Can My U.S. Company Be Forced to Disclose Internal Documents in a Japanese Lawsuit? Understanding the Document Production Order

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read

When a U.S. company becomes entangled in civil litigation in Japan, one of the most pressing concerns often revolves around the extent to which it can be compelled to produce internal documents. Unlike the broad discovery procedures familiar in the United States, Japan's system for accessing documentary evidence held by an opposing party or a third party operates under a more circumscribed, court-ordered framework. This article provides an in-depth look at Japan's document production order system (J.: bunsho teishutsu meirei), outlining its legal basis, the scope of the obligation, key exceptions—particularly concerning confidential corporate information—and how it compares to U.S. discovery.

The Japanese Framework: Balancing Truth-Finding with Confidentiality

The Japanese Code of Civil Procedure (CCP) places the primary responsibility for gathering and presenting evidence on the litigating parties themselves, a principle known as Benron-shugi (the principle of party presentation). However, to ensure that relevant evidence is not withheld and to correct imbalances in access to information, the CCP provides a mechanism for a party to request the court to order another party or a third party to produce specific documents.

The scope of this document production obligation was significantly expanded by the 1996 amendments to the CCP. The underlying philosophy shifted towards a general obligation to produce documents unless specific grounds for refusal apply, aiming to enhance the truth-finding function of the courts and address issues of evidence unevenly distributed between parties.

When Can Document Production Be Ordered? The Scope of Article 220 CCP

Article 220 of the CCP is the cornerstone of the document production system. It delineates several categories under which a possessor of a document is obligated to produce it.

Specific Categories of Obligation (Article 220, items 1-3)

  1. Documents Cited by the Holder (Item 1): If a party has referred to a document in the litigation to support its own arguments, it is generally obligated to produce that document upon the opponent's request. This is based on principles of fairness and preventing a party from selectively using evidence.
  2. Documents the Requesting Party Has a Right to Access (Item 2): If the party requesting production has a substantive legal right to demand the delivery or inspection of the document from its holder (e.g., based on a contractual provision or a specific statutory right like a shareholder's right to inspect accounting books), the court can order its production.
  3. "Benefit Documents" and "Legal Relationship Documents" (Item 3): This category covers documents created for the benefit of the requesting party (e.g., a receipt issued to them) or documents created concerning a legal relationship between the requesting party and the document holder (e.g., a contract between them). The rationale is that such documents inherently pertain to the requesting party's interests or their dealings with the holder.

The General Obligation and Its Crucial Exceptions (Article 220, item 4)

Beyond these specific categories, Article 220, item 4 establishes a broad, catch-all obligation: a document holder must produce any document unless it falls under one of the specifically enumerated exceptions. This general obligation underscores the shift towards greater transparency, but its true scope is defined by the exceptions, which are designed to protect legitimate confidentiality interests. For U.S. companies, understanding these exceptions is paramount.

Key Exceptions to Document Production: Shielding Confidential Information

The exceptions listed in Article 220, item 4, sub-items (a) through (e) (J: イ through ホ) are critical, as they often form the basis for resisting document production requests, especially those involving sensitive corporate information.

