Product Liability Comparative Guide

1 Product liability regimes

1.1 What are the legal regimes under which consumers who are injured by a defective product can bring a claim for compensation? What is the most common way in which such product liability claims are brought?

The main legal regime under which injured consumers can bring a lawsuit in court is through a general civil action based on a claim under the Product Liability Act (85/1994).

Other than bringing a lawsuit, a system for voluntary alternative dispute resolution (ADR) is available. ADR proceedings are provided by various organisations, such as the National Consumer Affairs Centre of Japan and business associations such as the Product Liability Centre for Electrical Home Appliances.

1.2 Do any special regimes apply in specific sectors?

No. There is no specific legal regime for product liability cases; they are brought as general civil actions under the Product Liability Act. Although the Act on Special Measures Concerning Civil Court Proceedings for Collective Redress for Property Damage Incurred by Consumers (96/2013, as amended in 2022) ('Collective Action Act') introduced a collective action system in 2016, it is not available for product liability cases brought under the Product Liability Act, as explained in questions 2.1 and 2.2.

1.3 Are the courts in your jurisdiction generally considered sympathetic to claimants in product liability suits?

Generally, the courts are not considered particularly sympathetic to claimants or defendants in product liability cases; they tend to be objective and balanced. While there is certain case law in which it appears that the court effectively reduced the claimant's burden of proof, the court's decision in those cases was limited to the facts presented to it and thus likely does not have significant precedential value.

2 Parties

2.1 Can representative bodies bring product liability suits in your jurisdiction on behalf of groups of consumers? If so, which bodies may do so and what is the applicable procedure?

The scope of claims subject to collective action is very limited; in particular, collective action is not available for claims for compensatory damages under the Product Liability Act. Therefore, if product liability claimants wish to seek compensation under the Product Liability Act, there is no special collective action system available. On the other hand, even since before 2016, it is common in certain cases for lawyers to represent multiple claimants who have the same interest; however, this is merely an aggregation of individual lawsuits and the court adjudicates each claim on its own merits.

2.2 Are class actions or other forms of collective action available in your jurisdiction? If so, what restrictions and requirements apply in this regard? Are they commonly used?

Under the Collective Action Act, which came into force on 1 October 2016, it became possible for specific consumer organisations certified by the prime minister to bring certain consumer collective actions.

The proceedings consist of two stages:

• The first stage is to seek a declaratory judgment on common obligations. In this stage, the court's role is to determine whether any monetary obligations are owed by the defendant to a considerable number of consumers, based on existing facts and legal causes common to those consumers. The consumers who are subject to specific relief have not yet been specifically identified.
• The second stage is held only when:
• • the court has declared, in the first stage, that there are common obligations among the defendants; or
  • the first stage concludes to similar effect, such as resulting in the defendant's acknowledgement of the claim or in a settlement.
• In the second stage, the court:
• • adjudicates the substance of the relevant claim pertaining to the confirmed common obligations; and
  • confirms whether the defendant owes any monetary obligations and the monetary amount in respect of damage sustained by each consumer.
• At this stage, consumers may opt in via delegation to the plaintiff's representative; the first and second stage judgments do not bind consumers who have not opted in. If the court confirms that the consumers have the right to monetary relief from the defendant, the plaintiff's representative collects money from the defendant and distributes it to each opted-in consumer.

As of 5 April 2023, only five lawsuits against six business entities had been brought under these collective action proceedings since 2016. Among those lawsuits, four have concluded; specifically, at the first stage, judgments were issued upholding the claims and at the second stage opt-in consumers obtained compensation.

2.3 Which parties may potentially be held liable for defective products in your jurisdiction?

Under the Product Liability Act, the following business entities can be held liable (Article 2, Item 3):

• Manufacturers or importers of defective products: Any persons that manufactured, processed or imported the product in the course of trade.
• Business entities that indicate names or similar on defective products: Any persons that place their name, trade name, trademark or other indication on the product:
• • as the manufacturer of such product; or
  • such that it leads others into believing that the aforementioned person is the manufacturer.
• Other business entities that appear to be the manufacturer or importer of the defective product: Any person that uses indications including a name on the product which can be recognised by others as that of the real manufacturer, taking the manner of the manufacturing, processing, import or sale of the product and other circumstances into consideration.

2.4 Can parties outside the jurisdiction be the target of a product liability suit? What requirements and restrictions apply in this regard?

The claimant can bring a lawsuit against a foreign entity such as a manufacturer of the defective product as set forth in question 2.3. There are no legal restrictions in this regard.

However, given the practical difficulties in serving legal documents on foreign entities, claimants typically select the importer which is domiciled in Japan, rather than the foreign manufacturer, as a defendant.

3 Basis for liability

3.1 What are the most common grounds for action in your jurisdiction where a consumer is claiming damages for injuries caused by a defective product?

The most common grounds are the claims under the Product Liability Act.

As explained in question 4.2, under the Product Liability Act, if a claimant establishes that the manufacturer manufactured the defective products and that the defective products caused the harm, the claimant will be awarded damages without having to establish that the manufacturer's actions were intentional or negligent, as is required for other tort claims or for liability under a contract.

