JAIL98YN̲SUM.doc

The Law Applicable to the Assignment of Receivables:
Japanese Conflict-of-Law Rules in the Age of Securitization,
THE JAPANESE ANNUAL OF INTERNATIONAL LAW, No.41, pp.44-60 (1998).

SUMMARY
Yoshiaki Nomura∗
It is generally accepted that the conflict–of-laws rules are the rules ofindirect regulation that determine the applicable substantive law, which in turn directly
regulates the legal relationship in question. However, the conflict-of-laws rules are by
no means a body of autonomous rules independent of reality. In fact, the 1989 revisionof the Horei i introduced many new rules in family relationships, reflecting thedevelopments in the substantive values, such as the equality of the sexes and theconsideration of international harmonization.
The proposed rule, which refers to the law of the assignor’s domicile, isintended as a response to the developments in financing practice and the law ofsecuritization.

It is also in harmony with the recent attempt by the United Nations

Commission on International Trade Law (UNCITRAL) to prepare a uniform law on
assignment in receivables financing.
Under the proposed scheme, however, the law of the debtor’s domicile
provided by the current rule of the Horei still governs the assignment of a right which
is not registered. For example, a large bank loan or a right to repayment of the large
tenancy deposit for a shopping center may be included in this category.

In thesecases, it could be much easier and less costly to simply notify the debtor or acquire its
consent in accordance with the Civil Code than to consummate the registration
procedure provided by the Act for the Special Rules of the Civil Code concerning theOpposability of Assignment.ii Likewise, even in a bulk assignment case, the debtors
are protected by the law of their domicile.

The possible fragmentation of applicablelaws may not be so serious as to threaten the success of the receivables financing,∗

Professor of Law, Osaka University, School of International Public Policy and School of Lawi

Horei (1898 Act No.10) is the basic legislation of the Japanese conflict of laws. For the English text of Horei,
see 39 The Japanese Annual of International Law (1996), pp.186-191.
ii
Saiken-Joto no Taikoh-Yohken ni kansuru Minpo no Tokurei-toh ni kansuru Horitsu, 1998 Act No.104. For
the text of the pertinent provision, see infra text following note 35. For the meaning of “opposability,” seetext accompanying note 19 and text following note 35.
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since the jurisdictions involved may be limited and predictable and the protection ofdebtors could not affect the viability of the financing scheme.
Unlike the protection of debtors, the priority question is likely to affect thesuccess of the financing.

It can be a zero-sum game between the competing parties

or otherwise cause to the value of the assigned assent to diminish. The priority
question between the other third parties is determined by the law of the assignor’s
domicile, or in effect, the law of its place of business.
In sum, the proposed rule refers to the law of the assignor to determine thequestion of priority, while the protection of the debtor is left to the law of the debtor asprovided by the current rule under the Horei.

It is pointed out in the foregoing

discussion that the question of method and effect of public notice is an important
public policy for a regulating state. Viewed from the traditional principle of the closest
connection, the present approach may be explained as an attempt to connect thequestion of public notice with the jurisdiction where the information in question ismost readily accessible by the interested parties.

In contrast, the question of theprotection of debtor has the closest relationship with the state of the debtor’s domicile
under the notification system of assignment. That state doubtlessly has a greaterinterest to protect the debtor, and its interest is greatest where the debtor is theeconomically weak, such as a consumer.

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