A Foreign Law Seems to Apply in Japan, But What If It Violates Japanese Public Order?

Private international law (PIL) rules often direct Japanese courts to apply foreign substantive law to resolve disputes with international elements. This commitment to applying foreign law where appropriate is crucial for fairness in cross-border dealings and for respecting the legal systems of other nations. However, an unconditional application of foreign law could, in exceptional circumstances, lead to outcomes that are fundamentally incompatible with Japan's core legal principles and societal values. To guard against such situations, Japanese law, like that of many other countries, incorporates a "public order" or "public policy" exception. This is a vital, albeit carefully restricted, mechanism that allows a court to refrain from applying an otherwise applicable foreign law if doing so would produce a result that deeply offends Japanese public order.

This article explores Article 42 of Japan's Act on General Rules for Application of Laws (AGRAL) (Hō no Tekiyō ni Kansuru Tsūsokuhō, 法の適用に関する通則法), which embodies this public order (kōjo, 公序) exception, examining its rationale, scope, conditions for invocation, and consequences.

What is "Public Order" in Japanese Private International Law (AGRAL Article 42)?

AGRAL Article 42 states: "If the application of a provision of a foreign law that is to govern pursuant to this Act would be contrary to public order or good morals, such provision shall not be applied."

The Necessity of a Public Order Exception

The PIL process typically involves a "leap in the dark": choice-of-law rules select the applicable law based on connecting factors (like nationality, habitual residence, or place of an act) without first examining the content of that law. While this mechanical approach promotes certainty and efficiency, it carries the risk that the designated foreign law might contain provisions or lead to results that are unacceptable from the perspective of the forum's fundamental legal and moral standards. The public order exception acts as a crucial safety valve to prevent the forum's legal system from being compelled to produce outcomes that would undermine its own foundational principles.

Defining Kōjo (Public Order)

The concept of "public order" in the context of AGRAL Article 42 is nuanced:

1. National, Not Universal, Public Order: The prevailing view in Japan is that public order is determined from the perspective of Japanese national interests and values, rather than by reference to some universal or internationally shared standard of public order. This reflects the reality that fundamental legal and moral conceptions can vary significantly between nations.
2. International, Not Domestic, Public Order: This is a critical distinction. The "public order" relevant for PIL purposes is much narrower than the concept of "public policy" found in Japanese domestic law (e.g., Article 90 of the Civil Code, which can invalidate domestic contracts contrary to public order or good morals). If any foreign law provision that merely differed from a mandatory rule of Japanese domestic law were struck down, the entire purpose of PIL (which is to apply foreign law where appropriate) would be negated. For example, Japanese law has a specific age for marriage (Civil Code Article 731); if a foreign national's law sets a slightly different (but still reasonable) age, applying that foreign law to validate their marriage would not typically violate Japan's international public order, even though it differs from the domestic rule. The international public order exception is reserved for situations where the application of foreign law would offend the most fundamental principles, basic notions of justice, or core moral values underpinning the Japanese legal system.

The General Stance on Invocation: Restrictiveness

The dominant academic view in Japan, and often reflected in cautious judicial approaches, is that the public order exception should be invoked restrictively and only in compelling circumstances. This stems from the respect owed to foreign legal systems and the PIL goal of achieving internationally harmonious solutions. Overuse of the public order exception would undermine the certainty and predictability that PIL rules aim to provide.

However, some scholars advocate for a more "functional" approach, viewing public order as a tool to achieve substantively just outcomes in individual cases, particularly where rigid choice-of-law rules might lead to perceived unfairness. This latter approach, while aiming for equity, is often criticized for potentially leading to arbitrary or overly broad non-application of foreign law.

Conditions for Invoking the Public Order Exception under AGRAL Article 42

For the public order exception to be triggered, several conditions, implicit or explicit in Article 42, must be met:

Condition 1: Foreign Law is Applicable

The process must have first led to the designation of a foreign law as the applicable law (lex causae) through the relevant choice-of-law rules in AGRAL or other specific statutes/treaties. If Japanese law is already the applicable law, the public order exception in Article 42 is not pertinent (though domestic public policy under Civil Code Article 90 might be). This includes foreign law designated by analogy or through judicial interpretation of PIL principles (e.g., the Supreme Court judgment of September 26, 2002, Minshū Vol. 56, No. 7, p. 1551, considered the public order implications of applying U.S. patent law, which was deemed applicable based on "sound reason" rather than a direct statutory rule for that specific issue).

Condition 2: The "Application" of the Foreign Provision is at Issue

The focus is not on whether the foreign law provision itself, in the abstract, is offensive to Japanese values. Instead, the critical assessment is whether the result of applying that foreign provision to the specific facts of the case at hand would be contrary to Japanese public order. A foreign law might seem unusual or even objectionable on its face, but if its application in a particular case yields a result that is not fundamentally offensive, public order will not be breached. This usually implies that the result of applying the foreign law differs from the result that would be obtained under Japanese law in a comparable domestic situation.

Condition 3: The Result is "Contrary to Public Order or Good Morals" of Japan

This is the core of the inquiry. The court must determine if the specific outcome produced by applying the foreign law provision would violate Japan's fundamental legal principles or core moral values (i.e., its international public order).

