Appealing a Judgment in Japan: Who Can Appeal and Can the Outcome Get Worse?

Japanese Attorney at Law - Bengoshi L.L.

• 11 min read

The conclusion of a trial at first instance in Japanese civil litigation does not necessarily mark the end of the dispute. Parties dissatisfied with the judgment may have the right to seek review by a higher court through the appellate system. This system is designed to correct errors made by lower courts and to ensure the uniform interpretation and application of law. However, the ability to appeal is not unlimited, and the process itself is governed by specific rules. Two fundamental questions for any party considering an appeal are: first, do they have the requisite "interest to appeal" (jōso no rieki), and second, could their own appeal inadvertently lead to a less favorable outcome—a concern addressed by the "prohibition of reformatio in peius" (furieki henkō kinshi no gensoku).

The Japanese Appellate Structure: A Brief Overview

Japan generally employs a three-tier court system for civil matters:

  1. Court of First Instance: Typically a District Court (chihō saibansho) or, for smaller claims, a Summary Court (kan'i saibansho).
  2. Court of Second Instance (High Court - Kōtō Saibansho): An appeal from a District Court judgment (or certain Summary Court judgments) is known as a kōso appeal. The High Court conducts a de novo review, meaning it re-examines both issues of fact and law. Parties can, within certain limits, introduce new arguments and evidence. This is often described as a "continuation system" (zokushin-sei), where the High Court essentially continues the trial.
  3. Court of Final Instance (Supreme Court - Saikō Saibansho): An appeal from a High Court judgment is known as a jōkoku appeal. The Supreme Court's review is primarily limited to questions of law. The grounds for a jōkoku appeal are restricted, generally to alleged constitutional violations or other grave errors of law that clearly affected the judgment (Article 312, Code of Civil Procedure - CCP). For other asserted errors in the interpretation of law, a party may file a "petition for acceptance of jōkoku appeal" (jōkoku juri no mōshitate) under CCP Article 318. The Supreme Court has discretion to accept such cases if it deems them to involve important questions of legal interpretation.

This article will primarily focus on the principles of "interest to appeal" and "prohibition of reformatio in peius" as they generally apply in the context of kōso appeals to the High Court, though the concepts have relevance for jōkoku appeals as well.

Part 1: Who Can Appeal? The "Interest to Appeal" (Jōso no Rieki)

Not every party to a lawsuit can appeal a judgment. A fundamental prerequisite for lodging a valid appeal is that the appellant must possess an "interest to appeal." This essentially means that the party must have been adversely affected by the judgment of the lower court. A party who has achieved a complete victory and received all the relief they sought generally has no grounds or "interest" to appeal that judgment.

Determining Who is "Adversely Affected": The Formal Dissatisfaction Theory

The prevailing approach in Japanese judicial practice and legal scholarship for determining whether an interest to appeal exists is the "Formal Dissatisfaction Theory" (keishiki-teki fufuku setsu). This theory involves a relatively straightforward comparison:

  • The court looks at the relief sought by the party in their pleadings (e.g., the claims made by the plaintiff or the specific outcome sought by the defendant, such as dismissal of the plaintiff's claim).
  • This is then compared with the relief actually granted to that party in the operative part (shubun) of the judgment (the formal ruling or order of the court).

If the judgment grants the party less than what they formally requested, they are considered to have been adversely affected with respect to the denied portion and thus possess an interest to appeal.

  • Examples:
    • If a plaintiff claims 10 million yen in damages but the court awards only 6 million yen, the plaintiff has an interest to appeal the denial of the remaining 4 million yen. The defendant, ordered to pay 6 million yen, has an interest to appeal the part of the judgment ordering payment.
    • If the plaintiff's entire claim is dismissed, the plaintiff clearly has an interest to appeal.
    • If the plaintiff's entire claim is granted as requested, the plaintiff generally has no interest to appeal, while the defendant (against whom the judgment was rendered) does.

Dissatisfaction with Reasoning Alone is Usually Insufficient

A crucial aspect of the Formal Dissatisfaction Theory is that a party generally cannot appeal solely because they are dissatisfied with the reasoning (riyū) of the judgment, if the outcome in the operative part is entirely favorable to them. Res judicata (the binding preclusive effect of a judgment) primarily attaches to the decision set forth in the operative part, not to the subsidiary findings of fact or legal interpretations contained within the court's reasoning (with the notable exception of findings on a set-off defense, as per CCP Article 114(2)).

For instance, (drawing from the scenario in the provided PDF's Basic Problem 48) if a defendant is sued for the return of property and their primary defense is that they purchased it outright, but the court dismisses the plaintiff's claim because it finds the transaction was a security transfer (as argued alternatively by the plaintiff) and the secured debt (owed to the defendant) has not yet been fully repaid, the defendant has formally "won" (the plaintiff's claim for return is dismissed). Even if the defendant strongly disagrees with the court's finding that it was a security transfer (preferring the "outright sale" characterization for other potential legal consequences), they generally cannot appeal this unfavorable reasoning as long as the operative part grants them the dismissal they sought. They would typically have to wait and contest that reasoning if and when the plaintiff brings a new action based on it (e.g., an action to redeem the security after offering to pay the alleged remaining debt).

