Litigation - Japan

Sovereign immunity, international jurisdiction and courts' powers in labour disputesAuthors

Contributed by Anderson Mori & Tomotsune

Yoshimasa Furuta

April 13 2010
Sovereign immunity
International jurisdiction

When a labour dispute is litigated in the Japanese courts, jurisdiction may be restrictedby virtue of the sovereign immunity of one of the parties or by the lack of a basis onwhich to accept international jurisdiction. Recent legislative and case law
developments in both areas will have a significant impact on the power of the Japanesecourts to resolve labour disputes.
Sovereign immunity
During the 19th century, under the conventions and principles of international law, asovereign state's actions were considered immune from the jurisdiction of the courts ofany other state - a position termed 'absolute immunity'. Only in limited circumstances,such as when a state voluntarily submitted to jurisdiction or a case involved real
property in another state, would a foreign court have jurisdiction over a sovereign state.
However, in the 20th century the concept of restrictive immunity became the norm.
Restrictive immunity divides state conduct into two types: sovereign actions withprimarily domestic effect and commercial actions that have a corporate, private-lawcharacter. Jurisdictional immunity applies only to sovereign actions.
The UN Convention on Jurisdictional Immunities of States and their Property endorses
restrictive immunity. Judicial precedent in Japan previously supported absoluteimmunity, but now favours restrictive immunity.(1)In light of this, the Act on the Civil Jurisdiction of Japan over Foreign States was enactedin April 2009 and took effect on April 1 2010. The act enshrines the concept of restrictive
immunity and denies jurisdictional immunity to foreign states (including federal states)in respect of commercial dealings, among other matters.
On October 16 2009, before the act came into force, the Supreme Court held that wherea cause of action arises from an employment agreement between an individual and aforeign state, the foreign state may not benefit from sovereign immunity except in
special circumstances.(2) This was despite the court's acknowledgement that the state
involved in the case - the federal state of Georgia in the United States - could
independently enjoy sovereign immunity and might have been entitled to do so in other,
special circumstances (eg, in the event of a potential violation of its sovereignty).
The court also referred to Article 9 of the act, which provides that foreign states have nojurisdictional immunity in civil suits relating to labour contracts under which work iscarried out in Japan. The judgment therefore has value as a precedent under the newact, despite having been issued before the act came into force.
International jurisdiction
No statute or international treaty defines the scope of the Japanese courts' international
jurisdiction. Therefore, judicial practice follows the precedent set by the court's
November 11 1997 judgment,(3) in which it held that:"if one ground exists on which to accept jurisdiction within Japan as prescribed by theCode of Civil Procedure, then in general it is appropriate to make the defendant submit
to the jurisdiction of the Japanese courts. This is subject to the caveat that should
special circumstances exist which would mean that to accept jurisdiction would goagainst the principle of fairness between parties or of prompt and proper judgment, thecourts must refuse jurisdiction."
Since October 2008 the Ministry of Justice has been preparing a new statute defining
the international jurisdiction of the Japanese courts, and in March 2010 a bill was

Mariko Nagata

Since October 2008 the Ministry of Justice has been preparing a new statute defining
the international jurisdiction of the Japanese courts, and in March 2010 a bill wassubmitted to Parliament to amend the Code of Civil Procedure. With regard to labour
disputes, the bill aims to establish new rules to ensure better protection for employees.
Once the code has been amended, employees will be able to file suit in a Japanesecourt against an employer if their labour was provided in Japan.(4) This will be the caseeven if there are no other grounds on which to claim jurisdiction in Japan. In contrast,
an employer will be able to file suit against an employee in a Japanese court only if theemployee is resident in Japan at the time of filing.(5) In general, the bill is intended tobroaden the authority of the Japanese courts in relation to lawsuits filed by employees,
and to narrow it in the case of lawsuits filed by employers.
The bill also aims to restrict the effect of jurisdiction clauses in employment contracts.
The Japanese courts typically give effect to jurisdiction clauses within employment
contracts, unless it would be against public policy to do so.(6) However, the bill(7) would
limit the validity of such clauses to situations where:lllthe jurisdiction clause is agreed at the time of termination of the contract andspecifies the courts of the jurisdiction in which the work is provided - for thepurposes of this part of the act, 'exclusive jurisdiction' clauses are not regarded asexclusive, but as identifying additional jurisdictions in which a suit may be brought;
the employee files a suit within the jurisdiction specified in the contract; orthe employee chooses to invoke the jurisdiction clause in his or her contract in theevent of the employer filing suit in another state.

The bill is expected to be enacted in April 2010. Once in effect, the amendments to thecode will have a significant impact on the treatment of cross-border labour disputes in
the Japanese courts.
For further information on this topic please contact Yoshimasa Furuta or Mariko Nagata
at Anderson Mori & Tomotsune by telephone (+81 3 6888 1000), fax (+81 3 6888 3089)
or email (yoshimasa.furuta@amt-law.com or mariko.nagata@amt-law.com).
Endnotes(1) For examples of the two positions in practice, see Matsuyama v Republic of China(1128 Minshu 7-12, Daishin-in, 1928) and Tokyo Sanyo Trading Co Ltd v Islamic
Republic of Pakistan (2542 Minshu 60-6, Supreme Court, 2006), respectively.
(2) 293 Saibansho-jiho 1493 (Supreme Court, October 16 2009).
(3) 4055 Minshu 51-10 (Supreme Court, November 11 1997).
(4) Article 3(4)(2) of the draft revised code.
(5) Id, Article 3(4)(3).
(6) 137 Hanrei-jiho 1743 (Tokyo High Court, November 28 2000).
(7) Article 3(7)(6) of the draft revised code.

The materials contained on this website are for general information purposes only andare subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-housecorporate counsel and other users of legal services, as well as law firm partners, qualify for a freesubscription. Register at www.iloinfo.com.

© Copyright 1997-2010 Globe Business Publishing Ltd