However, only 'manufactured products' are subject to the claims under the Product Liability Act. In other words, claimants may not claim for compensation for defects in non-manufactured objects such as:

• assets (buildings or houses);
• unprocessed personal property (unprocessed agricultural, forestry, livestock or marine products); or
• electricity or software (which are intangible).

Where a claimant wishes to seek compensation in relation to such objects, he or she must bring a lawsuit using other legal theories, such as tort liability or contractual liability under the Civil Code.

3.2 Can criminal penalties be imposed for the manufacture or sale of defective products?

When a person dies or is injured due to defective products and the death or injury was caused by the failure of the relevant party (eg, a manufacturer or seller) to exercise due care, the relevant party may be subject to penalties for professional negligence under Article 211 of the Criminal Code. The representative of the manufacturer/seller or the person in charge of the relevant products for the manufacturer or seller may be subject to a maximum imprisonment of five years or a maximum fine of JPY 1 million. In the past, there have been several cases where criminal penalties were imposed on the representatives of companies responsible for harm caused by severely defective products.

4 Defective products

4.1 How is a 'defective product' defined in your jurisdiction?

Products are determined to be defective when they lack the safety that they ordinarily should provide, taking into account:

• the nature of the product;
• the ordinarily foreseeable manner of use of the product;
• the time when the manufacturer (or equivalent) delivered the product; and
• other circumstances concerning the product (Paragraph 2, Article 2 of the Product Liability Act).

While not clearly stipulated in law, defective products are generally categorised into three types:

• defects in manufacturing, meaning that the product lacks safety because it was not manufactured in accordance with the design and specifications, such as:
• • infiltration of extraneous materials during the manufacturing process; or
  • incorrect assembly of the components;
• defects in product design, meaning that the product lacks safety due to insufficient safety considerations at the design stage of the product; and
• defects in instructions and warnings, meaning that the product lacks safety because the manufacturer failed to provide appropriate information for the consumer to prevent or avoid accidents caused by the inherent danger of the product, which danger cannot be eliminated in design considering the utility or benefit of the product.

4.2 What are the standards for proving that a product is defective? Who bears the burden of proof? Is it possible to shift the burden of proof?

There are no specific standards for proving that a product is defective; however, in general, a civil court judge can take into consideration all evidence and any other matters submitted to, and recognised by, the judge. The judge further has the freedom to make findings of fact and can determine a matter to be a fact if he or she is convinced of the truth to the extent that an ordinary person usually would not disagree that the matter is a fact. This general rule does not change when it comes to product liability claims.

The person requesting compensation (ie, the claimant in most cases) bears the burden of proving the defects. However, as judges have broad discretion in determining the facts, they sometimes perform 'presumption de facto' – that is, making presumptions based on rules they are aware of from past experience or other knowledge that they have acquired from their past experiences. As a result, there are several precedents in relation to which it can be interpreted that the alleged defect was found to exist considering the facts surrounding the case.

4.3 What are the standards for proving the causal link between the product defect and the damage suffered established? Who bears the burden of proof? Is it possible to shift the burden of proof?

As provided in question 4.2, there are no specific standards for proving the existence of a causal link. In the course of enacting the Product Liability Act, there were discussions as to whether a causal link in a case should be presumed and the defendant should bear the burden of proving that there is no causal link; however, this presumption was not incorporated into the enacted Product Liability Act. Therefore, the claimant bears the burden of proving that an ordinary person usually would not suspect that a causal link exists in the relevant case. However, as provided in question 4.2, judges sometimes exercise presumption de facto and there are several precedents whereby a causal link was found to exist while the judge acknowledged that it was not fully proved. For example, one precedent found that there was a causal link even though the evidence did not fully establish a specific causal link, on the grounds that it would be difficult to conceive that causes other than the defective product at issue could have led to the accident.

4.4 What else must be proven to succeed in a product liability action? What specific concerns and considerations should be borne in mind in this regard?

In claims brought under the Product Liability Act, other than proving the defect and the causal link between the defect and the damages, the injured person must establish:

• that the manufacturer (ie, manufacturer, seller, importers etc, as provided in question 2.4) manufactured (ie, manufactured, sold, imported etc) the defective products;
• the existence of the harm;
• that the product was delivered to the victim; and
• specific damages and the amount thereof. Claims based on the Product Liability Act are to be brought only when consequential loss is caused (ie, damage other than damage to the defective product itself, such as damage to the human body or to other property). If the damage caused by the defective product was limited to the product itself, the victim may only claim under other legal avenues such as tort liability or contract liability under the Civil Code.

On the other hand, the injured person is not required to prove the intention or negligence of the manufacturer (or equivalent) if he or she establishes that the manufacturer manufactured the defective products that caused the harm. In this regard, the burden of proof is shifted to the defendant compared to general tort claims or contractual liability claims under the Civil Code.

Please also see question 5.2 for the potential counterarguments by the defendant – namely in respect of development risk or design and instruction – which may require the claimant to engage in rebuttal.

5 Defences and limitations

5.1 What is the limitation period for bringing a product liability suit in your jurisdiction? What requirements and restrictions apply in this regard?