  1. Documents Related to Self-Incrimination or Defamation (Sub-item a; J: イ): This protects documents whose disclosure could lead to criminal prosecution or conviction of the holder or certain relatives, or documents concerning matters that could damage their reputation.
  2. Documents Concerning Official Secrets of Public Officers (Sub-item b; J: ロ): This exception covers documents containing secrets of public officials, where production would harm the public interest or substantially hinder the performance of public duties. The court's determination often involves consulting the relevant supervisory government agency. A Supreme Court decision on October 14, 2005, clarified that "official secrets" are not merely those formally designated as secret but must be substantively secret, and that the harm to public interest or public duties must be concretely demonstrated.
  3. Documents Concerning Professional, Technical, or Occupational Secrets (Sub-item c; J: ハ): This is a highly relevant exception for businesses. It covers:
    • Facts that persons in certain enumerated professions (doctors, attorneys, patent attorneys, registered foreign lawyers, certified public accountants, notaries, religious functionaries, etc.) learned in the course of their duties and are obligated to keep secret. This requires that the client (the person to whom the secret pertains) has an objectively protectable interest in keeping the fact confidential (Supreme Court decision, November 26, 2004).
    • Matters concerning technical or occupational secrets of a person. The Supreme Court, in a decision on March 10, 2000, defined "technical or occupational secrets" as those matters whose disclosure would devalue the technology or make its use difficult, or would seriously affect the occupation and make its future conduct difficult. Subsequent case law has refined this, for example, by stating that a financial institution's duty of confidentiality regarding a customer's transaction history does not necessarily constitute an "occupational secret" exempting production if the customer (who is a party to the litigation) themselves has an obligation to disclose it (Supreme Court decision, December 11, 2007). The Supreme Court decision of October 3, 2006, concerning a news reporter's sources, introduced a balancing test between the interest in maintaining secrecy and the interest in truth-finding and a fair trial for this category of secrets.
  4. "Documents Prepared Exclusively for the Internal Use of the Holder" (J.: jiko riyō bunsho) (Sub-item d; J: ニ): This is arguably one of the most frequently litigated and crucial exceptions for corporations. It exempts documents "prepared exclusively for the internal use of the holder".
    The leading Supreme Court case, a decision on November 12, 1999, concerning bank loan approval documents (ringisho), established a three-pronged test for a document to qualify under this exception:Subsequent Supreme Court decisions have further clarified these requirements, often leading to a narrower interpretation of what constitutes an "exclusively internal use" document.These cases demonstrate that Japanese courts scrutinize claims of "exclusively internal use" quite carefully, balancing the need for evidence with the protection of legitimate corporate confidentiality.
    • Internal Nature: The document must have been created for the sole purpose of internal use by the holder and not intended for disclosure to external parties. This is judged from its purpose of creation, content, the process by which the holder came to possess it, and other circumstances.
    • Risk of Undue Disadvantage: Disclosure of the document must pose a risk of causing undue disadvantage to the holder, such as infringing personal privacy or hindering the free formation of will within an organization.
    • Absence of Special Circumstances: There must be no special circumstances that would negate the protection.
    • External Connection/Disclosure Intent: Documents created based on legal requirements or with the expectation of inspection by supervisory authorities or disclosure to third parties may not satisfy the "internal nature" requirement. For example, an investigation report prepared by an investigation committee established by an insurance administrator for a failed insurance company, particularly if based on a statutory order, was found not to be an internal document (Supreme Court decision, November 26, 2004). Similarly, a bank's self-assessment materials regarding loans were denied "internal document" status due to the necessity of post-creation inspection by regulatory agencies (Supreme Court decision, November 30, 2007). Information about a care service user prepared by a care service provider for a review and payment organization was also deemed not exclusively internal due to its intended disclosure to a third party (Supreme Court decision, August 23, 2007).
    • Hindrance to Free Will Formation: Even if a document is internal, if its disclosure is unlikely to hinder the free formation of will within the organization, the "undue disadvantage" requirement may not be met. For example, internal bank circulars sent from headquarters to branch managers, which were not documents created in the process of forming internal decisions but rather conveyed established policies, were held not to be exempt (Supreme Court decision, February 17, 2006).
  5. Documents Related to Criminal Cases or Juvenile Protection Cases (Sub-item e; J: ホ): This generally exempts documents related to ongoing or past criminal proceedings or juvenile protection proceedings, or documents seized in such proceedings. However, there are nuances. For instance, if such a document also qualifies as a "legal relationship document" under item 3 (e.g., a copy of a complaint in a criminal case which also outlines a civil contractual dispute between the same parties), its production in a civil case might be ordered under certain conditions (Supreme Court decision, May 25, 2004).

The Procedure for Requesting Document Production

A party seeking the production of a document (the "requesting party") must file a motion with the court. This motion must specify:

  • The designation of the document (e.g., title, date, author).
  • The gist of the document (its general content).
  • The current holder of the document.
  • The fact to be proven by the document.
  • The ground for the document production obligation (i.e., which item of Article 220 applies).

If the requesting party cannot fully designate the document or describe its gist, they can ask the court to order the document holder to clarify these points (Article 222).

The court then examines the motion. If the document holder is a third party, the court must question them before ordering production (Article 223, paragraph 2).

In-Camera Proceedings (Article 223, paragraph 6)

A distinctive feature of the Japanese system is the in-camera inspection. When determining whether a document falls under certain exceptions (sub-items (a) to (d) of Article 220, item 4 – notably excluding the exception for criminal/juvenile case documents), the court can order the document holder to present the document to the court itself. This presentation is made only to the judges, and no one else, including the requesting party, is allowed to see the document at this stage. This procedure allows the court to make an informed decision about the applicability of an exception without prematurely disclosing potentially sensitive information. While intended to balance competing interests, this ex-parte nature of the inspection has raised some concerns from a due process perspective regarding the requesting party's inability to directly address the document's content in arguing for its production.

