Can We File a New Lawsuit in Japan if a Similar Case Is Already Pending? Understanding the Prohibition of Overlapping Claims and Its Interaction with Set-Off Defenses

In the realm of civil litigation, the prospect of multiple lawsuits addressing the same or substantially similar issues between the same parties is a concern for both litigants and the judicial system. Such concurrent proceedings can lead to inefficient use of court resources, place an undue burden on defendants, and most critically, risk the issuance of contradictory judgments. Japanese civil procedure addresses this through a fundamental rule: the "Prohibition of Overlapping Claims" or "Prohibition of Duplicate Litigation" (J.: jūfuku soshō no kinshi), primarily stipulated in Article 142 of the Code of Civil Procedure (CCP).

This article will explore the scope and application of this prohibition in Japan, paying particular attention to the often-complex scenarios that arise when a claim asserted as a set-off defense in one action intersects with a separate lawsuit concerning that same claim. Understanding these rules is vital for any party, including U.S. companies, involved in or contemplating litigation in Japan.

The Prohibition of Overlapping Claims (CCP Article 142): Rationale and Scope

The core purpose of Article 142 CCP is threefold: to promote judicial economy by avoiding redundant proceedings; to ensure fairness to the defendant by preventing them from having to defend against the same claim in multiple forums simultaneously; and to maintain the consistency and integrity of judgments by averting the possibility of conflicting decisions on the same matter.

The basic rule is that once an action is pending before a Japanese court, a party cannot file another action involving the same case. If such a subsequent overlapping suit is initiated, it is considered improper and is subject to dismissal by the court.

Determining "Identity of the Case"

The crucial question is what constitutes the "same case." This is generally determined by assessing the identity of two key elements:

1. Identity of Parties: The prohibition applies when the parties in both lawsuits are identical. This includes situations where the roles of plaintiff and defendant are reversed between the two actions. Furthermore, the principle extends to cases where, even if a party in the second suit was not a party in the first, they would nevertheless be bound by the judgment rendered in the first suit (e.g., under the rules of res judicata extending to certain successors or interested parties as per CCP Article 115).
2. Identity of Claim (Subject Matter of Suit - Soshōbutsu): Traditionally, the identity of the claim was determined by whether the substantive legal right or legal relationship being asserted as the subject matter of the suit (soshōbutsu) was the same in both actions. The precise scope here could be influenced by differing theories on how to define the soshōbutsu (the "old" versus "new" theories of subject matter, with the new theory potentially broadening the scope of what is considered "identical").

There is a discernible trend in Japanese legal thinking and practice towards interpreting the "identity of claim" more broadly than just a strict identity of the formal soshōbutsu. Courts may find an overlap if the underlying factual basis of the claims or the main points of contention are substantially common, indicating that the dispute is, in essence, the same even if the legal characterization of the claims differs slightly.

Procedural Handling of Overlapping Litigation

The wording of Article 142 ("a party may not additionally file an action") is often interpreted not merely as a bar to filing, but more accurately as a prohibition on the concurrent pendency of duplicate suits. This means that while a second, separate lawsuit might be improper, the underlying claim is not necessarily extinguished.

Instead of outright dismissal of the claim itself, the preferred approach, where feasible, is to integrate the matter into the first, already pending action. This can be achieved if the plaintiff in the first suit amends their complaint to add the claim, or if the defendant in the first suit raises it as a counterclaim.

If a separate, overlapping lawsuit is nevertheless filed, the court where this later suit is pending has options. It may, upon motion or ex officio, transfer the case to the court where the first suit is pending, provided that court also has jurisdiction (CCP Article 17). The first court can then consolidate the proceedings for a unified hearing and judgment (CCP Article 152, paragraph 1). However, both transfer and consolidation are generally at the discretion of the courts. If consolidation is not viable, the court handling the later suit might stay (suspend) its proceedings pending the outcome of the first action.

