Can I Force a Japanese Company to Disclose Internal Documents in Litigation? Understanding Document Production Orders and the "Self-Use Document" Exception

In the course of commercial litigation, access to relevant documents held by the opposing party or third parties is often critical for substantiating claims or defenses. While Japan's civil procedure does not feature the broad, party-driven pre-trial discovery common in jurisdictions like the United States, it does provide a mechanism for compelling the production of documents through court orders. This system, primarily governed by Articles 219 through 225 of the Code of Civil Procedure (CCP), establishes a general duty to produce documents, but this duty is qualified by several important exceptions. One of the most frequently litigated and practically significant exceptions concerns "documents exclusively prepared for the holder's own use." Understanding the scope of this general duty and its limitations, particularly the "self-use document" exception, is vital for any entity involved in or facing litigation in Japan.

The General Duty to Produce Documents in Japanese Civil Procedure

Historically, Japanese law was more restrictive regarding a party's obligation to produce documents in their possession. However, amendments to the Code of Civil Procedure, particularly the comprehensive revisions that came into effect in 1998, significantly broadened this obligation.

Article 220 of the CCP outlines the circumstances under which a holder of a document is obligated to produce it. While items 1, 2, and 3 of this article list specific scenarios (such as documents the holder has cited in the litigation themselves, documents the party seeking production has a right to demand delivery or inspection of under substantive law, or documents created for the benefit of the party seeking production or concerning the legal relationship between them and the holder), the most encompassing provision is item 4.

CCP Article 220, item 4 establishes a general, residual duty for a document holder to produce any document unless it falls into one of the specifically enumerated categories of exempted documents. This represents a shift towards greater transparency and access to evidence, aiming to ensure that relevant information is available to the court for a fair and just resolution of the dispute.

Requesting Document Production: The Procedural Steps

A party seeking the production of a document held by an opponent or a third party must file a motion with the court for a document production order (CCP Article 221). This motion must specify:

1. The designation of the document (sufficiently identifying it).
2. The purport or summary of the document's contents.
3. The current holder of the document.
4. The facts that the party intends to prove by using the document.
5. The grounds upon which the duty to produce the document arises (i.e., which sub-item of Article 220 is being invoked).

The court then examines the motion and, if necessary, hears from the document holder. If the court finds that the document holder has a duty to produce and the document is relevant, it will issue a document production order.

Key Exceptions to the General Duty of Production

The general duty to produce under Article 220, item 4, is not absolute. The same provision lists several categories of documents that are exempt from production. These exceptions are designed to protect overriding public or private interests. The most significant for commercial litigation include:

• (a) Documents concerning secrets of public officials in connection with their duties which, if disclosed, would harm the public interest or substantially hinder the performance of public duties, unless approved by the relevant supervisory agency (referring to principles in CCP Article 197(1)(i)).
• (b) Documents exclusively prepared for the internal use of the holder (「専ら文書の所持者の利用に供するための文書」 - moppara bunsho no shojisha no riyō ni kyōsuru tame no bunsho), unless the holder is the State or a local public entity. This is commonly referred to as the "self-use document" exception.
• (c) Documents concerning matters for which the holder or a specified related person (e.g., doctor, lawyer, religious professional) has a right to refuse testimony due to professional secrecy, unless such person has been released from the duty of secrecy (referring to CCP Article 197(1)(ii) and (iii)). This also covers documents containing technical or professional secrets of the holder, unless waived.
• (d) Documents prepared exclusively for use in criminal prosecution, prevention of crime, or other matters concerning public security, where disclosure might harm such interests.

The "self-use document" exception (b) is of particular importance in the context of forcing disclosure of internal corporate documents and has been the subject of significant judicial interpretation.

