JAPAN Law and Practice Contributed by: Hiroki Wakabayashi, Kenichi Sadaka and Kei Akagawa, Anderson Mori & Tomotsune
Out-of-Court Settlement As for an out-of-court settlement, which is usually fol- lowed by a withdrawal of the lawsuit, only the fact of the withdrawal is open to the public. The reason for the withdrawal (ie, an out-of-court settlement) remains unknown. Accordingly, the out-of-court settlement can remain confidential, as long as the parties com- ply with the confidentiality clause, if any, in the set- tlement agreement. The confidentiality advantage of out-of-court settlements may lose its appeal once the amendment to the CCP providing for the confidential- ity of in-court settlements comes into effect. 8.3 Enforcement of Settlement Agreements The record of a judicial settlement has the same effect as a final and binding judgment (Article 269 of the CCP), so the party may commence enforcement pro- cedures by submitting the record to the enforcement court. An out-of-court settlement agreement may be simi- larly enforceable only if it takes the form of a notarial deed prepared by a notary public and if the following two conditions are met: • the claim to be enforced is a claim for payment of a certain amount of money or any other fungible thing or a certain amount of securities; and • the agreement contains a statement to the effect that the obligor will immediately accept compul- sory execution. 8.4 Setting Aside Settlement Agreements A judicial settlement may be set aside upon certain action by a party which demonstrates that the settle- ment is null and void for certain reasons, such as fraud or a material mistake. Such action includes the party’s motion for the re-opening of oral proceedings for the lawsuit which was settled, the party’s objection to the enforcement of the judicial settlement, and the party’s filing of a new lawsuit seeking a declaratory judgment to confirm that the judicial settlement is null and void.
appeal. If a witness refuses to testify, the court will rule on whether such refusal is based on a good reason. Such rulings are subject to appeal in a higher court. 7.8 General Timeframes for Proceedings Typically, a commercial dispute between reasonably sophisticated companies will, on average, take 12–18 months from the filing of the complaint to the trial (evi- dentiary hearing). The trial (evidentiary hearing) will usually last half a day or one full day. However, if there are multiple witnesses, the hearing could extend over two or more days, with sessions scheduled weeks apart. 8. Settlement 8.1 Court Approval Parties may settle a lawsuit either in court or outside the court. An out-of-court settlement requires no court approval. An in-court (judicial) settlement is established when its details are recorded in the record of settlement pre- pared by the court. In this sense, an in-court settle- ment is regulated to a certain extent, although it need not be approved by the court. 8.2 Settlement of Lawsuits and Confidentiality For a judicial settlement, the record of settlement, which is a part of the court record, has been gener- ally open to the public, with exceptional protection from public disclosure as set forth in 1.3 Court Filings and Proceedings . Even under exceptional protection, it has been virtually impossible to protect the fact of the settlement itself from public disclosure as it is not classed as a protected secret under Article 92 of the CCP. However, following the recent amendment to the CCP, from a date to be designated by the Supreme Court – no later than 24 May 2026 – a record of in- court settlement will become protected from public disclosure unless settlement is reached during an oral hearing open to the public (amended Articles 91 and 91-2 of the CCP). This amendment may lead to a considerable shift from out-of-court settlements to in-court settlements, as the latter offers superior enforceability.
531 CHAMBERS.COM
Powered by FlippingBook