Finance related Procedural Law
1 Within finance related procedural law are the Civil Preservation Act, the Code of Civil
Procedure, the Civil Execution Act and insolvency law (the Bankruptcy Act, the Civil
Rehabilitation Act, the Corporate Rehabilitation Act and provisions on special
liquidation procedures in the Companies Act). In the Civil Code, which is Japan’sgeneral private law, there are areas which seek the smooth satisfaction of money claims
through mortgages, joint guarantee obligations and the right of setoff and theseprocedures have the function of effectively establishing and realizing these rights in linewith the intent of the Civil Code.
2 The Civil Preservation Act is a law which, by adopting provisional relief simply andpromptly, aims to prevent risks arising due to delays in the realization of rights throughthe establishment of rights based on the decision of a meritorious lawsuit and throughcompulsory execution.
In the Civil Preservation Act three classes of provisional dispositions are prescribed: (1)in order to preserve the money claims of a compulsory execution, provisional
attachment to take measures to limit the disposition of the assets of the obligor, (2) inorder to preserve a property delivery and surrender claim of a compulsory execution,
provisional disposition relating to the disputed property to take measures to maintainthe current condition of that property, and (3) provisional disposition to prescribe
provisional status to take measures to prescribe provisional conditions until thedetermination of a judgment concerning the merits of rights involved.
The Civil Preservation Act prescribes, firstly, general provisions as general proceduralprinciples. Secondly, the Act prescribes the procedures for the issuance of preservationorders per the above noted classifications and procedures for appeals. Thirdly, the Act
prescribes the execution procedures of issued preservation orders. Fourthly, the Act
prescribes the effect regarding provisional dispositions where there has been, inparticular, a dispute over interpretation. Fifthly, the Act establishes penal provisions.
Civil preservation procedures have, compared to court proceedings, the following specialcharacteristics. Firstly, they are procedures scheduled to follow meritorious court
proceedings and have an ancillary nature to the court proceedings. Also, because the1requirement for speed, summary procedures are adopted and preservation orders may
be issued without going through oral arguments, and prima facie evidence of the rights
to be preserved or the legal relations and the necessity of preservation is held to besufficient. Furthermore, the preservation disposition is provisional up to thedetermination and realization of rights based on meritorious court proceedings.
3 The Code of Civil Procedure is a law prescribing the procedural format to conceptually
establish (formation / disposition) rights under certain substantive law applied by thecourts. Along with preventing the arbitrary exercise of jurisdiction, the Code grants on
equal terms to both parties competence in the lawsuit and, based on such guarantees,seeks the fairness and appropriateness of courts, and regulates procedures by law with
the intention of securing the faith of citizens with respect to the court.
The Code of Civil Procedure firstly establishes general provision and provides for thecourts, parties, court expenses, court proceedings, the processing of the collection ofevidence prior to the filing of a claim, etc. and applications through electronic dataprocessing. Secondly, as the court proceedings of the first instance, the Code prescribes
special provisions relating to actions, proceedings organization, oral arguments andthose preparations, evidence, judgments, the completion of a suit without a hearing,large-scale lawsuits, etc. as well as special provisions concerning the court proceedingsof small claims court. Thirdly, the Code prescribes matters relating to appeals. Fourthly,
the Code prescribes matters relating to retrials. Fifthly, the Code prescribes specialprovisions on actions on bills and notes and actions on checks. Sixthly, the Codeprescribes special provisions on actions on small claims. Seventhly, the Code prescribes
demand procedures. Eighthly, the Code prescribes matters relating a stay of execution.
4 The Civil Execution Act is a procedural law which has as its primary objective thepursuit of the prompt and definite recovery of invested capital by compulsorily
undertaking, which is the exclusive possession of state power, the realization of rights
established through court proceedings and the exercise of security interests, etc. inrespect to the assets of individual obligors.
The Civil Execution Act stipulates four types of civil execution which provides for: (1)the compulsory execution carried out based on individual titles of obligations in order tocompulsorily satisfy a claim, (2) security interests based on mortgages, pledges or
statutory liens are compulsorily converted into money through the compulsorily auction2

of the subject assets and the execution of security seeking the satisfaction of a secured
claim, (3) formal compulsorily auctions (this includes compulsorily auctions based on
possession liens and compulsorily auctions for conversion into money based on theprescriptions in the Civil Code, Commercial Code and other laws) which do not have asa direct object the realization of a claim, and (4) disclosures of assets when the court
issues an order to an obligor to disclose assets. Although these are fundamentally not
the same and there are procedurally a number of differences, in any event these areanticipated by the Civil Code and are a state function which is realized when demanded
and share in common the point of compulsorily disposition by state power.
The Civil Execution Act establishes, firstly, general provisions as general proceduralprinciples. Secondly, the Act prescribes, as compulsory execution, monetary execution
procedures with the objective of satisfying a money claim and non-monetary execution
procedures with the objective of satisfying other claims. Thirdly, the Act prescribes
security execution procedures, but the monetary execution procedures are often appliedmutatis mutandis. With respect to formal compulsory auctions, cases of compulsory
auction shall be applied as security execution. Fourthly, the Act prescribes mattersrelating to asset disclosure procedures. Fifthly, the Act prescribes penal provisions.
In the Civil Execution Act, there is a requirement to simultaneously give consideration
to the prompt and certain realization of the rights of rights holders, the protection ofobligors, the protection of third parties, the reconciliation of the interests between
rights holders and the protection of social interests. The Civil Execution Act, by drawing
a sharp line between court organs and the execution organs, seeks the prompt andcertain realization of the rights of rights holders. Additionally, the Act protects theminimum life of obligors through statutory asset seizure-prohibitions and, with respect
to unjust executions and illegal executions, the Act provides for relief procedures suchas actions to oppose execution, appeals against a disposition of execution, objections toexecution, etc. and seeks to appropriately give relief to obligors and to the rights of thirdparties. Furthermore, in the reconciliation of the interests among rights holders,equality is maintained and, notwithstanding whether there has been an attachment of
the subject assets, the Act prescribes equal distribution in accordance with the class andtype of right held by each rights holder who participates in the proceedings. In addition,
the Act protects buildings broadly recognizing the formation of statutory rights andprescribes that a standard sales price be determined so as not to have a negative impact
on the real estate market due to the sale of assets which are the subject of an execution.
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5 In cases where the obligor is economically bankrupt, the Bankruptcy Act, the Civil
Rehabilitation Act, the Corporate Rehabilitation Act and provisions on special
liquidation procedures in the Companies Act prescribe judicial procedures to collectively
process those debt relations.
The Bankruptcy Act and provisions on special liquidation procedures in the Companies
Act both prescribe liquidation type insolvency procedures. The Bankruptcy Act isapplied to natural persons and judicial persons and the provisions on special liquidation
procedures in the Companies Act are applied only to a company in liquidation. The Civil
Rehabilitation Act and the Corporate Rehabilitation Act are both rehabilitation typeinsolvency procedures. The Civil Rehabilitation Act is applied to natural persons andjudicial persons and the Corporate Rehabilitation Act is applied only to stockcompanies.

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