The statutory limitation period under the Product Liability Act is:

• five years from the time of knowledge of the defect; and
• 10 years from delivery of the product (Paragraph 1, Article 5).

With respect to liability in tort under the Civil Code, the statutory limitation period is:

• five years from the time of knowledge of the tortious act; and
• 20 years from the occurrence of the act (Article 724 of the Civil Code).

With respect to contractual liability, the statutory limitation period is:

• five years from the time the injured person becomes aware that he or she can exercise the right to a claim; and
• 10 years (or 20 years in the case of harm to the human body or death) from the time the injured person can actually exercise such right (Articles 166 and 167 of the Civil Code).

No specific requirements or restrictions apply.

5.2 What defences to product liability suits are available in your jurisdiction?

There are two defences that defendants may establish under the Product Liability Act (Article 4):

• The defect in the product could not have been discovered given the state of scientific or technical knowledge at the time when the manufacturer (or similar) delivered the product (defence of development risks) – this requirement is considered difficult to meet and it has never been upheld by a Japanese court to our knowledge; or
• Where the product is used as a component or raw material of another product:
• • the defect occurred primarily because of compliance with the instructions concerning the design given by the manufacturer of the other product; and
  • the defendant is not negligent with respect to the occurrence of the defect in the component product.

In addition, a user's misuse of the products or a third party's intervening act or other events can be defences to the alleged defect or causal relationship. The claimant's fault may be taken into account in terms of comparative fault and lead to a reduction in the amount of damages awarded. Insurance benefits or a pre-existing condition of the claimant that contributes to the damage may also be taken into account.

5.3 Can a party exclude or limit its liability for defective products in your jurisdiction? If so, how? What specific concerns and considerations should be borne in mind in this regard?

Even if the defects and the causal link between the defects and the damage are confirmed, when the defendant succeeds in establishing the defences stipulated in the Product Liability Act as provided in question 5.2, the defendant is not liable for the damages.

Compliance with mandatory or industrial standards or requirements will not necessarily lead to a finding of no defects or liabilities; while such compliance can be considered to be a factor in determining whether the products were defective. There are several precedents whereby the alleged defect was recognised as such even though the product was in compliance with a certain standard.

6 Forum

6.1 In what forum(s) are product liability suits heard in your jurisdiction?

Mostly in civil actions before a court.

In civil actions of first instance, generally a single judge hears and renders judgment on the case; but in complicated cases or for certain other reasons, judges can decide that the case should be heard and determined by a panel consisting of three judges. This decision can also be made once the proceedings are underway.

6.2 Who hears product liability suits in your jurisdiction (eg, judges or juries)?

Professional judges, as there is no jury system for civil actions in Japan.

Most judges in Japan are career judges, who choose to become a judge shortly after the mandatory vocational legal training – with the exceptions of:

• some Supreme Court judges (who are selected from among other legal experts such as professionals or bureaucrats); and
• other recent cases where people who passed the bar exam and have worked as attorneys opt to become judges mid-career.

6.3 Is there any opportunity for forum shopping in your jurisdiction? If so, what are the implications?

It is generally unlikely that forum shopping would occur in Japan because the Product Liability Act is a national law; and since career judges tend to transfer to courts around the country every three years or so, it is generally expected that the claimant will be able to obtain the same level of judgment based on the same law anywhere in Japan.

7 Filing a product liability suit

7.1 What are the formal, procedural and substantive requirements for filing a product liability suit? How does this process typically unfold and what is the timeframe?

The complaint which the plaintiff submits to the court must indicate:

• the names of the parties;
• the object of claim;
• the cause of action; and
• both fundamental facts supporting the claim and important ancillary facts.

Copies of important evidence must be attached to the complaint. The plaintiff must also identify the amount of claim in the complaint and pay the court fees corresponding thereto. The court fees are prescribed by law and are nationally uniform.

After reviewing the complaint for conformity with relevant requirements, the court will serve the defendant with a copy of the complaint and the evidence, together with a summons to appear before the court on a set date.

After the complaint is served, the defendant must submit its answer thereto. In this answer, the defendant must state whether it admits or denies each of the plaintiff's allegations together with any rebuttals. Generally, the answer should be submitted one week prior to the first hearing date designated by the court; however, in practice, because of time constraints for preparation, it is typical for the defendant to submit a brief answer with a statement of general denial and later to submit a supplemental brief with substantial arguments prior to the second hearing date, which generally falls one to two months after the first hearing date.

7.2 Do any pre-filing requirements apply before commencement of the suit?

There are no pre-filing requirements that must be satisfied before the commencement of a formal lawsuit. While certain kinds of actions, such as divorce, require mandatory mediation, there are no pre-filing requirements with respect to ordinary civil actions, including product liability actions.

7.3 How is jurisdiction over the product liability suit determined?

Under the Code of Civil Procedure, the relevant court located at the relevant following place will have jurisdiction (Articles 4, 5, 11 and 12):

• the place where the defendant is located (in the case of a company, the address of its principal office);
• the place where the defendant is to perform its obligations in a case involving property;
• the place of the business office of a company in a case where the action is in connection with its business conducted at the office;
• the place where the accident occurred in product liability cases and tort claims;
• the place of the court agreed by the parties as the court of jurisdiction for the first instance; or
• the court where the claimant brings a lawsuit, if the defendant presents oral argument on the merits of the case or enters a statement in preparatory proceedings without entering a defence of the lack of jurisdiction.