The Intricacy of Set-Off Defenses in Overlapping Litigation

The application of Article 142 becomes particularly intricate when a set-off defense (J.: sōsai no kōben) is involved. A set-off defense is where a defendant, in response to the plaintiff's claim, asserts their own monetary claim against the plaintiff to extinguish or reduce the plaintiff's claim up to the amount of the defendant's claim.

A key feature is that a judicial determination on the existence or non-existence of the defendant's claim used for the set-off (the "active claim" or jidōsaiken) can have a res judicata effect, but only for the amount that was actually offset against the plaintiff's claim (the "passive claim" or judōsaiken) (CCP Article 114, paragraph 2). This means if a defendant’s JPY 1,000 claim is used to successfully set off JPY 700 of the plaintiff’s JPY 700 claim, the court's finding on the JPY 700 portion of the defendant's claim becomes binding.

The complexity arises when the defendant's active claim used for set-off in one lawsuit is also the subject matter of a separate lawsuit (either pre-existing or filed subsequently). This creates a direct risk of duplicative adjudication and potentially conflicting judgments on that very same claim.

Japanese law and practice typically analyze this issue based on two primary scenarios:

Scenario 1: Separate Suit Filed First, Set-Off Asserted Later (J.: Besso Senkō Gata)

This occurs when a claim is already the subject matter of a pending lawsuit (Suit A), and subsequently, the defendant in a different lawsuit (Suit B) attempts to use that same claim as a set-off defense against the plaintiff in Suit B.

The Supreme Court of Japan, in a judgment on December 17, 1991, held that asserting such a set-off generally constitutes a prohibited overlapping litigation by analogy to Article 142 CCP, and thus the set-off defense is impermissible in Suit B. The Court reasoned that the claim asserted for set-off is, in effect, treated like a subject matter of suit itself within Suit B, as it becomes an object of the court’s judgment with potential res judicata effect.

This ruling has faced academic criticism. Critics argue that it may overly prioritize the avoidance of conflicting judgments at the expense of the defendant's substantive right to assert a set-off, which also serves an important "security function" (ensuring the defendant can effectively collect on their claim by offsetting it). Moreover, a set-off is often pleaded conditionally (i.e., "if the plaintiff's claim is found valid, then I assert my set-off"). Due to this "compulsory order of examination" (shinri junjo no kyōsei), the court in Suit B would only examine the set-off claim if it first upholds the plaintiff's main claim. If the plaintiff's claim fails, the set-off claim might not be adjudicated at all, diminishing the immediate risk of conflicting judgments on the set-off claim itself.

Recognizing these complexities, the Supreme Court has carved out exceptions:

• Explicitly Partial Claim in First Suit: If the claim pending in Suit A was explicitly designated as only a portion of a larger claim, the remaining portion of that claim can legitimately be used as a set-off defense in Suit B (Supreme Court judgment, June 30, 1998).
• Counterclaim in the Same Action: If a claim is already pending as a counterclaim in a lawsuit, it can also be asserted as a set-off defense against the main claim within that same consolidated proceeding (Supreme Court judgment, April 14, 2006). This promotes efficiency within a single proceeding.

Scenario 2: Set-Off Defense Asserted First, Separate Suit Filed Later (J.: Kōben Senkō Gata)

This scenario arises when a party has already asserted a claim as a set-off defense in a pending lawsuit (Suit A), and then subsequently initiates a new, separate lawsuit (Suit B) where that same claim is now the main subject matter of the action.

The PDF does not mention a definitive Supreme Court precedent on this specific pattern. Lower court decisions have historically been divided, though some more recent trends, such as a Tokyo High Court judgment on April 8, 1996, have leaned towards finding this to be a prohibited overlapping suit.

The arguments are often a mirror image of the first scenario:

• Arguments for Prohibition: Allowing Suit B to proceed creates a direct risk of conflicting judgments on the claim already being considered (at least potentially) in Suit A.
• Arguments Against Prohibition: The party asserting the claim has a legitimate interest in obtaining an independent, affirmative judgment on their entire claim, which a set-off defense (especially if only partially successful or not reached by the court in Suit A) might not provide. Forcing a party to rely solely on a set-off defense could prejudice their ability to fully recover or enforce their claim.

