Global Guide to Competition Litigation Japan

Transcription

1 Global Guide to Competition Litigation Japan 2012

2 Table of Contents Availability of private enforcement in respect of competition law infringement and jurisdiction... 1 Conduct of proceedings and costs... 2 Relief... 5 Emerging Trends... 6 Contact Information... 7

3 Japan Fumio Koma, Junya Ae and Hiroaki Nagahashi A. Availability of private enforcement in respect of competition law infringement and jurisdiction 1. Scope of private enforcement actions in Japan Individuals and corporations can bring legal actions to claim compensation for damages arising from violations of the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (Act No. 54 of April 14, "JAA"). Such legal actions claiming compensation may be based on general principles of tort law, which are mainly governed by Article 709 of the Civil Code and Article 25 of the JAA. The scope of general tort law is so wide that no violation of the JAA is specifically excluded from its scope. By contrast, Article 25 of the JAA lists the types of violations subject to liability, and typical violations, such as monopolisation, unreasonable restraint of trade, and unfair trade practices are covered. The key differences between the two bases of liability (i.e. Article 709 of the Civil Code and Article 25 of the JAA) are the requirements of (i) the violation conducted intentionally or negligently by the defendant, in the case of a tort, and (ii) a final and binding administrative order (i.e. basically, a cease and desist order) by the Japan Fair Trade Commission prior to claiming the compensation (the "JFTC") in the case of a violation of the JAA. Unlike Article 709 of the Civil Code, violators of the JAA are liable under Article 25 of the JAA even where a violation is not an intentional act or due to negligence. However, a claim based on Article 25 of the JAA can only be brought after an administrative order or a declaration of illegality by the JFTC regarding the violation has been issued and has become final and binding. Another difference is jurisdiction. The Tokyo High Court has exclusive jurisdiction over actions based on Article 25 of the JAA, as the court of first instance. Jurisdiction for actions based on general tort law is determined by the general jurisdiction rules, under which actions can be brought in whatever district court has jurisdiction over the location of the defendant's principal office or the place where the tort was committed. The most likely defendants in these actions are business operators who have violated the JAA. In addition (although rarely seen in practice), it is technically possible to bring civil actions based on general tort law against individuals involved in violations, such as directors or employees of violating business operators. 2. Applicable limitation periods The limitation period for actions claiming compensation for damages under Article 25 of the JAA is three years. The limitation period commences on the date on which the administrative order or the declaration of illegality pertaining to the alleged violation becomes final and binding (Article 26 of the JAA). The right to demand compensation for damages based on general tort law is extinguished (i) when the claimant does not exercise the right within three years from the time that it becomes aware of both the occurrence of damages and of the identity of the person who caused the damages or (ii) when twenty years have elapsed from the time of the tortious act. Baker & McKenzie 1

4 Global Guide to Competition Litigation - Japan It should be noted that the limitation period for claims based on general tort law may commence without regard to whether an administrative order or declaration of illegality pertaining to the alleged violation has become final and binding, under a court precedent (judgment of the Supreme Court rendered as of April 28, 2009, Case No. Heisei (Gyo-Hi) 97). Therefore, civil actions based on general tort law need to be filed within three years of the injured party learning of the occurrence of the damages and the person who caused them, without regard to the status of any administrative procedure pertaining to the alleged violation. 3. Appeals In case of general tort claims, an appeal can be made from a district court to a high court and then a further appeal to the Supreme court is available. In terms of claims based on Article 25 of JAA, it is possible to appeal against a ruling by the Tokyo High Court to the Supreme Court. When a party appeals a judgment rendered by a district court to the competent high court, he/she may challenge both its findings on the facts and on issues of law. In contrast, in appeals from high court to the Supreme Court, facts legitimately determined by the high court are binding on the Supreme Court (Article 321(1) of the Civil Procedure Code (the "CPC")), and thus, review by the Supreme Court is limited to the application of the law and the legitimacy of the fact finding process. 4. Availability of class actions for infringement of competition law and/or damages in Japan Japanese law does not specifically provide an equivalent to class actions as permitted in the U.S. Under Japanese law, the "Appointed Party" system prescribed by Article 30 of the CPC is most similar to a U.S. class action. Pursuant to Article 30 of the CPC, a number of persons who share common interests may appoint from among themselves one or more persons as party/parties to a lawsuit (the "Appointed Party"), and the Appointed Party stands as the claimant or defendant on behalf of the appointing person(s). The judgment in such lawsuit affects not only the Appointed Party but also persons who appointed them. However, it does not expand into anyone who shares common interests but did not appoint them. B. Conduct of proceedings and costs 5. Burden of proof The claimant should prove (i) a violation of anti-trust law, (ii) occurrence of damages, (iii) a causality between the violation and the damages, and (iv) the amount of the damages. Even where there is a final and binding administrative order or declaration of illegality issued by the JFTC pertaining to the violation alleged by the claimant in the civil lawsuit, Japanese courts are technically not bound by such orders or declarations and the claimant still assumes the burden of proof regarding requirements (i) through (iv) described above. That being said, in practice such an order or declaration can have a material impact on a civil lawsuit. Specifically, a violation of competition law may be strongly presumed to have occurred based on the administrative order or declaration by the JFTC. Therefore, for claimants, submission of such an order or declaration is highly likely to be beneficial, if available. 2 Baker & McKenzie