There is no priority or precedence; and the claimant may choose any court, unless it has been agreed in advance that a certain court has exclusive jurisdiction over the case.

Where a party is a foreign entity, a Japanese court has jurisdiction over the case if, generally speaking:

• any of the places set forth above are located in Japan; or
• the claim is related to:
• • business activities of a company which has an office in Japan; or
  • business activities of a company which are conducted in Japan (Articles 3-2 to 3-12 of the Code of Civil Procedure).

7.4 How is the applicable law determined?

Article 17 of the Act on General Rules for Application of Laws stipulates that the law of the place where the result of the tortious act occurred governs a claim arising from a tort.

However, Article 18 of the act contains special provisions for product liability, which stipulate that a claim arising from a tort involving injury, death or damage to property of others caused by a defect in a product (ie, a thing produced or processed) that is delivered, against a producer (ie, a person that has produced, processed, imported, exported, distributed or sold a product in the course of trade) or a person that has made a representation regarding the product in a manner which allows others to recognise such person as its producer, will be governed by:

• the law of the place where the victim received delivery of the product; or
• the law of the principal place of business of the producer, if delivery of the product at the relevant place was ordinarily unforeseeable.

7.5 Under what circumstances (if any) must security for costs be provided?

No security for costs is required except for seeking a provisional injunction.

8 Disclosure and privilege

8.1 What rules apply to disclosure/discovery in your jurisdiction? Do any exceptions apply?

There is no procedure similar to pre-trial discovery or disclosure procedures pursuant to which, in preparation for trial, each party is required to disclose documents and witnesses in response to the other party's requests. Therefore, parties generally need to prepare for litigation based on the evidence each has at hand.

There are several methods available under the Code of Civil Procedures or other relevant laws to obtain evidence, such as:

• a motion for the preservation of evidence;
• a request for information via a bar association;
• enquiries by a (potential) claimant to a (potential) defendant in writing;
• a petition to the court to request public officials or public or private organisations to provide certain information or documents; and
• a motion to produce documents.

These methods are not as broad as discovery procedure, and the petitioner is generally required to identify the specific information or documents it is seeking.

8.2 What rules on privilege apply in your jurisdiction? Do any exceptions apply?

There are no rules on privilege under the laws of Japan.

8.3 What are the specific implications of the rules on discovery/disclosure and privilege in product liability suits?

Because there are no discovery or broad evidence disclosure procedures, each party is responsible for collecting evidence to support its case. Therefore, while judges sometimes presume the existence of some facts whereby the burden of proof is mitigated in general, the victim must collect evidence on his or her own and prove that the product is defective.

9 Evidence

9.1 What types of evidence are permissible in your jurisdiction? How is this typically presented during the proceedings?

Evidence is categorised as:

• written documents;
• witness and party testimony;
• observation; and
• expert evaluation.

In principle, written documents are submitted by each party. In addition, certain documents may be collected and examined by the court through various methods.

Witness and party testimonies are given in a public courtroom in the presence of the presiding judges in charge and each party and its counsel. In principle:

• the party that called the witness (which may itself be a party) conducts direct examination;
• the other side then conducts cross-examination; and
• finally, the party that called the witness conducts a redirect examination.

The other side may conduct further cross-examination when permitted by the judges. After the parties have conducted the examination, the judges can put questions to the witnesses or to the parties themselves. The entire witness examination process is generally concluded in less than one day unless the case is complex. Prior to the examination, the parties must file a motion to call a witness or for party examination, which states the main topics of the expected testimony; and in practice, the witness or the party to be examined submits his or her written testimony in advance. Typically, the witness and party examinations occur later in the proceedings, after both parties have exchanged their arguments and just before the judge closes the case.

Observation of the goods and expert evaluation are not very common; but in cases where professional expertise or knowledge is required, experts are sometimes called.

9.2 Is expert evidence accepted in your jurisdiction? If so, how are the experts typically appointed and what input or influence (if any) do the parties have in this regard?

Yes. Typically, a party identifies an expert who will provide a favourable opinion and then submits the written opinion of the expert to the court. Sometimes such expert may be examined in court as part of the witness examination procedure. The court will evaluate the expert opinion as a part of the evidence submitted by the party; therefore, it is difficult to say whether the expert opinion has a significant influence on the court's decision. Further, a court may also appoint an expert with expertise upon discussion with the parties and hear the expert's testimony. The influence of the expert appointed by the court is more significant than that of an ordinary expert. Such expert witness is often used in medical or construction litigation and is not common in product liability litigation.

In some cases where professional expertise or knowledge is required, the court may retain technical advisers in order for them to provide an objective explanation based on their expertise (Article 92-2 of the Code of Civil Procedure). Different from experts, technical advisers can be involved in the whole process of the litigation in order to provide advice to the judge, but their explanation will not constitute evidence.

