Process and Substance in Contract Law Reform in Japan – and Australia?

Japan’s is well underway on the path to completing its first comprehensive reform of contract law since enactment of the Civil Code in 1896. A driving force has been Takashi Uchida, a prominent participant in Japan’s intense discussions over contract law theory in the early 1990s. He resigned in 2007 as Professor of Civil Law at the University of Tokyo in order to spearhead deliberations within the Legislative Council (hosei shingikai) of the Ministry of Justice (MoJ), now charged with recommending specific reforms.
At the Council’s first Working Group meeting on 22 November 2009, one member reportedly suggested that deliberations should proceed “without paying too much attention to ‘the Basic Policy for the Law of Obligation Reform’ (draft proposals by [the] Japanese Civil Code (Law of Obligations) Reform Commission)” because it had been confirmed that the Working Group’s deliberations should start “from zero”. However, the Draft Proposals (DP) published in April 2009 by that semi-private Reform Commission, along with a detailed five-volume commentary written by its members, were clearly intended to frame the subsequent debate in the formal Working Group arena – and have mostly achieved that effect.

The Working Group’s “Interim Report” (IR or chukan shian) was finalized on 26 February 2013. Its Final Report is expected by March 2014, leading to a reform Bill being introduced into Parliament in late 2014 or early 2015. However, the new Civil Code provisions are likely only to apply to contracts concluded or renegotiated two years after Bill is enacted.
In a paper presented at the Asian Law Institute conference in Bangalore in May 2013, and the JSAA conference in Canberra on 2 July, Professor Souichirou Kozuka and I analysed the process and contents of the recommendations so far. We argue that Professor Uchida has effectively mobilised a strong “bureaucratic coalition” (of MoJ officials and seconded Judges) supported by most legal academics, minimizing opposition from smaller law firms and certain business groups. Even the change back to a Liberal Democratic Party led government in the December 2012 general election is unlikely to derail the Civil Code reform juggernaut. In short, “micro-politics” matters much more than “macro-politics” in this field of law and policy-making.
Overall, the recent IR tracks closely the DP recommendations of 2009 (see the summary table in English by Professor Kozuka, available in the PDF file downloadable here). Among the 595 operative provisions of the DP, 209 were accepted in the IR (with some technical changes being made to some of these), while 98 were modified significantly as a result of the LC’s deliberations. There appear to be only 15 new proposals in the IR that were not dealt with in the DP at all. Further, the DP contained 48 policy provisions that suggested no concrete provision, but which instead advanced proposals about how the relevant part should be codified. As many as 38 of these policy provisions were adopted by the IR.
Two other major trends are evident from Professor Kozuka’s match-up of the DP against the IR (detailed in Japanese in the PDF available above). On the one hand, most of the DP’s proposals survived in some form, although the number of proposed amendments was reduced. On the other hand, differences between the DP and IR proposals are fewer regarding the general provisions on contractual obligations (keiyaku soron) compared to proposals addressing specific types of contract (keiyaku kakuron) set out in the Civil Code, such contracts of sale or mandate (agency). One implication could be that there is more chance of achieving major amendments within the Legislative Council’s official contract law reform process if there are more comparative reference points, especially provisions and principles based on international instruments such as the UN Convention on Contracts for the International Sale of Goods (CISG, acceded to by Japan in 2008 – and by most Asia-Pacific countries, including Australia).
These lessons as to the process and substance of law reform in Japan are also suggestive for other countries in the Asia-Pacific and beyond, which are presently considering or engaged in contract law reform. Korea, for example, is also making progress in comprehensive reforms to its own Civil Code, which had historical influences from Japan. Last year, Australia’s Attorney-General’s Department initiated a consultation into whether and how Australian contract law might be better harmonized nationally and internationally, resulting in a significant number of online public Submissions.
The Australian Network for Japanese Law (ANJeL) and the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS) will hold an invitation-only seminar at Sydney Law School on Friday 6 December to compare “Contract Law Reform in Asia” in a broad comparative context. Speakers include Professors Kenji Saigusa (Waseda University) and Andrew Pardieck (Southern Illinois University), co-authors with me and Professor Hiroo Sono (Hokkaido University) on a book for Kluwer on Japanese contract law – which will compare both the old and the new. Professor Jonghyu Jeong (Chonnam National University) will share insights into developments in Korea, drawing also on his familiarity with contract law reforms recently in Europe. Contract law experts interested in joining the seminar are welcome to contact

Author: Luke Nottage

Prof Luke Nottage (BCA, LLB, PhD VUW, LLM LLD Kyoto) is founding co-director of the Australian Network for Japanese Law (ANJeL), Associate Director (Japan) of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS), and Professor of Comparative and Transnational Business Law at Sydney Law School. He specialises in international dispute resolution, foreign investment law, contract and consumer (product safety) law.