5 6. Joint and several liability of cartel participants Each member of a cartel is liable for all damages caused by the cartel. In other words, a claimant may sue one or more persons from among the participants to claim compensation for all of the damages suffered by the claimant. The JAA has a leniency program which enables applicants under certain conditions to enjoy an exemption from an administrative penalty imposed by JFTC. However, it does not directly apply to civil procedures. Therefore, application for the program does not exempt applicants from civil liability. The apportionment of damages awarded to a claimant among cartel participants is based mainly on the fraction of the damages attributable each participant. If one of the joint participants compensates the claimant in excess of the fraction for which it is liable, the participant can demand reimbursement from the other participants. Such a demand can be made not only by filing another legal action against the other participants, but also by a Notice of Suit prescribed by Article 53 of the CPC, which forces the other members of the cartel to participate in the lawsuit between the members being sued and the claimant. 7. Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privileges Parties to a civil lawsuit do not have a general obligation to disclose documents, including evidence which would have an adverse impact on them. However, upon a request from a party, the court may order the other party to submit documents as evidence to the court unless a requested document falls within any of the following classifications prescribed under Article 220 of the CPC: i) documents stating matters subject to a right to remain silent in connection with possible criminal responsibility; ii) documents concerning a secret in relation to a public servant's duties; iii) documents stating facts that lawyers, doctors, notaries, religious persons or other types of professionals learned in the course of their duties or other technical or professional secrets; iv) documents prepared exclusively for use by the holder thereof (excluding a document held by the State or a local public entity which is used by a public servant for an organisational purpose); or v) documents concerning a suit pertaining to a criminal case, a record of a juvenile case or documents seized in such cases. Further, a party can request the court to order those in possession of documentary evidence to submit it to the court (Article 226 of the CPC). For example, a claimant can request the court to have the JFTC provide its records of a case. The JFTC has publicised a Notice on Provision of Documents for Civil Lawsuits Claiming Compensation for Damages Caused by Violations of the JAA, as of May 15, 1991, which provides, amongst other things, its disclosure policy when JFTC is requested to provide its documents to the court under Article 226 of the CPC. In the notice, the JFTC enunciated that, depending on circumstances, it will accept such requests for provision of evidentiary documents, including documents used for findings of fact by the JFTC in administrative orders or other materials relevant to its investigation, to promote private enforcement of the JAA. Baker & McKenzie 3

6 Global Guide to Competition Litigation - Japan 8. Pre-action disclosure While it would not be directly classified as pre-action disclosure (i.e., the system wherein a potential party to a lawsuit can request disclosure of documents held by the counter party before commencement of the lawsuit), there would be room for potential claimants to collect information owned by potential opponents prior to filing a law suit through "Preservation of Evidence" under Article 234 of the CPC. As prescribed by Article 234 of the CPC, Preservation of Evidence is a procedure in which a court examines evidence upon a petition from a potential party even before filing a lawsuit, if the court finds it necessary because examination of the evidence would be difficult without such a prior examination (Article 234 of the CPC). The petitioner must make a prima facie case showing such necessity. 9. Average length of time from issue of claim to judgment in Japan It is very hard to assess the average length of proceedings since there are no authoritative records of the time required from the filing of a claim to the rendering of a judgment. Based on publicly available records of court precedents, it typically takes from two to four years to reach a final judgment in the first instance. Appeals generally take a similar amount of time for each further instance. 10. Average costs from issue of claim to judgment in Japan Costs consist mainly of court fees (i.e., fees to be paid to the court) and legal fees. Average amounts for such fees are not available. Court fees include court costs, charges for service of legal documents by the court, and expenses necessary for the examination of evidence. Court costs are provided by the Act on Costs of Civil Procedure and are calculated based on the amount of a claim. A claimant or appellant must pay the court costs with a stamp on a complaint or a written appeal. However, the court fees, including the court costs, should be basically borne by the defeated party. Legal fees should be borne by each party, in principle. In the case of a tort claim, a reasonable amount of legal fees is considered to be part of the damages caused by the tortious act, and thus, the court may order the defendant to pay an amount of money corresponding to this reasonable amount. However, the amount ordered by the court usually does not cover the entire actual amount of the legal fees. 11. Third party/alternative funding Third party or alternative funding for litigation is not explicitly prohibited in Japan. Contingency fees are allowed under Japanese law. "No win, no fee" arrangements are not explicitly prohibited, but to our knowledge they are hardly ever used in practice. According to Article 466 of the Civil Act, any claim may be generally assigned except where its nature does not permit the assignment. It should be noted, however, that assignment or entrustment of rights in order to have an assignee or trustee conduct a specific procedural act (i.e. issue and conduct a claim) is prohibited under Article 10 of the Trust Act. 4 Baker & McKenzie