9.3 What are the specific implications of the rules on evidence in product liability suits?

As provided in question 8.3, plaintiffs must collect evidence on their own and prove that the product is defective.

10 Court proceedings

10.1 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

The Constitution requires that court proceedings be made public. In practice, most of the proceedings in civil actions are held in a private room where the parties exchange their arguments in writing and are not disclosed to the public, as they are merely for preparation purposes. The most important court procedures that are made public are party and witness examinations. The court can decide not to conduct witness examination in open court in patent cases or litigation regarding unfair competition where important trade secrets will be mentioned. No similar procedure is available for product liability cases.

The court records (both written briefs and evidence) are also public. Anyone can read the court record at the court; and anyone with a legitimate interest in the case is entitled to request a copy of the record.

If the documents include trade secrets and such parts are not relevant to the case, the parties can redact such parts of the documents to be submitted to the court as evidence. If it is not possible to avoid mention of trade secrets or important personal secrets in the written brief or certain evidence, the parties may submit a separate motion seeking a court order that only the parties to the litigation may inspect and copy the identified parts of the court records.

10.2 How do product liability suits typically unfold in your jurisdiction?

In addition to making court records public in typical cases, the Consumer Affairs Agency (CAA) collects information on product liability cases where either judgments were rendered or settlements were reached, and officially publishes those cases online every year.

As of March 2023, there were 472 cases on the CAA database in which judgments had been rendered and 105 settled cases. There do not seem to have been any significant changes in the frequency or nature of product liability cases.

10.3 What is the typical timeframe for product liability suits in your jurisdiction?

According to a public report, the average length of court proceedings at first instance, from acceptance of the case by the court to the final judgment or settlement, is ordinarily 9.9 months and 15.2 months for compensation actions, including product liability claims (Report regarding Review of the Expediting of Trials [No 9, 2021]). However, as the Japanese system does not distinguish between trial and pre-trial stages, these averages include many cases where there was no trial, and it is difficult to tell how long it takes to arrive at the trial stage. The amount of time required for cases to be concluded varies widely because:

• the parties are generally allowed to make arguments as exhaustively as they wish; and
• settlement proceedings can be conducted several times, which extends the overall time needed.

Product liability actions often require complex technical knowledge and therefore can take longer than average. Accordingly, in practice, recent product liability cases have often taken two years or more.

10.4 Are alternative dispute resolution procedures (eg, mediation, arbitration) often used in product liability cases in your jurisdiction? Are these encouraged/mandated by the courts?

As provided in question 1.1, alternative dispute resolution (ADR) and consulting desks are provided by public organisations and other business associations. For some specific products – such as pharmaceuticals, consumer electronics, vehicles and other consumer products – 'general incorporated foundations' or other private associations for each product provide an ADR platform for product liability claims. In practice, however, these forms of ADR are not used frequently.

The courts or judges do not actively recommend that parties use ADR; however, in the course of court proceedings, it is very common for the judge to:

• encourage the parties to settle the case;
• have settlement discussions led by the judge; and
• sometimes make a settlement proposal himself or herself.

The judge may encourage settlement at any stage of the proceedings but usually does so at a later stage after gaining an understanding of the case.

11 Remedies

11.1 What remedies are available in product liability suits in your jurisdiction?

Under the Product Liability Act, only compensation for damages is available. By using other legal theories, such as a general tort claim, it is possible to seek an injunctive order; however, the court will issue such order only in very limited cases.

11.2 What categories of damages are recoverable?

Any damages that are within the scope of causation with the defect are recoverable. Compensation for damages that would normally arise and damages that may arise under special circumstances is awarded if the damages were foreseeable at the time of delivery of the product and within the scope of causation.

Specifically, damages can be typically requested for the following:

• injuries suffered by the victim or the death of the victim – such as fees for medical treatment, inpatient costs, travel expenses to the hospital or funeral costs – as a result of product defects;
• mental suffering from injuries or death;
• lost profits, which can include:
• • the salary that the injured person would have received had he or she not been required to take a leave of absence; and
  • the salary that the deceased person would have received throughout his or her lifetime had he or she not died;
• the price of the defective product itself;
• extensive damage to property other than the defective product;
• other actual expenses, such as costs of inspections, letters to end users and so on; and
• attorneys' fees to a certain extent.

11.3 Are punitive damages awarded in your jurisdiction?

No punitive, exemplary, moral or other non-compensatory damages are awarded.

Punitive damages are generally viewed as contravening the public policy of Japan; therefore, even if punitive damages are available under the governing law applied to the case, the Japanese court will not consider or award punitive damages if the case is litigated in Japan (see Article 42 of the Act on General Rules for Application of Laws).

11.4 What factors will the courts consider in deciding on the quantum of damages when liability is established?

In general, the court will consider the actual costs confirmed by the evidence. In the case of personal injury (including physical/psychological injury or death), the court will consider awarding non-pecuniary damages. The amount of such damages will vary on a case-by-case basis since it is subject to the discretion of the judge. Attorneys' fees tend to be about 10% of the total amount of damages awarded.

12 Appeals

12.1 Can the court's decision in in the product liability suit be appealed? If so, on what grounds and what is the process for doing so?