The Balancing Act: "Inappropriateness" of the Result vs. Connection to Japan
There's no simple litmus test. The assessment often involves a balancing or correlation between two key elements:

1. The Degree of "Inappropriateness" or "Unjustness" of the Foreign Law's Outcome: How fundamentally offensive is the result when viewed from the perspective of Japan's core legal and moral order? This involves considering the nature of the foreign rule, the values it reflects (e.g., are they based on religious or political tenets fundamentally at odds with Japanese secular or democratic principles?), and the extent to which its application in the specific case would produce a shocking or intolerable outcome.
2. The Strength of the Connection between the Case and Japan (Naikoku Kanrensei, 内国関連性): How closely is the case tied to Japan? Relevant factors include the nationality, habitual residence, and domicile of the parties; the place where the transaction or event occurred; the location of relevant property; and the extent to which Japanese societal interests are implicated.

The "Correlation Theory": It is often suggested that these two elements are inversely correlated.

• If the result of applying the foreign law is highly offensive to fundamental Japanese principles, the public order exception might be invoked even if the case has relatively weak connections to Japan.
• Conversely, if the result of the foreign law is only mildly problematic, the exception is unlikely to be invoked unless the case has very strong connections to Japan, making the application of such a foreign result particularly inappropriate within the Japanese legal sphere.

For example, a foreign law that absolutely prohibits divorce under any circumstances might be considered to produce a highly inappropriate result from the perspective of Japanese public order, which recognizes divorce. If a Japanese national habitually resident in Japan is subject to such a foreign law, the combination of the result's inappropriateness and the strong connection to Japan would likely lead to the invocation of public order.

Consequences of Invoking the Public Order Exception

1. Non-Application of the Foreign Provision

The immediate effect stated in AGRAL Article 42 is that the offensive foreign provision "shall not be applied." This typically means that only the specific provision causing the public order violation is set aside, not necessarily the entire foreign law that was initially designated as applicable. For example, if a foreign custody law's rule on who becomes the custodian is found to violate public order, but its rules on the content of custodial rights are acceptable, only the former might be disapplied.

2. Filling the Gap (Kekketsu Hojū, 欠缺補充): What Law Applies Instead?

Once the foreign provision is disapplied, a question arises: what law then governs the issue? There are differing views on this:

• Application of Japanese Substantive Law (the Lex Fori): The prevailing approach in Japanese judicial practice, and a strong academic view, is that the "gap" created by setting aside the foreign provision is filled by applying the substantive rules of Japanese law (the law of the forum). So, if a foreign law prohibiting divorce is not applied due to public order, Japanese divorce law would then determine if a divorce can be granted.
• Kekketsu Hininsetsu (Theory Denying a "Gap"): A dominant theory among academics posits that no true "gap" arises. Instead, the very act of finding a public order violation implies a substantive judgment based on fundamental Japanese legal principles. In this view, these fundamental principles (seen as unwritten Japanese international private substantive rules) directly provide the solution once the offensive foreign rule is displaced.
• Application of the Next Closest Law: A minority view suggests that if the original choice-of-law rule involved a hierarchy of connecting factors (e.g., in divorce or matrimonial property), and the law chosen by the primary factor is set aside for public order reasons, the court should then look to the law designated by the next connecting factor in the hierarchy.

While the kekketsu hininsetsu has strong theoretical appeal among scholars for its consistency, the practical outcome of applying Japanese law (as the lex fori) is often similar and provides greater certainty for courts.

Specific Applications and Problem Areas

Public Order and Preliminary Questions (Senketsu Mondai, 先決問題)

When the public order issue arises not in relation to the main question before the court, but concerning a preliminary or incidental question that needs to be resolved first (e.g., the validity of a marriage as a precursor to determining inheritance rights), the public order exception is generally invoked even more restrictively. If the main legal relationship does not itself trigger public order concerns, courts are usually reluctant to invalidate a preliminary status or right created under foreign law solely on public order grounds, especially if doing so would disrupt established situations or expectations.

Punitive Damages and Public Order

The enforcement of foreign judgments awarding punitive damages has frequently raised public order concerns in Japan.

• Japanese tort law is primarily compensatory. Punitive damages, aimed at punishing the defendant and deterring future conduct, are generally seen as contrary to the fundamental principles of the Japanese civil liability system. The Supreme Court judgment of July 11, 1997 (Minshū Vol. 51, No. 6, p. 2573) found that enforcing the punitive portion of a U.S. judgment would violate Japanese public order.
• Interaction with AGRAL Article 22 (for Torts): It is crucial to remember that for tort claims, AGRAL Article 22(2) already limits remedies to those recognized under Japanese law and to the extent so recognized. This means that even before considering the general public order exception under Article 42, Article 22(2) would typically filter out claims for punitive damages if the tort claim itself is being adjudicated (or a foreign tort judgment is being recognized) in Japan. Thus, Article 42's role regarding punitive damages in tort cases is often pre-empted by Article 22. However, Article 42 remains relevant for torts if, for example, the applicable foreign law is far more restrictive in recognizing a tort or awarding compensation than Japanese law, and applying such a restrictive foreign law would lead to a result fundamentally unjust from Japan's perspective.

