Can You Legally Compel Performance from a Japanese Business Partner? Exploring the "Right to Demand Performance" (Riko Seikyuken) and Its Limits

When a Japanese business partner fails to fulfill their contractual obligations, a primary concern for the aggrieved party is whether they can legally compel the counterparty to perform as promised. Under Japanese civil law, the "Right to Demand Performance" (Riko Seikyuken 履行請求権) is a fundamental remedy. However, this right is not absolute and is subject to significant limitations, most notably when performance has become impossible. This article explores the nature of the Riko Seikyuken, its general priority, its crucial limitations, and the avenues for its enforcement.

The Nature and Primacy of the Right to Demand Performance

In principle, a creditor in Japan is entitled to the actual performance that the debtor promised. The Riko Seikyuken embodies this entitlement. There are differing theoretical perspectives on its precise legal nature:

• One traditional view sees it as an inherent, primary component of the underlying claim (saiken 債権) itself.
• Another perspective, gaining traction among some scholars, views it as one of several remedies (alongside damages and rescission) provided by law when non-performance (saimu-furiko 債務不履行) occurs, designed to protect the creditor's contractual interest.

Regardless of the precise theoretical classification, Japanese law generally prioritizes actual performance where it remains feasible. This reflects a preference for giving the creditor what was bargained for, rather than immediately resorting to monetary compensation.

Exercising the Right: Timing

The right to demand performance typically becomes exercisable once the performance is due (rikoki 履行期). If a contract specifies a performance date, the creditor can demand performance on or after that date. If no specific date is set, performance is generally due upon demand, or within a reasonable time depending on the nature of the obligation.

Key Limitations on the Right to Demand Performance

While the right to demand performance is a cornerstone of creditor protection, it is not without significant limitations.

A. Impossibility of Performance (Riko Funo 履行不能) – Article 412-2, Paragraph 1

The most significant limitation is when performance of the obligation has become impossible. Article 412-2, Paragraph 1 of the Japanese Civil Code (a provision clarified and expanded in the 2017 reforms) states that a creditor cannot demand performance of an obligation if its performance is impossible.

What Constitutes "Impossibility" under Japanese Law?
The impossibility that precludes a demand for performance is assessed "in light of the contract, other cause of the obligation, and common sense in transactions." This encompasses several types of impossibility:

1. Physical Impossibility: This is the most straightforward type, where performance is objectively and physically unattainable.
   • Example: A contract for the sale of a unique painting, which is subsequently destroyed by an accidental fire before delivery.
2. Legal Impossibility: Performance is prohibited by law or governmental order.
   • Example: A contract to export certain goods becomes impossible if, after the contract is made, a new law imposes an export ban on those goods.
3. Economic Impossibility / Gross Disproportionality: While physically or legally possible, the cost or effort required for the debtor to perform is so excessively high compared to the benefit the creditor would receive that demanding performance would be an abuse of right or contrary to good faith.
   • Example: A contract for work requires a specific, rare material. After contracting, the only available source of this material becomes astronomically expensive due to unforeseen global events, making the cost of completion many times the contract price and the value of the completed work to the creditor. Courts are generally cautious in recognizing economic impossibility, but it is a recognized category. For instance, historical provisions relating to contracts for work (under the pre-2017 Civil Code, former Art. 634, Para. 1) excused a contractor from repairing minor defects if the cost of repair was excessive. Similarly, Article 997 of the current Civil Code, concerning a legacy of property belonging to another, excuses the obligor if acquiring it would require "excessive expense." These illustrate the underlying principle.
4. Unreasonableness in Light of the Contract's Purport: There are situations where, even if not strictly impossible in the physical, legal, or economic sense, demanding performance becomes unreasonable due to supervening events that fundamentally alter the basis of the contract or frustrate its purpose, when viewed through the lens of the original contractual intent and transactional common sense.
   • Example (Double Sale of Real Property): If a seller sells a piece of land to Buyer A and subsequently sells the same land to Buyer B, and Buyer B perfects their ownership by registration first, it generally becomes impossible for the seller to transfer registered title to Buyer A. The Supreme Court (judgment of April 21, 1960, Minshu 14-6-930) has held that the seller's obligation to Buyer A becomes impossible in such cases, unless special circumstances exist (e.g., the seller can readily reacquire the property from Buyer B).
   • Example (Sale/Lease of Another's Property): If a person contracts to sell or lease property they do not own, and the true owner definitively refuses to transfer the property or allow its use, performance of the seller's/lessor's obligation to the contracting party may become impossible (Supreme Court judgment, December 20, 1974, Hanrei Jiho 768-101).

Original vs. Subsequent Impossibility:
It's important to note that under Article 412-2, Paragraph 2 of the Civil Code, a contract is not necessarily void even if performance was impossible at the time the contract was made (original impossibility, or genshi-teki funo 原始的不能). However, even if the contract is valid, the creditor still cannot demand the impossible performance. Their remedies would lie in damages or rescission. The same applies to subsequent impossibility (kohatsu-teki funo 後発的不能), where performance becomes impossible after the contract is formed.

Debtor's Attributability (Fault):
Crucially, for the purpose of defeating a demand for performance based on impossibility, whether the impossibility is attributable to the debtor (e.g., due to the debtor's negligence) is irrelevant. If performance is objectively impossible, it cannot be demanded, regardless of fault. The debtor's fault or attributability is, however, highly relevant for determining whether the debtor is liable for damages for non-performance (under Art. 415). The debtor bears the burden of proving that performance is impossible if they wish to use this as a defense against a claim for specific performance.