The Japanese judicial system comprises a three-tiered court system and there are no exceptions for product liability suits. Therefore, a party that loses a case in part or in whole and is dissatisfied with the judgment may challenge it by submitting a written appeal to a high court (if the first-instance court is a district court) or a district court (if the first-instance court is a summary court) within two weeks of delivery of the judgment. In the second-instance court, the appellant may make factual allegations and the court will conduct fact-finding in the same manner as at first instance.

The party that loses at second instance may submit a final appeal or a petition for acceptance of a final appeal to the Supreme Court (if the first-instance court was a district court) or a high court (if the first-instance court was a summary court). The grounds for a final appeal are very limited and include grounds such as a misinterpretation at second instance of the Constitution or other violations of the Constitution. However, even if there are no valid grounds for a final appeal, the Supreme Court may accept a final appeal if it believes that the appeal involves important issues such as the interpretation of other laws. Therefore, in practice, the losing party often files a petition for final appeal with the Supreme Court even if there are no grounds for a final appeal.

13 Costs and fees

13.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?

Court fees correspond to the amount of the claim. In general, court fees:

• are paid by attaching a documentary stamp to the complaint;
• are prescribed by law; and
• are nationally uniform. For example:
• • for a claim of JPY 10 million, the court fee to bring a lawsuit at first instance would be JPY 50,000; and
  • for a claim of JPY 100 million, the court fee to bring a lawsuit at first instance would be JPY 320,000.

Other litigation expenses – such as postal costs for service of documents, per diem allowances, travel expenses and accommodation expenses for witnesses and experts – are generally borne by the losing party.

Generally, legal fees, including attorneys' fees, are not borne by the losing party and each party bears its own attorneys' fees. However, in tort cases, in practice, the court tends to grant a certain portion of attorneys' fees in the form of damages, which is an additional amount equivalent to about 10% of the damages awarded.

13.2 How are the costs and fees allocated among the parties?

The portions of the costs and fees to be borne by each party are stipulated in the judgment. However, if the winning party wishes to make the losing party pay the costs incurred by the winning party, the winning party must file a separate petition to receive approval for a specific amount of costs, which rarely occurs in practice.

13.3 What happens if the claim is withdrawn before the proceedings have finished?

The claim may be withdrawn until the court renders the judgement by:

• formally submitting a motion to withdraw to the court in writing; or
• making an oral motion and having a court clerk record it on the official court record (Article 261 of the Code of Civil Procedure).

If the claim is withdrawn, it will be treated as if the claim had not been filed from the beginning and it is theoretically possible to refile the claim. If the defendant has filed a counterargument, the claimant must obtain the defendant's consent to withdraw the claim.

13.4 Do the courts manage costs during the proceedings?

The court calculates the court costs (eg, court fees, postal fees, travel costs of witnesses) incurred, but the costs are not managed. On the other hand, the court manages the costs for expert testimony.

13.5 How do the courts assess the costs and fees at the end of the proceedings?

The court will only calculate the costs and fees to be apportioned by the court in the final judgment. As for the portions of the costs and fees to be borne by each party, they are usually divided in proportion to the amount awarded in the judgment compared to the original claim.

14 Funding for product liability suits

14.1 Is legal aid available for product liability cases in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Claimants suffering economic hardship, whose earnings are less than a certain amount and who can prove that it is 'not impossible' to win their case may receive public legal aid from the Japan Legal Support Centre.

In addition, when a consumer may suffer damage from the activities of a business and the consumer brings a lawsuit against the business or the business brings a lawsuit against the consumer, the consumer may receive financial assistance and other legal aid from the local government upon fulfilling certain requirements, including demonstrating that:

• it is difficult to seek damages in a lawsuit instituted individually because the cost of the lawsuit would exceed or is likely to exceed the amount of damages;
• there are many consumers who have suffered, or are likely to suffer, damage due to the same or similar kind of causes;
• the settlement of the dispute pertaining to the damage has been submitted for deliberation by the Tokyo Consumer Damage Relief Commission; and
• the victim has been domiciled in Tokyo for three or more months consecutively prior to the day of application for the loan (eg, Ordinance of Consumer Affairs of Tokyo, Article 31).

A party who receives legal aid is not required to notify the opponent of that fact.

14.2 Are contingency fees and similar arrangements permitted in your jurisdiction in product liability cases? If so, what requirements and restrictions apply in this regard?

Currently, attorneys' fees are not regulated by law. Therefore, Japanese lawyers are not prohibited from receiving contingency fees and many firms have fee systems that are a mixture of both engagement fees and contingency fees, although pure contingency fee arrangements are rare.

Fee arrangements need not be notified to the other party.

14.3 Is third-party funding permitted in your jurisdiction in product liability cases? If so, what requirements and restrictions apply in this regard?

There has been discussion as to whether third-party litigation funding for lawsuits is acceptable from an ethical viewpoint. Some people argue that such third-party funding – especially when conducted as a profit-making activity – may violate certain provisions of:

• the Lawyers Act (prohibition against non-registered lawyers acting as intermediaries in legal services); or
• the Trust Act (prohibition on trusts for suits for the primary purpose of having another person conduct litigation).