The court issues its decision on the motion by a ruling. An immediate appeal (sokuji kōkoku) can be filed against this ruling by either party (Article 223, paragraph 7).

Consequences of Non-Compliance

The CCP provides for sanctions if a party or a third party fails to comply with a document production order:

  • When a Party Fails to Comply (Article 224):
    • The court may deem the opposing party's allegations concerning the description (nature, content, authenticity) of the document to be true (Article 224, paragraph 1).
    • If a party, for the purpose of preventing the opposing party from using a document they are obligated to produce, destroys it or otherwise makes it unusable, the same sanction applies (Article 224, paragraph 2).
    • Crucially, if it is extremely difficult for the opposing party to make specific allegations about the document's description or prove the fact to be proven by other evidence, the court may deem the opposing party's allegations concerning the fact to be proven by the document to be true (Article 224, paragraph 3). This is a more powerful sanction.
  • When a Third Party Fails to Comply (Article 225):
    • The court may, by a ruling, impose a non-penal fine of up to JPY 200,000 on the third party (Article 225, paragraph 1). An immediate appeal can be filed against this ruling. Unlike non-compliance by a party, there is no provision for deeming facts true against a non-compliant third party.

Comparison with U.S. Discovery

The Japanese document production order system differs significantly from the discovery process in the United States:

  • Scope: U.S. discovery is famously broad, generally allowing parties to obtain any non-privileged information that is relevant to any party's claim or defense. The Japanese system is more targeted; production is ordered for specific, identified documents, and only if an obligation under Article 220 is established.
  • Process: U.S. discovery is largely party-driven, with court intervention typically occurring only when disputes arise. In Japan, document production (other than voluntary exchange) is almost entirely court-mediated through the order system.
  • Burdensomeness and Cost: The extensive nature of U.S. discovery, particularly e-discovery, often leads to significant costs and burdens. While obtaining documents in Japan can be challenging, the system is generally less prone to the massive-scale document dumps seen in U.S. litigation.
  • E-Discovery: While electronically stored information (ESI) is increasingly common in Japanese litigation and can be subject to production orders (as "quasi-documents" under Article 231 CCP), Japan does not have as developed a body of specific rules and practices for e-discovery as the U.S. The focus remains on specific documents rather than broad searches of databases.

Practical Implications for U.S. Companies

For U.S. companies facing or anticipating litigation in Japan, several practical points emerge:

  • Document Management: Robust internal document management policies are crucial. Knowing what documents exist, where they are, and how they are classified can be vital when responding to production requests or assessing litigation risks.
  • Protecting Confidentiality: While the exceptions under Article 220, item 4 provide some protection, U.S. companies should be prepared to argue vigorously for their application, particularly for trade secrets, sensitive internal analyses, or proprietary technical information. The "exclusively for internal use" exception (jiko riyō bunsho), despite its seemingly broad language, is interpreted and applied by courts with scrutiny.
  • Responding to Orders: A document production order from a Japanese court is a serious matter. Non-compliance by a party can lead to adverse inferences by the court. Understanding the grounds for objection and the procedural steps is essential.
  • Cross-Border Challenges: If relevant documents are located outside Japan (e.g., at a U.S. parent company), questions of enforcement and potential conflicts with foreign data privacy laws or blocking statutes may arise, requiring careful legal navigation.
  • Local Counsel: Engaging experienced Japanese legal counsel is indispensable. They can advise on the applicability of Article 220 to specific documents, assist in preparing motions or objections, and represent the company's interests before the Japanese court.

Conclusion

While Japan's system for compelling document production is not as expansive as the discovery regime in the United States, it is a potent tool that has been significantly strengthened over the years. The general obligation to produce documents, subject to specific exceptions, means that parties in Japanese civil litigation, including foreign corporations, can be required to disclose a wide range of potentially critical internal documents.

U.S. companies involved in Japanese legal proceedings must be aware of these rules, proactively manage their documentary evidence, and be prepared to engage with the Japanese courts on issues of document production. A thorough understanding of the grounds for production, the available exceptions, and the procedural intricacies is key to protecting corporate interests while complying with legal obligations in Japan.