B. Nature of the Obligation Does Not Permit Compulsion (Article 414, Paragraph 1, proviso)

Even if performance is theoretically possible, the law recognizes that some obligations, by their very nature, are not suitable for compulsory performance. Article 414, Paragraph 1, proviso, states that compulsory performance cannot be sought if "the nature of the obligation does not permit it." This typically applies to:

• Obligations involving highly personal services (e.g., the performance of an artist, a musician, or a specific consultant whose unique skills are essential).
• Obligations requiring the debtor's continuous voluntary cooperation or creative input.
• Obligations where forced performance would excessively infringe upon the debtor's personal liberty or dignity.

In such cases, while the creditor cannot force performance, they may still be entitled to damages for non-performance or have the right to rescind the contract.

C. Other Defenses (Brief Mention)

A debtor may also resist a demand for performance by asserting other defenses, such as:

• Right to Concurrent Performance (Doji-Riko no Kobenken 同時履行の抗弁権): In bilateral contracts, a party can refuse to perform their obligation until the other party tenders their own counter-performance (e.g., a buyer refusing to pay until the seller tenders delivery of goods).
• Defense of Insecurity (Fuan no Kobenken 不安の抗弁権): In certain circumstances, a party may suspend their performance if it becomes apparent that the other party is unlikely to be able to render their counter-performance.

These defenses are primarily covered in the specific rules for bilateral contracts.

Enforcing the Right: Compulsory Performance (Riko no Kyosei) – Article 414

If a creditor has a valid right to demand performance and the debtor fails to perform voluntarily, the creditor can seek the assistance of the state to compel performance. This is known as "compulsory performance" or "compulsory execution" (riko no kyosei 履行の強制). Article 414 of the Civil Code serves as the bridge between the substantive right to demand performance and the procedural mechanisms for its enforcement.

Prerequisite: A "Title of Obligation" (Saimu-Meigi 債務名義)
Generally, to initiate compulsory execution procedures, the creditor must possess a "title of obligation." This is an official document that authoritatively establishes the existence and content of the claim. Common examples include a final and binding court judgment, a notarial deed containing an execution clause, or a settlement reached in court. An exception exists for obligations to make a declaration of intent (e.g., to consent to a property registration); here, a final judgment ordering such declaration is deemed to be the declaration itself (Article 174 of the Civil Execution Act).

Methods of Compulsory Execution
The Civil Execution Act provides for different methods of compulsory performance, chosen based on the nature of the obligation:

1. Direct Compulsion (Chokusetsu-Kyosei 直接強制): This involves state officials (e.g., court execution officers) directly bringing about the performance. It is primarily used for:
   • Obligations to deliver specific movable or immovable property (e.g., evicting a tenant and restoring possession of property to the landlord).
   • Obligations to pay a sum of money (enforced by seizing and liquidating the debtor's assets).
2. Substitute Execution (Daitai-Shikko 代替執行): This is used for obligations to perform an act (sakui-saimu 作為債務) that can be performed by a third party (i.e., they are "fungible" or daitai-teki 代替的). If the debtor fails to perform, the creditor can obtain court authorization to have the act performed by a third party at the debtor's expense.
   • Example: An obligation to demolish an unlawfully constructed building. If the debtor refuses, the creditor can have it demolished by a contractor and recover the costs from the debtor.
     For obligations to forbear from an act (fusakui-saimu 不作為債務), if the debtor acts contrary to the forbearance, the creditor can demand removal of the offending state of affairs at the debtor's expense, or seek an appropriate disposition for the future (Article 171 of the Civil Execution Act).
3. Indirect Compulsion (Kansetsu-Kyosei 間接強制): This method is employed when the nature of the obligation makes direct or substitute execution inappropriate or ineffective (e.g., certain non-delegable acts, or obligations to forbear where a substitute performance is not meaningful). The court orders the debtor to pay a certain sum of money to the creditor for each day of continued non-performance or for each instance of violating a forbearance obligation. This creates psychological and financial pressure on the debtor to comply. The sums paid are not considered damages per se, so the creditor can still claim separate damages if their actual loss exceeds the amount ordered under indirect compulsion (Article 172 of the Civil Execution Act).
   • Example: An obligation not to play loud music after a certain hour. If violated, the court might order the debtor to pay the creditor a daily penalty for continued violations.

The choice of execution method is crucial and depends on ensuring that the creditor's right is effectively realized while also respecting the limits imposed by the nature of the obligation and the debtor's fundamental rights.

The Creditor's Right to Substituted Compensation (Daisho Seikyuken) – Article 422-2

If performance of the primary obligation becomes impossible, but the debtor, as a result of the same cause that led to the impossibility, acquires a right or benefit in substitution for the original object of performance (e.g., insurance proceeds for a destroyed item, or compensation from a third party who caused the loss), the creditor may have a right to claim that substitute benefit from the debtor. This is known as the "right to substituted compensation" (daisho seikyuken 代償請求権), codified in Article 422-2 of the Civil Code. This right allows the creditor to capture the economic value that has replaced the originally owed performance.

Conclusion

The right to demand performance, Riko Seikyuken, is a fundamental remedy for creditors under Japanese law, underscoring the legal system's commitment to upholding contractual promises. However, this right is not absolute. It is critically limited by the doctrine of impossibility (riko funo), which encompasses physical, legal, and economic impossibility, as well as situations where compulsion would be unreasonable or contrary to the nature of the obligation. Where performance can no longer be demanded, the creditor must typically turn to other remedies such as damages or rescission. If a debtor remains recalcitrant despite a valid demand for possible performance, the Japanese legal system provides various methods of compulsory execution to enforce the creditor's rights, ensuring that contractual obligations are not mere empty promises. Understanding these principles is key to navigating performance issues in Japanese business dealings.