Exceptions and Refinements

While the Formal Dissatisfaction Theory is the general rule, there are recognized exceptions or specific situations where a party who appears to have formally "won" might still be found to have an interest to appeal:

  1. Defendant "Wins" Due to a Set-Off Claim Being Upheld: If a defendant successfully raises a set-off defense (asserting their own claim against the plaintiff to cancel out the plaintiff's claim), and the plaintiff's claim is dismissed as a result, the defendant has effectively "used up" their own claim to the extent of the set-off. If the defendant believes the plaintiff's primary claim should have been dismissed on other grounds (e.g., the plaintiff's claim was invalid from the start) without needing to sacrifice their set-off claim, they have an interest to appeal the judgment to achieve that more favorable outcome (i.e., dismissal of plaintiff's claim and preservation of their own claim). This is because the finding on the set-off claim itself acquires res judicata under CCP Article 114(2).
  2. Certain Family Law Judgments: In some family law contexts, such as divorce proceedings, the formal outcome might not fully reflect a party's interest. For example, if a defendant successfully opposes a plaintiff's petition for divorce (resulting in a dismissal), that defendant might still have an interest to appeal if they themselves wished to obtain a divorce but on different grounds or terms. Rules preventing immediate re-litigation of the same divorce claim (e.g., Article 25 of the Personal Status Litigation Act) might necessitate allowing an appeal to address their own affirmative desire for a different form of dissolution.
  3. Impact on Other Rights or Potential Future Litigation: In rare cases, even a formally favorable judgment might contain elements that directly and detrimentally affect other specific legal rights of the "winning" party, or might create a situation where they are unfairly precluded from pursuing related claims. The "New Substantive Dissatisfaction Theory" (shin jisshitsu-teki fufuku setsu) attempts to unify these exceptions by arguing that an interest to appeal exists if the judgment, once it becomes final and binding, would produce some legally disadvantageous effect (like res judicata or other preclusive effects) for the party.

Part 2: Can the Outcome Worsen on Your Own Appeal? The Prohibition of Reformatio in Peius

A significant principle governing appellate review in Japan is the "Prohibition of Reformatio in Peius" (不利益変更禁止の原則 - furieki henkō kinshi no gensoku). This rule is explicitly stated for kōso appeals in CCP Article 304: "The court of second instance may not change the judgment of the first instance to the detriment of the appellant, within the scope of the part of the case that has become subject to its judgment by the filing of an appeal."

The Core Principle and Its Rationale

In essence, if only one party appeals from a judgment, the appellate court cannot alter the original judgment in a way that makes the appellant's position worse than it was under the original judgment. The most unfavorable outcome for an appellant who is the sole party appealing is that their appeal will be dismissed, and the original judgment will simply be affirmed.

The primary rationales for this principle are:

  • Encouraging Appeals: It allows a party who is genuinely dissatisfied with a lower court's decision to seek appellate review without the fear that their own act of appealing might result in an even less favorable judgment. If such a risk existed, it would unduly deter parties from exercising their right to appeal, even when they have legitimate grievances.
  • Principle of Party Disposition: The scope of the appellate court's review is generally framed by the dissatisfaction expressed by the appellant(s). If the appellee (the non-appealing party) has not sought a modification of the judgment in their favor, the court should not unilaterally change it to the appellant's detriment beyond what the appellant themselves has put at issue.

How the Principle Operates

  • If a plaintiff is awarded 6 million yen out of a 10 million yen claim and only the plaintiff appeals (seeking the full 10 million), the High Court cannot reduce the award below 6 million yen. It can affirm the 6 million, increase it up to 10 million, or modify the reasoning while still awarding at least 6 million.
  • If a defendant is ordered to pay 6 million yen and only the defendant appeals (seeking to pay nothing or less), the High Court cannot order the defendant to pay more than 6 million yen.

The Role of the Appellee: Incidental Appeals (Futai Kōso)

The prohibition of reformatio in peius operates to protect the appellant. If the appellee (the party who did not initially appeal) is also dissatisfied with some aspect of the first instance judgment and wishes to seek a modification in their own favor, they cannot rely on the appellant's appeal to achieve this.

Instead, the appellee must actively seek such a modification by filing their own independent appeal (if the appeal period is still open) or, more commonly, by lodging an "incidental appeal" (futai kōso) under CCP Article 293.

  • An incidental appeal is filed by the appellee in response to the appellant's main appeal. It allows the appellee to challenge parts of the original judgment that are unfavorable to them, even if their own time for filing a primary appeal has expired, as long as the main appeal is still validly pending.
  • If an incidental appeal is filed, the scope of the appellate court's review is expanded to include the issues raised by the appellee. In this situation, the court can modify the judgment in a way that is detrimental to the original appellant (concerning the issues raised in the incidental appeal) or, conversely, more beneficial to the appellee. The prohibition of reformatio in peius is then assessed individually for each party with respect to their own appeal (main or incidental).
  • An incidental appeal is dependent on the main appeal: if the main appeal is withdrawn or dismissed as unlawful before the incidental appeal itself meets all requirements for an independent appeal, the incidental appeal generally loses its effect.

