical allocation of judicial business among courts) has not changed since the enactment of the original code of civil procedure (11) in 1890, although some important additions and amendments were made in 1926. (12) Even with the overhaul of the civil procedure system by the enactment of the current CCP in 1996, the substance of most venue provisions remained untouched. (13) This means that the basic venue provisions have remained the same for more than 110 years. Since the 1981 Malaysian Airline case, (14) these CCP venue provisions have been applied or applied mutatis mutandis in international jurisdictional matters. (15)

      The venue provisions in the original code of civil procedure enacted in 1890 were modeled after the German Code of Civil Procedure, in which the venue provisions are classified into two categories: (1) general venue (futsu-saibanseki or allgemeiner Gerichtsstand) and (2) special venue (tokubetsu-saibanseki or besonderer Gerichtsstand). This basic framework is still maintained in the current CCP. (16)

   2. General Venue

      First, the CCP provides that a lawsuit may be filed at a place where "general venue" of the defendant exists. (17) "General venue" means a geographical region or area in which a court has authority to adjudicate the case irrespective of the type or substance of the case. (18) In each case where the defendant is a natural person, the general venue of the defendant is in which the defendant has a "residence" (jutsho). (19) In each case in which the defendant is a domestic corporation established for commercial purposes, the general venue of the defendant is its "principal place of business." (20) In each case in which the defendant is a foreign corporation, the general venue of the defendant is its "principal place of business in Japan." (21) These provisions are based on the actor sequitur forum rei principle, which originated in Roman law and is widely accepted in many countries.

      The last provision concerning foreign corporations explained above has no counterpart in the German Code of Civil Procedure. (22) It was added in the 1926 revisions to the CCP. (23) This important provision recognizes broad grounds for jurisdiction over foreign corporations. For example, a Japanese corporation, Alpha Auto in Tokyo, transacted with the New York head office of a U.S. corporation, Beta Bank, and the Tokyo office of Beta Bank was not involved in the transaction. A dispute later arose between Alpha Auto and Beta Bank, and Alpha Auto wanted to file a lawsuit against Beta Bank. Because the CCP provides that there is a general jurisdiction for a foreign corporation at its principal place of business in Japan, Alpha Auto may file a lawsuit in Japan even if Beta Bank's Tokyo office was not involved in the transaction and dispute. The reasonableness of such treatment may be arguable, (24) but this would be the outcome of any case in which the provision is formalistically applied. In fact, this is the outcome that the legislator intended when it added the provision in 1926. (25)

   3. Special Venue

      1. Concept

         Second, a lawsuit may be filed at any place where "special venue" exists. "Special venue" exists when the court has authority to adjudicate according to the type or substance of the case as stated in the CCP. (26) Special venue is admitted in addition to general venue. The venue provision that provides that a tort action may be filed at the place of the tort is an example of a provision for special venue. (27) The provisions that specify "the place of property" (28) and "the place of business" (29) as places of venue are also examples of special venue in the CCP.

         This distinction between "general venue" and "special venue" under Japanese law is not the same as the distinction between "general jurisdiction" and "specific jurisdiction" under U.S. case law. (30) The grounds for "special venue" under Japanese law, like those of German law, are specified in accordance with the type of litigation. The determination of venue may be made ex ante, without regard to the particular case before the court. (31) On the other hand, "specific jurisdiction" under U.S. law is determined ex post and on a case-by-case basis in light of the circumstances of each specific case before the court. (32)

      2. Example of a Problematic Provision: Place of Performance of Obligation

         Some venue provisions, if applied formalistically to international cases, might lead to unreasonable results, especially for particular defendants in certain circumstances. The following problem, caused by disharmony between procedural law and substantive law brought about in the process of implantation of European legal systems in Japan, relates to one particular provision.

         Article 5(i) of the CCP provides that "a suit concerning a property right" may be filed before the court that governs "the place of performance of the obligation." (33) This provision is one of the special venue provisions, and it is modeled after the German Code of Civil Procedure, which currently provides that "[t]he court of the place at which the obligation in dispute is to be performed shall have jurisdiction over disputes arising out of contractual relations or the existence thereof." (34) In Germany, if the "place at which the obligation in dispute is to be performed" is not designated in the contract, then the...