How Are Japanese Security Interests Enforced and Under What Circumstances Are They Extinguished? The creation of a security interest in Japan, whether a statutory right like a preferential right or a consensual one like a mortgage or pledge, is only the initial step in protecting a creditor's claim. Equally critical is understanding how these security interests are enforced if the debtor
What is "Retention of Title" (Shoyuken Ryuho) in Japanese Sales and How Does it Secure Sellers? In commercial transactions, particularly in the sale of goods on credit, sellers often face the risk of non-payment by the buyer after an Ttitle has passed to the buyer upon delivery. To mitigate this risk, sellers in Japan frequently employ a contractual device known as "Retention of Title"
Using Receivables as Collateral in Japan: The Mechanics of "Security by Assignment of Claims" (Saiken Joto Tanpo) In modern commerce, a company's accounts receivable often represent one of its most significant assets. The ability to leverage these future income streams for financing is crucial for working capital, investment, and growth. In Japan, a primary legal mechanism for using monetary claims as collateral is a form
How Does "Floating Charge" Style Security (Ryudo Dosan Joto Tanpo) Work for Inventory in Japan? Businesses often rely on financing secured by their current assets, such as inventory or raw materials. However, these assets are inherently "floating" – their specific components change constantly as goods are sold and new stock is acquired. Traditional security interests that attach to specific, identifiable items are ill-suited for
Understanding "Security by Assignment of Title" (Joto Tanpo) for Movables and Real Estate in Japan In the diverse landscape of Japanese security interests, "Security by Assignment of Title" (譲渡担保 - Jōto Tanpo) stands as a prominent and highly adaptable "atypical" (非典型 - hi-tenkei) security device. Unlike typical codified security interests such as mortgages or pledges which have clearly defined statutory frameworks
"Provisional Registration Security" (Karitoki Tanpo) in Japan: A Powerful but Complex Collateral Tool? In Japan's array of security interests, "Provisional Registration Security" (仮登記担保 - Karitoki Tanpo) stands out as a significant, albeit intricate, form of "atypical" or non-codified security (非典型担保 - hi-tenkei tanpo). Predominantly utilized for real estate, its core mechanism involves a creditor securing a loan
What is a "Revolving Mortgage" (Ne-Teito-ken) in Japan and Why is it Widely Used in Business? In the landscape of Japanese secured financing, while the ordinary mortgage (普通抵当権 - futsū teitōken) serves to secure a specific, existing debt, its utility diminishes in the context of dynamic, ongoing business relationships. Imagine a manufacturer constantly supplying goods to a distributor on credit, or a bank providing a fluctuating
Understanding "Statutory Superficies" (Hotei Chijo-ken) in Japanese Mortgage Law: When is it Established? A fundamental principle of Japanese property law is that land and any building(s) situated upon it are treated as legally separate and distinct items of immovable property. Each can be owned, sold, and, importantly, mortgaged independently. While this provides flexibility, it also creates a potential conundrum: what happens if
How Are Mortgagee's Rights Protected Against Infringement Before Foreclosure in Japan? A Japanese mortgage (抵当権 - Teito-ken) provides a creditor (mortgagee) with a powerful security interest over real estate. However, a defining characteristic of the mortgage is that the debtor (mortgagor) or the property owner retains possession and the right to use the mortgaged property. This non-possessory nature, while commercially convenient,
What is the Scope of a Japanese Mortgage? Understanding "Appurtenant Objects" (Fuka Ittai Butsu) and "Real Subrogation" (Butsujo Dai'i) When a creditor takes a mortgage (抵当権 - Teito-ken) over real estate in Japan, a fundamental question arises: precisely what assets and values does this security interest encompass? The answer is not always limited to the bare land or building initially described in the mortgage agreement. Japanese law extends the
Japanese Real Estate Mortgages (Teito-ken): Creation, Scope, and Priority Rules? The mortgage (抵当権 - Teito-ken) stands as a cornerstone of secured financing in Japan, especially concerning real estate. Unlike possessory security interests such as pledges, the Japanese mortgage, as regulated primarily by Articles 369 and onwards of the Civil Code, is a non-possessory consensual security interest (約定担保物権 - yakujō tanpo
What is "Pledge of Rights" (Kenri-jichi) in Japan and How Can Claims be Collateralized? In the Japanese system of secured transactions, the concept of a "pledge" (質権 - shichi-ken) extends beyond tangible movable and immovable property. The Civil Code, in Article 362, explicitly allows for "property rights" (財産権 - zaisanken) themselves to be used as collateral. This form of security
Securing Movables and Immovables with a Japanese "Pledge" (Shichi-ken): How Does It Work? In the diverse array of security interests available under Japanese law, the "pledge" (質権 - shichi-ken) stands as a foundational and historically significant consensual security device. Governed primarily by Articles 342 onwards of the Japanese Civil Code, a pledge is created when a creditor (the pledgee) takes possession