Exceptions to the Prohibition

While a strong principle, the prohibition of reformatio in peius is not absolute and has certain exceptions or limitations:

  1. Matters Subject to Ex Officio Review by the Court: The principle generally does not prevent an appellate court from correcting fundamental errors that it must investigate on its own initiative (shokken chōsa jikō), such as a lack of subject matter jurisdiction, critical procedural defects (e.g., improper service leading to a lack of due process for one party), or violations of public policy. If an appellate court discovers such a fundamental flaw, it might set aside a judgment that was favorable to the appellant and, for example, dismiss the entire original action if it lacked jurisdiction, even though this is detrimental to the appellant.
  2. Inextricably Connected Claims: In complex cases with multiple claims or counterclaims that are legally or factually inseparable, a modification on one appealed part might logically necessitate a change to another part that was not formally appealed, potentially to the appellant's detriment. This is applied cautiously.
  3. Special Types of Litigation Not Strictly Governed by Party Disposition: In certain types of lawsuits where the court has a more active role in shaping the outcome based on broader considerations than just the parties' specific requests (e.g., boundary demarcation suits - kyōkai kakutei soshō), the prohibition of reformatio in peius may not apply with full force. The Supreme Court decision of October 15, 1963 (Minshu Vol. 17, No. 9, p. 1220), indicated this for boundary demarcation suits.

Application in Complex Scenarios, such as Set-Off Defenses

The interplay of the prohibition of reformatio in peius with other procedural elements, like set-off defenses, can be intricate, as illustrated by the scenario in the provided PDF's Advanced Problem 20 and the Supreme Court decision of September 4, 1986 (Hanrei Jiho No. 1215, p. 47).

  • Scenario Recap: Plaintiff (X) sues Defendant (Y). Y raises a defense (e.g., X's claim is void) and, contingently (yobi-teki ni), a set-off defense. The first instance court rejects Y's primary defense but upholds the set-off, resulting in the dismissal of X's claim. Only X appeals, arguing the set-off was wrongly allowed. Y does not file an incidental appeal to argue that X's primary claim should have been dismissed on grounds other than set-off (which would have preserved Y's set-off claim for future use).
  • High Court's Dilemma: If the High Court, upon review, concludes that X's original claim was indeed non-existent or void from the start (meaning the set-off shouldn't even have been considered), how should it rule?
    • If it simply issues a new judgment dismissing X's claim on the grounds of its non-existence, this is actually more favorable to Y (the non-appealing appellee) than the first instance judgment, because Y's set-off claim would no longer be deemed "used up." This change would be to X's (the appellant's) detriment compared to the first instance outcome where X lost but Y's cross-claim was extinguished.
  • Supreme Court's Guidance (1986 case): In such a situation, because Y did not file an incidental appeal seeking a dismissal of X's main claim on grounds other than set-off, the High Court, even if it believes X's main claim is fundamentally flawed, cannot simply issue a new judgment dismissing X's claim on that more favorable (to Y) basis. To do so without an incidental appeal from Y would violate the prohibition against making the appellant X's situation worse relative to the first instance judgment's effect on Y's set-off claim. Instead, the High Court should simply dismiss X's appeal. This action upholds the first instance judgment (which dismissed X's claim due to set-off). X's position (claim dismissed) does not worsen, and Y's position (set-off claim consumed) is not improved without Y having actively sought that improvement through their own appeal or incidental appeal. This demonstrates a nuanced application of the principle to protect the appellant from unforeseen detrimental shifts in the basis of the judgment when the appellee has not sought such a change.

Strategic Considerations

  • For Potential Appellants: Carefully assess if the lower court judgment is genuinely "adverse" based on the formal relief granted versus what was sought. Understand that your own appeal, if you are the sole appellant, will not lead to an outcome worse for you than the original judgment.
  • For Appellees: If the appellant files an appeal, and you are also dissatisfied with any part of the judgment (even parts favorable to the appellant that you think should be more favorable to you, or parts unfavorable to you that the appellant didn't challenge), you must file your own primary appeal (if time permits) or, more commonly, an incidental appeal (futai kōso). Failure to do so means you generally accept the aspects of the judgment not challenged by the appellant, and the court cannot change them in your favor (or to the appellant's further detriment) on its own initiative.

Conclusion

The Japanese appellate system provides avenues for reviewing lower court decisions, but access to appeal is conditioned upon having a demonstrable "interest to appeal," typically defined by formal dissatisfaction with the judgment's outcome. Once an appeal is lodged by only one party, the crucial "prohibition of reformatio in peius" (no change to the appellant's detriment) ensures that appellants are not penalized for seeking review. This principle is a cornerstone of appellate fairness, encouraging the use of the appeal system. However, its application can become complex, particularly in multi-issue cases or where the appellee also has grievances. In such situations, the strategic use of incidental appeals by the appellee is essential to expand the scope of appellate review and seek a more favorable outcome for themselves. A thorough understanding of these interconnected principles is vital for any party contemplating or responding to an appeal in Japanese civil litigation.