However, there is no law that explicitly regulates funding from a third party or any court decision holding that third-party funding is illegal under Japanese law.

Recently, a crowdfunding platform for litigation of a public nature, such as litigation regarding same-sex marriage, was made available to the public. Fifty or more lawsuits have been funded through this crowdfunding site.

15 Product safety regimes

15.1 What rules and regulations govern product safety in your jurisdiction?

Several administrative regulations are applicable depending on the type of product.

For example, under the Consumer Products Safety Act (31/1973) – which covers many products that consumers can purchase in the market – in situations where a manufacturer acknowledges that a serious incident such as death, serious injury, carbon monoxide poisoning or fire resulting from a defect in a consumer product has occurred, it must notify the secretary general of the Consumer Affairs Agency within 10 days of becoming aware of the matter. The Consumer Affairs Agency will then announce the name of the manufacturer and provide an outline of the incident and other information.

15.2 Do any special regimes apply in specific sectors?

Several administrative regulations are applicable depending on the type of product – for example:

• the Food Sanitation Act (233/1947) for food;
• the Road Transport Vehicle Act (185/1951) for vehicles;
• the Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Products, Gene Therapy Products and Cosmetics (145/1960, as amended) for medicine and other medical products; and
• the Electrical Appliances and Material Safety Act (234/1961) for electrical appliances.

The kinds of obligations that may be imposed vary under each act.

15.3 Which bodies are responsible for enforcing these rules and regulations? What is their general approach in doing so?

It depends on the product. The relevant ministries and agencies governing the product in question have jurisdiction over the relevant product – for example:

• the Consumer Affairs Agency for consumer products;
• the Ministry of Land, Infrastructure, Transport and Tourism for vehicles; and
• the Ministry of Health, Labour and Welfare for medicines.

Upon receipt of a report of an incident, the agencies may:

• obtain reports and opinions from the relevant parties;
• conduct investigations, including on-site investigations; and
• when a violation is found, impose an administrative penalty.

In general, it is common for enterprises to voluntarily make reports and engage in discussions with the agencies.

15.4 What are the penalties for failing to comply with applicable product safety rules?

This depends on the relevant act. For example, under the Consumer Products Safety Act:

• if a manufacturer fails to make a report or makes a false report, the secretary general of the Consumer Affairs Agency may order the manufacturer to establish a system to collect incident information and the like (Article 39); and
• if the manufacturer violates such order, it may be sanctioned by up to one year's imprisonment and/or a fine of up to JPY 1 million in the case of an individual (Item 4, Article 40) or a fine of up to JPY 100 million in the case of a corporation (Item 1, Article 60).

In addition, the secretary general of the Consumer Affairs Agency may order the manufacturer to report the facts and may enter its offices to investigate. Pursuant to the applicable laws, manufacturers may be ordered to recall products.

16 Product safety issues and product recalls

16.1 Under what circumstances must a product be recalled in your jurisdiction?

The minister of economy, trade and industry may issue an order to prevent hazards, which may include a recall order, where the minister confirms that:

• with respect to a certain category of products which typically can cause a serious product accident, there is a risk of danger to the life or body of general consumers arising from the import or sale of products with inappropriate representation and/or non-conformity with the applicable standards; or
• with respect to other products, there is:
• • a risk of a serious product accident due to a defective product; or
  • serious risk to the life or body of general consumers (Article 39 of the Consumer Products Safety Act).

However, such orders are rarely issued. If drug ingredients are detected in health foods (Pharmaceutical Affairs Law), or food additives or pesticides other than those specified in the Food Sanitation Law are detected in foods, a recall order may be issued by a public health centre.

According to the Recall Handbook issued by the Ministry of Economy, Trade and Industry (see question 16.5), manufacturers and importers are encouraged to implement voluntary recalls in the case of safety incidents in order to minimise the occurrence or possible occurrence of accidents caused by consumer products. There are no specific requirements or regulations regarding recalls and in practice most recalls are voluntary.

16.2 Are there obligations to report product safety issues or product recalls to the regulatory authorities? Who bears those responsibilities? What are the details of the requirements? What penalties apply for failure to comply?

There is an obligation to report to the authority upon the occurrence of a product safety accident. Under the Consumer Product Safety Act, when a person who manufactures or imports a consumer product becomes aware of the occurrence of a product safety accident (an accident in which a hazard to the life or body of general consumers has occurred or may occur), the result of which may be serious (eg, death, serious injury, sequela injury, carbon monoxide poisoning, fire hazard), it must, within 10 days of learning of the accident, report the occurrence of the accident and other relevant information to the competent minister. If a product safety accident has occurred that is not very serious, the manufacturer is encouraged to report to the National Institute of Technology and Evaluation (NITE).