The "Self-Use Document" Exception: A Deep Dive

The exception for "documents exclusively prepared for the internal use of the holder" (often termed jiko-shiyō bunsho or moppara jiko riyō bunsho) is a crucial shield against the overly broad disclosure of a company's internal papers. The leading authority on its interpretation is the Supreme Court of Japan's decision of November 12, 1999 (Minshu Vol. 53, No. 8, p. 1787). This case, involving a request for loan approval documents held by a financial institution, established a three-prong test for a document to qualify for this exception:

1. Exclusively for Internal Use (External Non-Disclosure Characteristic - gaibu hi-kaiji-sei): The document must have been created with the sole purpose of being used internally by the holder (or within their organization) and not intended for disclosure to any external parties. This assessment considers the document's purpose of creation, its content, the circumstances under which the current holder came to possess it, and other relevant factors.
2. Risk of Significant Disadvantage from Disclosure (Disadvantage Characteristic - fu-rieki-sei): Disclosure of the document must create a risk that the holder will suffer a significant disadvantage. The Supreme Court identified examples such as the infringement of an individual's privacy or the obstruction of an organization's free internal decision-making process.
3. Absence of Special Circumstances Overriding Non-Disclosure: Even if the first two prongs are met, "special circumstances" (tokudan no jijō) might exist that nonetheless justify ordering production. This acts as a potential override to the exception, though its precise scope is less defined.

Let's examine how these prongs are applied, particularly to corporate documents:

Prong 1: External Non-Disclosure Characteristic

Whether a document was intended for external disclosure is a key factual determination.

• Internal Deliberations vs. External Communications: Documents that are purely part of an internal deliberative process, such as internal drafts, meeting minutes not meant for publication, or internal memoranda containing candid assessments, are more likely to satisfy this prong.
• Legally Mandated Submissions: Conversely, if a document is created with the knowledge or legal requirement that it will be submitted to or reviewed by external bodies (e.g., regulatory agencies), it generally loses its "exclusively internal use" character. For instance, the Supreme Court held on November 30, 2007 (Minshu Vol. 61, No. 8, p. 3186), that certain self-assessment documents prepared by financial institutions for asset quality, which are subject to inspection by supervisory authorities like the Financial Services Agency, do not qualify as self-use documents because an external use (regulatory review) is anticipated.
• Loan Approval Documents (kashidashi ringi-sho): In the seminal 1999 Supreme Court case, internal loan approval documents of a bank were found to satisfy this prong. These documents, which typically detail the borrower's situation, the proposed loan terms, risk analysis, and internal opinions leading to a lending decision, were deemed to be created primarily for the bank's internal decision-making processes.

Prong 2: Disadvantage Characteristic

Even if a document is for internal use, its disclosure must pose a risk of "significant disadvantage" to the holder for the exception to apply.

• Privacy Concerns: Infringement of the privacy of individuals mentioned in the document (whether employees, customers, or other third parties) is a recognized disadvantage.
• Obstruction of Free Internal Decision-Making: This is a particularly relevant ground for corporations. The rationale is that if internal documents reflecting candid discussions, preliminary opinions, alternative strategies, or critical self-assessments were routinely subject to disclosure in litigation, it would have a chilling effect on open internal communication. Employees and managers might become overly cautious in documenting their thoughts, thereby impairing the quality and frankness of the internal decision-making process. The 1999 Supreme Court decision recognized this as a valid disadvantage for loan approval documents, stating that their disclosure could hinder a financial institution's ability to freely form its intentions regarding lending decisions.
  The scope of this "free internal decision-making" protection is, however, a point of ongoing debate, as it must be balanced against the need for transparency and access to evidence in litigation, especially where corporate misconduct is alleged.

Prong 3: Absence of Special Circumstances

This prong acts as a potential override, suggesting that even if a document is internal and its disclosure is disadvantageous, overriding "special circumstances" could still compel production. The Supreme Court in the 1999 case acknowledged this possibility but did not elaborate extensively on what such circumstances might be. Later case law provides some hints. For instance, in a case decided on December 14, 2000 (Minshu Vol. 54, No. 9, p. 2709), concerning a loan guarantee, the Court considered whether the party requesting the loan approval document (the guarantor) was in a position effectively identical to the borrower (the bank's customer) regarding the use and relevance of the document, which might constitute a special circumstance. Although the Court ultimately denied such special circumstances in that specific case, it opened the door for this type of analysis. Other potential scenarios could involve situations where the document holder itself is in liquidation and its normal operational interests are no longer paramount, or where the document is the only evidence of a serious illegality.