If such a situation is deemed to fall under the prohibition of Article 142, the party would effectively be forced to choose between pursuing their claim as a set-off defense in Suit A or as an independent action in Suit B. The resolution likely requires a careful balancing of judicial economy, the defendant's right to utilize set-off, the plaintiff's right to seek an independent judgment, and the overall fairness considering the specific stage and nature of the proceedings in Suit A.

Related Issue: Negative Declaratory Actions vs. Subsequent Performance Actions

A distinct but related scenario concerns the interplay between an action for a declaration of non-existence of a debt (a negative declaratory action) and a subsequent action by the creditor for performance (payment) of that same debt.

If a debtor first files an action seeking a court declaration that they do not owe a particular debt, and the creditor then files a separate action seeking payment of that debt, is the creditor's performance action barred as overlapping litigation?

The prevailing view, as suggested by legal commentary and some court tendencies, is that the subsequent performance action is generally not treated as a prohibited overlapping suit. Instead, it is often the initial negative declaratory action that may lose its "benefit of confirmation" (kakunin no rieki – a necessary element for a confirmation action to proceed) and be deemed improper once the performance action is filed. The rationale is that an action for performance provides a more complete and direct remedy (i.e., an enforceable judgment for payment) than a mere declaration of non-liability, thus superseding the need for the latter.

This approach aims to prevent potential abuse by debtors who might tactically file pre-emptive negative declaratory actions in forums of their choosing simply to inconvenience creditors or delay the enforcement of legitimate claims. The Supreme Court of Japan, in a judgment on March 25, 2004, endorsed this outcome where the creditor's performance claim was filed as a counterclaim within the debtor's initial negative declaratory action; the court dismissed the main declaratory claim for lack of benefit of confirmation. While there isn't a direct Supreme Court ruling for when the two actions are filed as entirely separate suits, this principle is influential. An Osaka High Court judgment of July 16, 1987, touched upon related issues in a case involving a bill-related dispute alongside a non-existence declaration claim.

Strategic Implications for Litigants

For any party involved in or anticipating litigation in Japan, these rules on overlapping claims and set-offs carry significant strategic weight:

• Comprehensive Pre-Litigation Analysis: Before initiating any lawsuit, a thorough assessment of all potential related claims and counterclaims is essential to decide the most effective way to proceed and to avoid triggering the prohibition.
• Choice of Action: When a party has a claim against another who also has a claim against them, deciding whether to initiate an independent suit, assert a counterclaim, or rely on a set-off defense requires careful consideration of the amounts involved, the strength of each claim, the desired outcome (an enforceable judgment vs. merely defeating the opponent's claim), and the procedural implications discussed.
• Responding to an Initial Suit: A defendant must promptly evaluate if the plaintiff's claim is related to any claims they might have and decide on the best course—a set-off defense, a counterclaim, or potentially a separate action (if permissible).
• Forum Considerations: While Article 142 primarily addresses conflicts within Japanese courts, the underlying principles of judicial economy and avoiding conflicting judgments are relevant in broader cross-border dispute strategy, although international parallel proceedings are governed by different (and often more complex) rules.

Conclusion

The prohibition of overlapping claims under Article 142 of the Japanese Code of Civil Procedure is a critical rule designed to ensure the orderly and efficient administration of justice. It mandates that, as a general principle, a single dispute should be resolved in a single proceeding before one court. However, the application of this principle, particularly in scenarios involving set-off defenses or competing negative declaratory and performance actions, reveals significant legal complexities.

Japanese courts attempt to balance the goals of judicial economy and consistency with the substantive rights of parties to assert their claims and defenses. For businesses, including U.S. companies, navigating these rules requires a nuanced understanding of both the letter of the law and its practical application through case law, ensuring that their litigation strategy in Japan is both procedurally sound and effectively advances their interests.