What Claims Are Protected by "General Preferential Rights" in Japan and What Is Their Scope? In the Japanese system of secured transactions, beyond securities created by explicit agreement, the law itself designates certain claims as deserving of special priority in debt recovery. These are known as "Preferential Rights" (先取特権 - Sakidori Tokken), a form of statutory lien. Among them, "General Preferential Rights&
How Do Japanese "Preferential Rights" (Sakidori Tokken) Grant Priority Payment Without an Agreement? In the intricate web of creditor-debtor relationships, the Japanese legal system provides certain claims with a special status, allowing them to be satisfied ahead of others, even in the absence of a specific contractual agreement creating a security interest. These are known as "Preferential Rights" or, more literally,
'Right of Retention' vs. 'Simultaneous Performance Defense' in Japan: What's the Difference for Creditors? In the landscape of Japanese commercial and contractual law, parties often find themselves in situations where they are owed a performance (typically payment) while also being obligated to perform an act for the counterparty, such as returning property. When the counterparty demands performance without fulfilling their own end of the
How Does Japan's "Right of Retention" (Ryuchi-ken) Allow a Creditor to Hold a Debtor's Property? In the course of business, situations frequently arise where one party, having provided services or incurred expenses related to another's property in their possession, seeks assurance of payment before returning that property. Japanese law provides a specific statutory mechanism for this purpose known as the "Right of
What Are the 'Common Properties' of Japanese Security Interests and How Consistently Do They Apply? The Japanese legal system features a diverse array of security interests (担保物権 - tanpo bukken), each designed to protect creditors in various commercial and financial transactions. While these mechanisms differ in their creation, scope, and enforcement, legal doctrine has traditionally identified certain underlying principles or "common properties" (共通の性質
'Typical' vs. 'Atypical' Security Interests in Japan: What Distinguishes These Collateral Forms? In the realm of Japanese secured transactions, creditors have a diverse toolkit of legal mechanisms to protect their claims. These mechanisms, broadly termed "security interests" (担保物権 - tanpo bukken), are not monolithic. A crucial distinction is drawn between "typical" (or "classical") security interests, which
Statutory (Hotei) vs. Consensual (Yakujo) Security Interests in Japan: What Are the Key Differences? Navigating the landscape of Japanese commercial law reveals a robust framework for securing obligations, primarily through what are known as "security interests" (担保物権 - tanpo bukken). These legal mechanisms are vital for creditors seeking to mitigate risks and ensure the satisfaction of their claims. A fundamental distinction within
Why Are Security Interests (Tanpo Bukken) Essential for Business Transactions in Japan? In the complex world of commercial dealings, ensuring the satisfaction of claims is paramount. When a business extends credit, provides services, or enters into significant contracts, the risk of default by the counterparty is an inherent concern. In Japan, a sophisticated system of "security interests" (担保物権 - tanpo
Can 'Holdover' Directors Be Sued for Dismissal? A Japanese Supreme Court Ruling on Continuing Duties and Shareholder Actions Case: Action for Dismissal of a Director Supreme Court of Japan, Third Petty Bench, Judgment of February 26, 2008 Case Number: (Ju) No. 1443 of 2007 Japanese company law provides a mechanism for directors whose terms have expired or who have resigned to continue exercising their rights and duties if
We Have a Foreign Judgment Against a Japanese Entity: How Can We Get it Recognized and Enforced in Japan? Obtaining a favorable judgment in a foreign court against a Japanese entity is often only half the battle. For that judgment to have practical effect in Japan—for instance, to seize assets located there—it must first be "recognized" (shōnin, 承認) and then, if it orders payment or
An Employee is Involved in a Status-Related Case (e.g., Divorce) in Japan: How is International Jurisdiction Determined? When employees and their families navigate international assignments, personal status matters such as divorce, child custody, adoption, or inheritance can become complex legal issues with cross-border implications. If an employee or their family member becomes involved in such a "status-related case" (mibun kankei jiken, 身分関係事件) with connections to
Can We Agree on a Foreign Court for Disputes with a Japanese Company, or Will a Japanese Court Accept Jurisdiction if We Sue There? In international business dealings, proactively addressing potential dispute resolution mechanisms is a hallmark of sound contractual practice. One key aspect of this is determining which country's courts will have the authority to hear any disputes that may arise—an issue known as international adjudicatory jurisdiction. Parties often seek
