May 22, 2014
Practice Group:
Commercial Disputes
Supreme Court of Japan Decision Clarifies Ability
to Enforce Certain Foreign Judgments
By Keiji Isaji / Ayuko Nemoto (Tokyo)
On April 24, 2014, the Supreme Court of Japan issued a decision (Decision) with respect
to the 'enforcement of foreign judgments' by Japanese courts. The Decision sets out
criteria for when a Japanese court must enforce an injunction that has been issued by a
foreign court as a remedy to a tort claim.
In this Legal Insight we will explore the background of, and issues discussed in, the
Decision.
Background
A California corporation (Appellant) and a Japanese corporation (Licensee) entered into
a license agreement. The Appellant granted an exclusive license of certain intellectual
property to the Licensee. The relevant intellectual property constitutes a 'trade secret'
under California law.
Following disclosure of the intellectual property, some of the employees of the Licensee,
who had gained knowledge of the Appellant’s intellectual property during their time at the
Licensee, left the Licensee and formed a new company (Appellee Company) together
with former employees (Appellees). The Appellant filed a lawsuit with the United States
District Court for the Central District of California (California Court) against the Appellees,
seeking:
(i)
damage compensation
(ii) an injunction to prohibit unfair disclosure and misappropriation of the
Appellant’s trade secrets in Japan and the United States, arguing that the
Appellant’s trade secrets had been unfairly disclosed and misappropriated
by the Appellees. The California Court ruled for the Appellant.
Following its victory in the California Court, the Appellant filed a motion to enforce the
judgment with a Japanese court. However, the Tokyo High Court ruled against the
Appellant, holding that the Appellant failed to provide enough evidence to prove there
had been damages in the United States caused by the Appellees’ tortious acts in
Japan. The Tokyo High Court ruled that the California Court, in this instance, did not
have jurisdiction to:
(i) rule on the tort action for damage compensation, nor
(ii) grant the tort injunction, and that the foreign judgment could not be
enforced in Japan.
Supreme Court of Japan Decision Clarifies Ability to Enforce Certain
Foreign Judgments
Overview of Enforcement of Foreign Judgments in Japan
In order to enforce a foreign judgment in Japan, a party to a dispute must obtain an
“enforcement judgment of a final judgment from a foreign court” (Enforcement Judgment)
from a Japanese court pursuant to the Civil Execution Act of Japan. If obtained, the
Enforcement Judgment will declare that Japanese courts should enforce the final
judgment by a foreign court.
In order to obtain the Enforcement Judgment, all of the requirements for 'recognition of a
foreign judgment' under the Code of Civil Procedures of Japan (Civil Procedure Code)
must be met, including:
•
proper jurisdiction of the foreign court
•
proper service of process
•
not being contrary to public policy
•
that the foreign jurisdiction has substantially similar enforcement procedures
as Japan. In this case, the proper jurisdiction of the foreign court was the
main issue.
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Supreme Court of Japan Decision Clarifies Ability to Enforce Certain
Foreign Judgments
Issues and Decision
1. Jurisdiction over decisions made by foreign courts
The Supreme Court held that courts should follow its previously established framework
for deciding issues of jurisdiction of foreign courts, specifically that jurisdiction should be
determined by considering (i) the applicable jurisdictional provisions in the Civil
Procedure Code and (ii) public policy.
2. Applicable jurisdictional provisions of Civil Procedure Code: definitions of 'tort
claim' and 'place of the tort'
The Civil Procedure Code provides that a 'tort claim' is one of the categories a Japanese
court may consider when it considers the jurisdiction of a foreign court in enforcing a
foreign judgment. Previously, it was unclear whether a 'tort claim' would include a motion
for injunction under the Civil Procedure Code. The Supreme Court concluded that, in
general, a 'tort claim' includes a motion for an injunction by a person whose interests
were infringed or threatened by a tortfeasor’s unlawful act. Further, the Supreme Court
did not limit the definition of 'tort claim' to tort claims under the Civil Code of Japan.
Next, the Supreme Court discussed the definition of 'place of the tort', which is referred to
when analyzing a court’s jurisdiction over tort claims. The Supreme Court concluded that
the definition covered:
•
the place where an illegal act could be conducted
•
the place where the interest or the right could be infringed, reasoning that one
can file a motion for injunction in tort even when a person’s interest is merely
threatened, but not yet infringed.
3. Required elements in the 'place of the tort' analysis
The Supreme Court went on to rule on which elements were required for a plaintiff to fulfil
with respect to the 'place of the tort' aspect of a tort action. The Supreme Court followed
its existing interpretation in this regard and stated that a plaintiff is only required to prove
either
•
that the defendant’s act in the foreign country where the judgment was issued
(Foreign Country) infringed on the plaintiff’s interest or right in either the Foreign
Country or Japan
or
•
that the defendant’s act in the Foreign Country or Japan infringed on the plaintiff’s
interest or right in the Foreign Country.
Next, the Supreme Court discussed what a plaintiff is required to prove with respect to
'place of the tort' when an injunction in tort has been issued in a Foreign Country. The
Decision states that (i) the defendant does not have to have actually conducted a tortious
act in the Foreign Country and (ii) the plaintiff’s interest does not have to have actually
been infringed in the Foreign Country. Rather, “it is sufficient if the plaintiff can verify the
objective fact that the defendant could conduct a tortious act in the Foreign Country or
the plaintiff’s interest could be infringed in the Foreign Country”. In addition, the Supreme
Court stated that Japanese courts could have jurisdiction to enforce the California Court’s
decision on tort compensation.
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Supreme Court of Japan Decision Clarifies Ability to Enforce Certain
Foreign Judgments
Based on the foregoing, the Supreme Court rejected and remanded the decision made
by the Tokyo High Court, stating that its decision denying the jurisdiction of a foreign
court was made without having considered the above points, and did not comply with
Japanese law.
Conclusion
This Decision helps to clarify how Japanese courts will rule on:
•
issues of a foreign court’s jurisdiction to issue tort injunctions that are enforceable
in Japan
•
on the enforceability of a foreign court’s decisions issued with respect to tort
claims.
Ultimately, the Decision clarifies and expands a plaintiff’s ability to enforce an injunction
in Japan that it has obtained in a foreign jurisdiction.
If we can assist you in similar cross-border litigations please do not hesitate to contact a
member of our Commercial Disputes group.
Authors:
Keiji Isaji
Ayuko Nemoto
keiji.isaji@klgates.com
+81.3.6205.3608
ayuko.nemoto@klgates.com
+81.3.6205.3639
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