Compensation Systemof Japan-------- Just Compensation
means
Full Compensation --------Tsuyoshi Kotaka
President ofJapan Organization for Land Acquisition and Compensation/ Professor of Shinshu University School of Law
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ⅠOutline ofLand Acquisition Processand Just Compensation

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1.

OUTLINE OF
LAND ACQUISITION PROCESS[１] Land Expropriation Law(Act No.219 of 1951)

Under Article 29, Paragraph 3 of theconstitution, the Land Expropriation Law wasenacted in 1951 as a general statute concerning
compulsory acquisition of land for publicpurpose.
3[2] Law of Special Measure for LandAcquisition (Act No.150 of 1961)
In addition, the Law of Special Measure forLand Acquisition provides a procedure forurgent expropriation for projects that areespecially needed for the social and economic
life of society and are expected to beaccomplished urgently.
4[3] Acquisition by negotiation
In general, land acquisition for public projects
is not done by procedure under the Land
Expropriation Law but by mutual negotiation
among the project initiator, the landowner, andinterested parties.

52. OUTLINE OF JUST COMPENSATION[1] Compensation Concerned with
Private Property“The Guideline of Standard forCompensation for Loss Caused byAcquisition of Land for Public Use”
(Cabinet Decision, June 29, 1962,
revised, December 12, 1967,revised, July 2, 2002)

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[2] Compensation Concerned withPublic Facilities“The Guideline of Standard forCompensation for Public Loss Caused
by Execution of Public Project”(Cabinet Decision, February 21, 1967)

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ⅡTypes and Contentsof Compensation

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The Constitution of Japan
Promulgated on November 3, 1946
Came into effect on May 3, 1947

CHAPTER III RIGHTS AND DUTIES OF THE PEOPLE

Article 29. The right to own or to hold property
is inviolable.
Property rights shall be defined by law, in
conformity with the public welfare.
Private property may be taken for public use
upon just compensation therefor.
9Full Compensation“Just Compensation” provided in Art 29,Para. 3 ofthe constitution should be “Full Compensation”,
which means the objective value of the acquired
property (fair market value) should be provided forcompensation.

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SUPREME COURT

Under the Land Expropriation Law, compensation
for loss should be full compensation, that is, theproperty value of an aggrieved person does notchange before and after condemnation, and theamount should be sufficient enough to acquire
alternative land nearby which is equivalent to theland taken.
[Sup. Ct., October 18,1973,27 Minshu 9, 1210 [1973]]

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Satisfying the following three requisites
makes compensation just.
[1] All actual losses caused by an acquisition of property
should be compensated fully.

[2] Criteria of calculation of loss should be sociallyobjective, that is, by fair market value, and noconsideration should be made to either specialconditions or the subjective and emotional value ofaggrieved persons (Art.7, Art.8, Para.4 of the Guideline ofStandard for Compensation for Loss Caused by Acquisition ofLand for Public Use ).
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[3] The standard date for calculating compensation forland is the date of the notification of the project
recognition under the provision of Art.26,para.1 ofthe Land Expropriation Law (Art.71,LEL）.
On the other hand, when land is acquired throughagreement, not condemnation, the date ofcalculation is the date of conclusion of the contract(Art.47 of the Guideline).
13Compensation for Loss by Land Expropriation
Removal of Building

Land Expropriation

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Compensation for Loss by Land Expropriation[1] Compensation for Rights
Compensation for Land[2] Compensation for
Ordinary Loss
Caused by Land Taking

Land Expropriation

Compensation for Removal of
Building
Compensation for Business Lossetc.
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COMPENSATION FOR RIGHTS
Compensation for Land

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Influence ofProjectPrice Increase

Amount ofCompensation

belong to
Project Initiator
Price Decrease

Market Price

Land to be ExpropriatedSpeculation orExpectation
The revision rate
corresponding to
the changes ofprices

Fixed Price(Land Expropriation
Law§71)

