JAPAN Law and Practice Contributed by: Hiroki Wakabayashi, Kenichi Sadaka and Kei Akagawa, Anderson Mori & Tomotsune
11. Costs 11.1 Responsibility for Paying the Costs of Litigation “Court costs” paid to the court and “legal fees” paid to lawyers are clearly distinguished from each other. Court costs are subject to the CCP rules and are com- posed of out-of-pocket expenses, such as costs to be initially payable at the time of filing a complaint, document translation costs (if a document written in a language other than Japanese is submitted as evi- dence), etc. Court costs shall be borne, in principle, by the defeated party. In other words, the winning party is entitled to recuperate these costs from the defeated party. However, legal fees are not treated as part of court costs. Thus, legal fees are not subject to the CCP rules, and shall be borne, in principle, by each party respectively, regardless of the result of the lawsuit. If a plaintiff wants to recover a certain portion of its legal fees, the plaintiff should explicitly include them in the complaint as additional damages to be com- pensated. However, this is not generally granted by the court even if the plaintiff wins the other portions of the claim, except in certain types of tort cases where the plaintiff seeks damages compensation arising from patent infringement, medical malpractice, car accidents, etc. Furthermore, even if “legal fees” are granted as additional damages to be compensated, the amount is usually 10% or less of the amount of the damages sought other than “legal fees”. 11.2 Factors Considered When Awarding Costs In principle, the defeated party bears the court costs. For example, if 70% of a plaintiff’s claim is granted, the plaintiff and the defendant will be ordered to bear the court costs on a 30:70 basis, respectively. 11.3 Interest Awarded on Costs Regarding court costs, in principle, no interest is awarded. As to legal fees, if they are granted in the judgment, 3% per annum will be awarded in princi- ple. However, if they are considered to have started to accrue before 1 April 2020 (ie, before the amend- ments to the Civil Code took effect; see 3.2 Statutes of Limitations ), then 5% per annum will be awarded.
On the other hand, the current rate of 3% per annum will be reviewed as of 1 April 2029 and every three years thereafter. 12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country In the context of international dispute resolution, the popularity of arbitration is rising. For domestic disputes, mediation presided over by the court and mediation offered by industrial associations (eg, the Security Company Association) are popular. In gen- eral, the government encourages and promotes the use of ADR, particularly in specific industries such as financial trading. In addition, the government pub- lished an action plan for online dispute resolution presided over by private organisations (ie, NPOs) in March 2022, which is expected to function as a more easily accessible and less expensive form of ADR, especially for disputes involving smaller amounts. 12.2 ADR Within the Legal System ADR is promoted by a law called the ADR Promo- tion Act. In general, ADR is not compulsory. ADR in Japan includes court-administered mediation which is a part of court procedures. While refusal to participate in ADR may not result in sanctions generally, under certain rules of mediation offered by industrial asso- ciations, a member of the association (ie, the industry side) is obligated to respond and there is a penalty for unreasonable refusal. A recent amendment to the ADR Promotion Act intro- duced a significant development: settlement agree- ments (excluding those involving domestic, con- sumer, or individual labour disputes) reached through mediation administered by a certified ADR business operator, in which the obligor consents to compul- sory execution, can now be enforced through a court’s enforceability order. For international mediations, the Act for Implementa- tion of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention on Mediation) establishes a comparable enforcement mechanism for qualifying
534 CHAMBERS.COM
Powered by FlippingBook