16.3 What other rules and requirements apply to product recalls? Do these vary between voluntary and mandatory recalls?

No mandatory requirements apply to recalls. However, the Recall Handbook (see question 16.5) encourages the following approach when a company is aware of a product safety incident:

• Collect necessary information regarding the incident and make a report to the Ministry of Economy, Trade and Industry in a case of a serious product accident or to the NITE (see question 16.2).
• Consider whether to implement recalls in light of:
• • the nature and seriousness of the damage;
  • whether the accident may expand to other users; and
  • the cause of the accident.
• Establish a special taskforce for the recall.
• Contemplate the recall plan.
• Decide how to provide information to users.
• Cooperate with stakeholders and other persons concerned, including:
• • officers and employees;
  • business partners such as distributors;
  • the relevant industry group or consumer group;
  • relevant authorities;
  • legal experts; and
  • insurance companies.
• Implement the recall as planned.
• Continuously monitor how the recall is being implemented, including analysis of the recall data and an effectiveness assessment.

16.4 What other types of corrective action are typically taken in your jurisdiction where a product is found to be defective?

There is nothing in particular.

16.5 What best practices should be borne in mind in relation to product safety in your jurisdiction?

The Ministry of Economy, Trade and Industry has published a Recall Handbook and revises it once every few years. The Recall Handbook stipulates not only the detailed steps for recalls, but also the necessary mindset for product safety, precautions to prevent accidents and actions to be taken when product accidents occur. Accordingly, it is recommended to print the guidelines and have the employees relevant to the product safety divisions familiarise themselves with the guidelines.

17 Criminal liability

17.1 Can parties be found to be liable under criminal law for defective products in your jurisdiction? (a) Which parties can be held responsible? (b) Can individual officers or employees be held responsible? (c) What is the basis for liability? (d) What penalties can be imposed?

(a) Which parties can be held responsible?

Directors of a manufacturer or departmental representatives with responsibility for manufacturing or product safety. Under the Criminal Code, as stated in question 17.1(c), only individuals (natural persons) can be held liable; there is no criminal liability for corporations.

(b) Can individual officers or employees be held responsible?

Directors of a manufacturer or departmental representatives with responsibility for manufacturing or product safety can be prosecuted as individuals.

(c) What is the basis for liability?

Article 211 of the Criminal Code, which relates to the crime of professional negligence resulting in injury or death. In addition, criminal penalties may be stipulated under other laws pertaining to specific product sectors, such as the Food Sanitation Act.

(d) What penalties can be imposed?

In the case of the crime of causing death or injury through negligence in the pursuit of social activities:

• imprisonment with or without labour for up to five years; or
• a fine of up to JPY 1 million.

17.2 Are there any examples of the criminal law being used in your country in cases involving defective products?

There have been several cases.

For example, in relation to a serious accident in 2002 where the wheels of a large trailer had fallen off due to a defect in which the hub had worn out, resulting in death or injury to three people, the Yokohama District Court in 2007 sentenced the two employees of the automobile company who were responsible for product safety to imprisonment for one-and-a-half years, suspended for three years. The court held that those employees should have been aware of the defect and should have initiated a recall. The decision was upheld by the Supreme Court in 2012.

In addition, there has also been a case in which the general manager of a factory was convicted for mass food poisoning involving milk.

18 Trends and predictions

18.1 Have any significant product liability and/or product safety cases been reported in your jurisdiction in the past five years? What were the details and why are they significant?

On 28 April 2021, the Osaka High Court issued a judgment in a product liability case in which all cargo loaded on a commercial truck was destroyed in a fire caused by the insufficient strength of the connecting rod in the engine. The court highlighted the following unique factors at issue as part of its analysis:

• Although truck users are required to perform regular maintenance, they are not expected to dismantle and inspect the engine;
• In many vehicle fires arising from the engine, the causes of the fire are not identified;
• Commercial trucks are required to ensure a high level of safety for a considerable period of time; and
• Engines are composed of many parts and are highly complex from a technical and scientific viewpoint.

Based on these facts, the court decided that if the truck user succeeded in establishing that the vehicle had been used as expected during the period from delivery of the vehicle to the occurrence of the accident and no defects that led to the accident were found during the inspection and maintenance that the truck user performed, it would be presumed that the vehicle was defective. The court added that it was not necessary for the truck user to:

• identify which parts of the engine were defective or the manner in which they were defective; or
• establish the scientific mechanism that led to the occurrence of the accident.

Notably, a high court issued a judgment effectively reducing the claimant's burden of proof regarding defects in certain cases.

18.2 How would you describe the current product liability and product safety landscapes and prevailing trends in your jurisdiction?

There are no particular prevailing trends. There has been no particular increase or decrease in the number of product liability cases over the past few years.

18.3 What new developments are anticipated in the next 12 months, including any proposed legislative reforms to the product liability and/or product safety regimes?

No particular developments are expected.

19 Tips and traps

19.1 What are your top tips for avoiding product liability and product safety issues in your jurisdiction, and what potential sticking points would you highlight?

The main tip for avoiding product liability issues is to manufacture products with sufficient care given to product safety. It is also important to place proper labels and warnings on products. This is especially true in light of the recent increase in online mail-order sales, which has enabled businesses outside Japan to easily introduce products into the Japanese market; it appears that many of these products do not meet Japanese legal or technical standards and product labelling is also often inadequate, including the lack of proper explanations in Japanese. These products may give rise to safety issues in the future; and if they do, it may be difficult for consumers to identify the manufacturers in the event of a problem.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.