Case Studies: Loan Approval and Self-Assessment Documents

The application of these principles is best illustrated by how Japanese courts, particularly the Supreme Court, have treated specific types of corporate internal documents:

• Loan Approval Documents (Kashidashi Ringi-sho): As discussed, the Supreme Court's 1999 decision is pivotal. It found that these documents, which are central to a financial institution's internal process of deciding whether to grant a loan and under what terms, generally qualify as "self-use documents." Their creation is for internal deliberation, and their disclosure could impede the institution's ability to make candid and well-considered lending decisions.
• Financial Institution's Self-Assessment Documents (Jiko Satei Bunsho): These documents are prepared by financial institutions to evaluate the quality of their loan portfolios and other assets, often in line with guidelines from regulatory bodies like the Financial Services Agency. The Supreme Court decision of November 30, 2007 (Minshu Vol. 61, No. 8, p. 3186), held that these documents generally do not meet the "exclusively for internal use" criterion of the self-use document exception. This is because they are prepared with the understanding that they will be subject to review by supervisory authorities as part of regulatory oversight. Their intended audience is not strictly internal.
  However, this does not mean such documents are always producible. While not shielded as "self-use documents," portions of them might still be protected under other exceptions, most notably the "professional secrets" exception, if they contain sensitive, non-public customer financial information or the institution's proprietary analytical methodologies that are not otherwise public.

Interplay with the "Professional Secrets" Exception

Even if a document does not qualify as a "self-use document," it may still be exempt from production under CCP Article 220, item 4, sub-item c, if it contains "professional secrets" (e.g., confidential client information held by lawyers, doctors, or financial institutions) or "technical or professional secrets" (often analogous to trade secrets).

The party claiming this exception bears the burden of demonstrating the secret nature of the information and that its disclosure would likely cause significant harm. The courts then typically engage in a balancing act, weighing the need for the document as evidence in the specific litigation (i.e., its relevance and importance for achieving a just outcome) against the potential harm that disclosure would cause to the holder of the secret or to third-party interests.

In the context of financial institutions and their self-assessment documents, the Supreme Court, in a decision dated December 11, 2007 (Minshu Vol. 61, No. 9, p. 3364), clarified an important point regarding customer information. If the customer whose information is contained in the bank's documents is themselves a party to the litigation and would have a duty to disclose that information if it were in their own possession, the bank cannot typically refuse production based on a duty of confidentiality owed to that customer. The customer, in such a scenario, is not deemed to have a legitimate interest protected by the bank's secrecy. However, the bank might still have its own distinct "professional secret" in its analytical techniques, internal risk assessments (not directly derived from the customer's raw data), or strategies, which could be protected.

Further elaborating on this, the Supreme Court, on November 25, 2008 (Minshu Vol. 62, No. 10, p. 2507), affirmed that when assessing whether information in self-assessment documents constitutes a protectable "professional secret" of the financial institution itself (as opposed to merely customer data), a comparison and balancing of various factors are necessary. These include the content and nature of the information, the type and degree of disadvantage the document holder would suffer from disclosure, and the necessity of the document as evidence in the particular civil case.

Consequences of Non-Compliance

If a court issues a document production order and the document holder fails to comply without a justifiable reason (such as a validly upheld exception), the court has the power to impose sanctions. Under CCP Article 224, the court may, in its discretion, deem the opposing party's allegations concerning the contents of the document, or the facts to be proved by that document, as true. This "truth presumption" can be a powerful tool and a significant deterrent against unjustified refusal to produce.

Conclusion

Japan's civil procedure provides a mechanism for compelling document production that, while not as expansive as American discovery, has moved towards a general duty of disclosure. This general duty is, however, carefully balanced against legitimate interests in protecting privacy, internal decision-making processes, and professional or trade secrets through specific statutory exceptions. The "self-use document" exception, as interpreted by the Supreme Court, is a key area where these competing interests are weighed, requiring a fact-intensive analysis of a document's purpose, intended audience, and the potential harm from its disclosure. For businesses operating in or dealing with Japanese entities, understanding these rules is crucial for both asserting rights to obtain necessary documents and for protecting their own confidential internal information when faced with a production request in Japanese litigation.