Land Expropriation Law

Planning

Notificationof Project
Recognition

The fair price

Ruling for
Acquisition of calculated byconsidering theRight

Amount of Compensation for Landin the Land Expropriationtransaction pricesof the similarlands in theneighborhood
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SUPREME COURT“Just Compensation” provided in Article 29 Paragraph3 of the Constitution means thatfaire price rationally calculated on the basis of transaction prices formatted in the economic
condition at the time of land acquisition, but it need not completely accord with thetransaction price.
Since the compensation for the loss caused by expropriation shall be made finally by theruling for acquisition of land, the amount of compensation for acquisition of land shall bemade concretely by the ruling(Art.48 Para.1 of the Land Expropriation Law), the amount ofcompensation should be calculated on the basis of the price prevailing at the time of theruling.
As to the concrete calculation method, Art.71 of the Law provides that the amounts of thecompensation concerning the land to be expropriated shall be the amounts obtained bymultiplying the faire prices as the date of the notification of the project recognition
calculated by considering the transaction prices of similar lands in neighborhood and otherfactors by the revision rate corresponding to the change of prices during the period
between the date and the date when the ruling for acquisition of land is given.
The change of transaction prices in neighborhood generally influenced by the project
concerned. But there is no ground the owners of the land to be acquired shall be able toenjoy the same amount of land price as the prices added to lands in neighborhood by theproject and the change in prices occurred to the land to be acquired belong to the project
initiator or the project initiator should bear.

(Sup.Ct.,June 11,2002, 56 Minshu 5,958[2002])

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COMPENSATION FOR ORDINARY LOSS
Caused by Land Taking
EX. Compensation for removal expenses
Compensation for business loss
Compensation for Ordinary Loss ;for which any landowner who is deprived ofrights to land can claim compensation, underusual circumstances, for unavoidable economic
loss caused by condemnation, but he or shecannot claim for loss under special circumstances. 19

Compensation to Owners of Building[1] Compensation for removal of buildings
When there is a building on the land
recognized to remove, the method of theremoval is determined after considering
the construction, uses and other conditionsof the building, the necessary expensesshall be calculated and compensated.
Typical methods to remove buildings are“rebuilding method”, “towing method” and“conversion method”.
20[2] Compensation for removal of structures
With regard to structures such as the door of agate, a fence, a lumber room, concrete-covered
ground or steps and others, necessary expenses
for the removal shall be calculated andcompensated.

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[3] Compensation for Standing Trees
Calculation methods of standing trees vary to the use
or kinds of the trees. For some sort of garden trees,
the necessary expenses for transplantation (diggingup, transport, planting and others) shall be usuallycalculated and compensated.
For other sorts of standing trees, the necessary
expenses for cutting down (cutting down, transport andothers) shall be usually calculated and compensated.
* Purposes to use standing trees
include garden trees (forornamental purpose), standingtrees in forest (goods), harvestingtrees and others.

22Other Expenses caused by Removal[1] Removal of Movable Property
Movable properties involved in the removalof building (furniture and household effects,goods, materials and others) shall becompensated with the necessary expenses
for packing, transport and others.

23[2] Miscellaneous Expenses on Moving
For expenses supposed to be paid for theremoval of buildings and others,“expenses to look for new place”, “necessary
expenses for legal procedures such as
notification for removal of house”, “expenses togive notice to acquaintances the move” andothers
shall be compensated.

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Compensation for Tenants
If it is extremely difficult for the tenants
to continue leasing building from thecurrent lessor due to the removal of thebuilding, ordinarily necessary expenses
to rent the same level of building as
tenants have lived in shall becompensated.
(for instance, removal expenses ofmovable properties, miscellaneous
expenses on moving, premium andothers)25Compensation to People running Business
If there is reason to believe that a business isrequired to suspend its operation temporarily due tothe removal of the store, the following losses shall becalculated and compensated.
・ loss of earnings during the periodrequiring the suspension (loss of income
for self-employment)・necessary expenses incurred bybusiness assets during the periodrequiring suspension, including taxes andpublic charges on business properties.
・suspension allowance for the employees
during the period requiring suspension

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SUPREME COURT

Ordinary loss caused by land acquisition provided in Art. 88of the Land Expropriation Law means economic and property
loss which is an unavoidable , socially objective loss that theaggrieved person suffers from compulsory landacquisition ,and it does not include non-economic value.
Historic or academic value in the regard through which
national history , and the life and culture of ancient times
could be understood generally puts no additional value on theeconomic or property value as real estate and gives noinfluence on its market value. Cultural value in this regard
cannot be calculated into economic value, and loss of its value
could not be compensated under the Land Expropriation Law.
(Sup. Ct. , January 21,1988,1270 Hanrei-Jiho 67 [1988])
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SUPREME COURT

When a regulatory statute provides scientificstandards, such as rules that dangerous equipment
shall be kept some distance from certain facilities,and violation against the regulatory standard broughtby the construction of a road that made the property
owner do something such as remove facilities inorder to meet the standards above and he sufferedfrom loss by removing his facilities, compensation forsuch loss, provided in Art. 70, Para. 1 of the Road Law,
is not required simply because the loss by exercise ofpolice power becomes actual.
(Sup. Ct. , February 18, 1983, 37 Minshu 1, 59 [1983])
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