JAPAN Law and Practice Contributed by: Junichi Ueda, Etsuko Hara, Nobuto Shirane, Takahiro Hayase, Yutaka Shimoo and Miki Goto, Anderson Mori & Tomotsune
1. Legal System 1.1 Legal System and Judicial Order
some foreign investments will require prior notification to the authorities (ie, the Minister of Finance and the competent minister). For foreign investments, inves - tors will generally have to wait for 30 days while the authorities examine the investment. These foreign investments include: • investments from countries with which Japan does not have existing treaties regarding inward direct investments, such as Iraq and North Korea; and • foreign investments in certain industries, such as agriculture, fishery, manufacturing, infrastructure projects, telecommunications and IT-related indus - tries. There are several types of exemptions from the prior notification requirement, which depend on the catego - ry of investor (ie, qualified financial institutions or not), the category of industries and companies invested in (ie, listed or not), acquired ratio, etc. During these 30 days, the authorities can issue a legally binding order for the investment to be modi - fied or suspended in particular cases, as explained in 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance . Therefore, the requirement for prior notification is, in practice, a form of approval. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance If an investor is required to provide prior notification, the notification should be made from six months to 30 days prior to the intended commencement of the investment. The authorities will examine the investment from the perspective of national security and the potential effect of the investment on the domestic economy. The authorities may recommend a modification or cancellation of the investment. The investor will still have the discretion to accept or reject the recommen - dation. However, should the investor reject the recom - mendation, the authorities can issue a legally binding order for the investment to be modified or suspended. If an investor is required to provide prior notification but fails to do so, that investor is generally liable to a sentence of imprisonment of up to three years and/
In general, Japan is a civil law jurisdiction. Most of Japan’s modern legal systems are based on conti - nental European civil law systems. However, the end of the Second World War also saw the introduction of some Anglo-American legal influences. Under the Constitution, judicial power is held by the courts, which are expressly guaranteed as being inde - pendent from other branches of the government. The Japanese court system can broadly be categorised into three tiers, as follows. • In the first tier, district courts are the main court of first instance for most cases. However, summary courts may act as the court of first instance for small civil claims and minor criminal offences. This tier also broadly includes family courts, which hear family and juvenile delinquency matters. District courts also act as the first level of appeal for some summary court matters. • In the second tier, there are eight high courts. These act as the general appellate court for district court cases, as well as for some summary court matters. • In the third tier is the Supreme Court. The Supreme Court will generally only hear appeals of cases that involve specific questions of law. Cases are generally determined by professional judges. However, in some serious criminal cases (eg, offences that carry a capital sentence), there is a lim - ited use of a jury of laypersons at the court of first instance. As a civil law system, there is no principle of binding judicial precedent in Japan. That being said, Supreme Court decisions are considered to be strong - ly persuasive and are usually taken into consideration where appropriate. 2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments There is no general requirement for approval of all forms of foreign investment. However, along with cer - tain actions against invested companies by investors,
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