Claims in Tort under Japanese Law, and How the Money is Actually Recovered

A director diverts company funds. A departing employee walks out with the trade secrets and sets up in competition. A counterparty obtains technical data by improper means. The losses a company suffers are not confined to broken contracts. Claims of this kind require no contractual relationship at all: they lie in tort. But a claim in tort carries its own requirements and its own limitation periods, and the real difficulty usually lies not in winning the case but in receiving the money afterwards. What follows explains both halves of the problem under the law of Japan.

Contents

The four requirements of a claim in tort
Where companies find themselves the victims
Proving the loss
Contributory negligence, deduction of benefits, and prescription
A judgment and a payment are two different things
What can be done after judgment, and where it stops
In closing
How to contact us

The four requirements of a claim in tort

Article 709 of the Civil Code of Japan provides that a person who intentionally or negligently infringes the right, or the legally protected interest, of another is liable for the loss thereby caused. In practice a claimant must assert and prove four things: intention or negligence on the part of the wrongdoer; infringement of a right or of a legally protected interest; loss actually sustained; and a causal connection between the act and the loss. Unlike a claim for non-performance of a contract, the burden of proof here rests in principle entirely on the victim, so the gathering of evidence determines the outcome from the very first day.

Where companies find themselves the victims

Breach of duty by directors and auditors. A director who breaches the duty of care of a prudent manager, or the duty of loyalty, and thereby causes loss to the company is liable to it under Article 423 of the Companies Act of Japan. That liability may be pursued alongside a claim in tort.
Employee dishonesty. Misappropriation, false expense claims, kickbacks arranged with outsiders. The individual is liable; and where the wrongdoer is an employee of another company, that company may be pursued as employer under Article 715 of the Civil Code.
Improper acquisition of information by a counterparty. Where trade secrets have been obtained or used by improper means, the Unfair Competition Prevention Act of Japan supplies a claim for damages and for an injunction in addition to the general law of tort, and its presumptions as to the amount of loss make proof appreciably easier.
The relationship with claims for breach of representations and warranties. Where a seller in a share transfer has concealed unfavourable facts, the buyer may claim under the indemnity provisions of the contract and may in addition frame the same conduct as a tort. The two routes carry different limitation periods and different measures of recovery, and it is common practice to advance both, so that a short contractual notice period does not extinguish everything at once.

Proving the loss

A tort case is won or lost on quantum. Lost profit must be built from objective material — past trading records, orders already placed, margins prevailing in the industry. A subjective expectation of what might have been earned will not carry a court. The cost of digital forensic work and of accounting investigation undertaken to establish the wrongdoing is recoverable so far as it is reasonable. Where the reputation of a company has been damaged, Japanese case law recognises that a company, no less than an individual, may recover for non-pecuniary loss.

Where the nature of the loss makes proof of its amount extremely difficult, Article 248 of the Code of Civil Procedure of Japan permits the court to fix a reasonable sum on the basis of the whole tenor of the oral argument and the results of the examination of evidence. Two further points distinguish tort from contract. Part of the claimant’s legal fees may be awarded as an item of loss, within the bounds of proximate causation. And interest for delay runs from the moment of the tortious act itself, with no demand required.

Contributory negligence, deduction of benefits, and prescription

Where the victim’s own fault contributed to the occurrence or the extent of the loss, the court may reduce the award accordingly. Weak internal controls, or a long silence after the irregularity was first noticed, may both be treated as fault on the victim’s side. Benefits actually received from the same cause — insurance proceeds, or sums already recovered — are deducted from the loss.

Prescription requires particular care. A claim in tort is extinguished three years after the victim came to know both of the loss and of the identity of the wrongdoer; where the tort has injured the life or body of a person, that period is five years. Independently of this, no claim may be brought more than twenty years after the tortious act. Internal wrongdoing often comes to light only years later, and the date on which the victim can be said to have “come to know” is frequently the central dispute. Where time is short, a demand by content-certified mail (naiyo shomei yubin), a Japanese postal system certifying the content and date of a letter, postpones completion of the prescription for six months, and an action must then be filed within that window.

A judgment and a payment are two different things

This is the point that most deserves emphasis. A Japanese court does not look for the debtor’s assets on the creditor’s behalf, and it does not collect. A judgment confers the standing to enforce; it is not itself money. A wrongdoer who realises that he is being pursued will commonly move deposits, mortgage his property, or transfer it to a relative, and cases in which nothing is left by the time judgment becomes final are not at all rare.

Before proceedings are commenced, therefore, the other party’s assets should be investigated: the certificate of registered matters of the company, the certificate of registered matters for any immovable property, the banks and branches used, the business premises, the principal customers. A Japanese lawyer may also make a bar association inquiry through his bar association under Article 23-2 of the Attorney Act of Japan. Where assets are found, provisional attachment (kari-sashiosae) should be applied for before the action is filed, freezing bank deposits or immovable property. It requires a prima facie showing of the right to be preserved and of the necessity of preservation, together with a security bond deposited with the Legal Affairs Bureau — in practice commonly between ten and thirty per cent of the sum claimed. That is not a light burden, but without it a judgment in one’s favour may prove to be no more than a piece of paper.

What can be done after judgment, and where it stops

Property disclosure procedure. Once an enforceable title has been obtained, the court may be asked to order the debtor to appear and state what he owns. A debtor who fails to appear without good reason, or who gives false information, is liable to imprisonment for up to six months or a fine of up to 500,000 yen.
Procedure for obtaining information from third parties. Deposit information can be obtained from financial institutions and information on immovable property from the registry office. Information identifying the debtor’s employer, and so his salary, is available only to creditors of maintenance claims and to creditors of claims for damages arising from injury to the life or body of a person — a distinction of real value in personal injury cases.
Execution against claims. Attachment of bank deposits, of accounts receivable, or of salary. Attachment of deposits is the most effective step in practice, but the institution and the branch must be identified.
Execution against immovables. A sale of the property by the court. Where prior mortgages already absorb the value, the distribution yields nothing, so a search of the register beforehand is indispensable.
Execution against movables. A court execution officer attends and seizes. Realisations are usually modest, and this is best regarded as a supplementary measure.

The limits should be faced squarely. If the other party has nothing, no procedure will produce money. Where the wrongdoer is an individual who obtains a discharge in bankruptcy, his debts are in principle extinguished — but claims for damages arising from a tort committed maliciously, and claims for damages arising from a tort that injured the life or body of a person through intention or gross negligence, are excepted from discharge, which matters greatly to a victim. Where assets have been given away or sold at a gross undervalue, an action to rescind the fraudulent act may also be considered.

In closing

In tort claims the outcome is largely settled before the action is ever filed. Fixing the evidence early, establishing early what the other party owns, and applying early for provisional attachment will do more for the sum actually recovered than any amount of advocacy at trial. We act for foreign businesses in matters of this kind, and are equally glad to work through the client’s own counsel abroad.

How to contact us

Telephone 03-6435-8418 within Japan, or +81-3-6435-8418 from overseas. Lines are open from 08:00 to 24:00 Japan time, including Saturdays, Sundays and public holidays. Enquiries are also received at any hour through the form on this site.

M&A Partners Law Office LPC　Katsuhiro Tsuchiya, Representative Attorney-at-Law (Tokyo Bar Association, Registration No. 26775)　17F Mori Trust Shiroyama Trust Tower, 4-3-1 Toranomon, Minato-ku, Tokyo, Japan

This article is a general explanation based on the laws and practice of Japan as at August 2026 (Reiwa 8). The outcome of any particular matter depends on its own facts, and no specific result is guaranteed.

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