7 12. Alternative methods of dispute resolution Arbitration is a typical type of alternative dispute resolution in Japan, and is governed by the Japanese Arbitration Act. It can be commenced if the parties agreed to use the process, although there is some debate as to whether disputes over competition law matters can be resolved through arbitration. The Arbitration Act does not explicitly exclude such disputes from its scope as defined in its Article 13(1), so arbitration might be worth considering as one option that can be used to deal with competition law disputes. Conciliation under the Act for Conciliation of Civil Affairs is another option that can be used to resolve competition law related disputes other than by a lawsuit. C. Relief 13. Availability of damages and quantification Under Japanese law, damages are compensatory because it is considered fair and sufficient to restore a victim to its original state before the violating act occurred. Consequently, as a general rule, a claimant has to prove the difference between its actual state after being affected by the alleged violation and the state it would have been in if it were not for the violation. For example, if a claimant purchaser argues that it was forced to buy products for an increased price determined by a cartel, it has to show not only the actual price at which it purchased the products, but also the price that would have been offered under competitive conditions. Further, while no current precedent has ruled on it to our knowledge, the passing-on defence is likely to be available in principle because the defendant may successfully claim that no damages should be claimed by buyers who themselves resold goods at a price including the cartel overcharge to final purchasers and have therefore passed-on the price increase to the final customers. The JAA does not provide specific rules to help claimants with the quantification of damages caused by violations of the JAA. Therefore, it is often extremely difficult to prove the price that would have been offered in the absence of the violation of the JAA. In such a case, a court may determine the damage suffered based on the oral arguments made and evidence submitted, exercising its discretion regarding the calculation of the damages as prescribed by Article 248 of the CPC. The amount of compensation awarded in cases to date varies, but in many of the cartel cases in which a claimant as a purchaser or party to a contract prevailed, courts awarded approximately five to twenty percent of the actual amount of the contract. 14. Punitive and exemplary damages Japanese law does not allow punitive or exemplary damages. 15. Availability of interim or final injunctions in respect of an alleged competition law infringement Both interim and final injunctions are available for the private enforcement of the JAA against only unfair trade practices under Article 19 of JAA but are not available in respect of to cartel cases. Baker & McKenzie 5

8 Global Guide to Competition Litigation - Japan The requirements for an injunction are prescribed by Article 24 of the JAA. According to this provision, a person is entitled to seek the suspension or prevention of typical violations of the JAA, such as the operation of a cartel, by a business operator if: i) the person's interests are infringed or likely to be infringed by the business operator's violation of the JAA; and ii) the person is suffering or likely to suffer extreme damages due to the violation. D. Emerging Trends In Japan, the case law on civil claims for violations of the JAA is largely concerned with bid-rigging. Price-fixing or other types of cartels have not been a main target of such enforcement so far. However, there has been a remarkable trend in the field of administrative enforcement of the JAA in cartel cases, where the amounts of the surcharges that the JFTC has ordered have been strikingly high. This trend in surcharge payment orders means damages suffered by injured parties from potential cartels would be likely extensive and accordingly may motivate them to file civil lawsuits. Therefore, it would be worth noting whether the number of civil lawsuits against cartels will increase in the near future. 6 Baker & McKenzie

9 Contact Information Fumio Koma Phone: fumio.koma@bakermckenzie.com Junya Ae Phone: junya.ae@bakermckenzie.com Hiroaki Nagahashi Phone: hiroaki.nagahashi@bakermckenzie.com Baker & McKenzie 7

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