Analyzing Scenarios

Let's consider adapted scenarios based on the problems in Case 30, No. 25 of the reference material.

Scenario 1: Foreign Law Prohibiting Divorce

• Facts: Ms. A (national of Country X, resident in Japan) and Mr. B (national of Country Y) were married and lived in Country Y. Their relationship irretrievably broke down, and Ms. A returned to Japan, where she now seeks a divorce. The applicable law for the divorce under Japanese PIL rules (AGRAL Art. 27) is determined to be the law of Country Y. However, Country Y law does not permit divorce under any circumstances.
• Analysis:
  • Result of Applying Country Y Law: Ms. A cannot obtain a divorce.
  • Inappropriateness of the Result: From a Japanese perspective, where divorce is recognized as a necessary remedy for irretrievably broken marriages, an absolute prohibition on divorce can be seen as highly inappropriate, potentially trapping an individual in a defunct marriage and preventing them from rebuilding their life.
  • Connection to Japan: Ms. A is now resident in Japan and is seeking relief in a Japanese court. Her future life is centered in Japan.
  • Possible Outcome: Given the significant inappropriateness of forcing Ms. A to remain in a broken marriage, especially with her connection to Japan (residence, seeking legal recourse here), a Japanese court would likely find that applying Country Y's absolute prohibition on divorce is contrary to Japanese public order. Japanese law would then likely be applied to determine if a divorce can be granted based on Japanese grounds.

Scenario 2: Enforcement of a Foreign Gambling Debt

• Facts: Mr. C, a Japanese national, incurs a gambling debt to Mr. D (a national of Country X) at a licensed casino in Country X, where such gambling is legal and debts are enforceable. Mr. D sues Mr. C in Japan to recover the debt. The applicable law to the gambling contract under Japanese PIL rules (AGRAL Art. 7 or 8) is the law of Country X.
• Analysis:
  • Result of Applying Country X Law: The gambling debt is enforceable.
  • Comparison with Japanese Law: Under Japanese domestic law, gambling contracts are generally considered void as contrary to public order (Civil Code Art. 90), and debts arising therefrom are unenforceable.
  • Inappropriateness & Connection: This is a classic public order dilemma. On one hand, enforcing a gambling debt could be seen as undermining Japan's general policy against private gambling. On the other hand, the transaction was legal where it occurred (Country X), Mr. C voluntarily participated, and Japan does permit some forms of state-regulated gambling. The connection to Japan is Mr. C's residence and the forum.
  • Possible Outcome: This is debatable. Historically, Japanese courts were often reluctant to enforce foreign gambling debts. However, with increasing international interaction and the legality of the activity in the locus contractus and under the lex causae, courts might be less inclined to invoke public order, especially if the gambling was conducted openly in a jurisdiction where it is a regulated industry, unless there are elements of exploitation or unconscionability. If the debt arose from casual, private gambling, the public order objection would likely be stronger.

Scenario 3: Foreign Custody Rule Mandating Father as Custodian

• Facts: Mother E (Country X national, resident in Japan) and Father F (Country Y national) have a child, G (Country Y national). They divorced in Japan, and F was granted custody. F is subsequently imprisoned for a serious crime. E and her new husband, H (Country X national), are now caring for G in Japan. E petitions a Japanese court for a change of custody. Under Japanese PIL (AGRAL Art. 32), the law applicable to parental authority is the law of Country Y (as the child's and father's common national law). Country Y law rigidly mandates that the father is always the custodian and allows no change.
• Analysis:
  • Result of Applying Country Y Law: Custody cannot be changed from F to E, meaning G officially remains in the custody of an imprisoned parent, despite being cared for by E.
  • Inappropriateness: Japanese law prioritizes the "best interests of the child" (ko no fukushi, 子の福祉) in all custody matters. A rule that automatically assigns custody to a father, irrespective of his suitability (e.g., imprisonment) and without regard for the child's actual welfare and care situation, would likely be seen as starkly contrary to this fundamental principle.
  • Connection to Japan: The child G, the mother E, and the stepfather H are all resident in Japan. The child's daily life and welfare are centered in Japan.
  • Likely Outcome: There is a very strong argument that applying Country Y's inflexible rule would violate Japanese public order based on the paramountcy of the child's welfare. The Japanese court would likely set aside the Country Y rule and decide on custody based on the child's best interests, effectively applying Japanese substantive principles.

Conclusion

The public order exception under AGRAL Article 42 is an essential, albeit exceptional, tool in Japanese private international law. It serves as a final safeguard to ensure that the application of foreign law, as dictated by Japan's choice-of-law rules, does not lead to results that are fundamentally irreconcilable with the core values and foundational principles of the Japanese legal order. While its invocation is approached with caution to maintain respect for foreign laws and international legal harmony, it remains a critical mechanism for upholding the integrity of Japanese justice in cross-border disputes. Understanding its nuanced application, particularly the interplay between the offensiveness of a foreign law's result and the case's connection to Japan, is vital for anyone navigating international legal issues with a Japanese nexus.