Claiming Performance in Japan: Are There Limits to Specific Performance, and What is "Impossibility of Performance" (Riko Funo)?

When a party fails to fulfill its contractual obligations in Japan, the non-breaching party's primary and most intuitive recourse is often to demand that the defaulting party perform what was promised. This "right to claim performance" (rikō seikyūken - 履行請求権) is a fundamental remedy in Japanese contract law. However, this right is not absolute. The Japanese Civil Code (Minpō), particularly after its significant 2020 revisions, sets out important limitations, chief among them being the concept of "impossibility of performance" (rikō funō - 履行不能). This article explores the nature of the right to claim performance in Japan, how it can be enforced, and, critically, when performance will be deemed "impossible," thereby barring a claim for specific performance.

The Right to Claim Performance (Rikō Seikyūken) in Japanese Contract Law

The right to claim performance is the creditor's entitlement to demand that the debtor carry out the specific actions or deliver the specific goods or services agreed upon in the contract. While the revised Civil Code does not contain a single, overarching article explicitly declaring "a creditor has the right to claim performance," this right is foundational and implicitly recognized through various provisions. Notably, Article 412-2, paragraph 1, details when such a claim is limited due to impossibility, thereby presupposing the existence of the right itself. Furthermore, Article 414 outlines the methods for compulsory performance, which are predicated on the creditor possessing an enforceable right to performance.

Japanese contract law generally prioritizes actual performance over mere monetary compensation (damages). This reflects the principle that the creditor bargained for a specific outcome or benefit, and damages may not always be an adequate substitute. This "superiority of performance claims" means that, in principle, if performance is feasible and not otherwise excused, the creditor is entitled to insist on it.

Enforcing the Right: Compulsory Performance (Rikō no Kyōsei) - Civil Code Article 414

Should a debtor refuse to perform voluntarily, Article 414, paragraph 1 of the Civil Code allows the creditor to seek judicial enforcement through "compulsory performance." The specific methods are detailed in the Civil Execution Act and can include:

1. Direct Compulsion (Chokusetsu Kyōsei - 直接強制): This involves the state, through its enforcement organs (e.g., court execution officers), directly bringing about the state of affairs that would have existed had the debtor performed. This is typically used for obligations to deliver specific movable or immovable property, or to pay a sum of money. For example, an officer may seize specified goods from the debtor and deliver them to the creditor.
2. Substitute Performance (Daitai Shikkō - 代替執行): If the obligation is one that can be performed by a third party (a "fungible" act, such as repair work or construction), the court may authorize the creditor to have a third party perform the act at the debtor's expense. The debtor is then liable for these costs.
3. Indirect Compulsion (Kansetsu Kyōsei - 間接強制): For obligations where direct or substitute performance is unsuitable (often non-delegable acts of doing something, or obligations not to do something), the court may order the debtor to pay a certain sum of money to the creditor for each day (or other period) of continued non-performance. The aim is to psychologically pressure the debtor into voluntary compliance.

However, Article 414, paragraph 1 contains an important proviso: compulsory performance is not available if "the nature of the obligation does not permit it." This typically applies to:

• Obligations requiring a high degree of personal skill, artistic talent, or trust (e.g., an artist's commission to paint a portrait, a specific surgeon's obligation to perform an operation). Forcing such performance would be impractical and could violate personal liberty.
• Obligations where enforcement would excessively infringe upon the debtor's fundamental personal freedoms.

The Primary Limitation: Impossibility of Performance (Rikō Funō) - Civil Code Article 412-2, Paragraph 1

The most significant limitation on the right to claim performance is "impossibility of performance." The revised Civil Code addresses this directly in Article 412-2, paragraph 1:
"If performance of an obligation is impossible in light of the contract or other cause of the obligation and transactional common sense, the creditor may not demand performance of that obligation."

This provision is pivotal. It clarifies that if performance is deemed "impossible" under this standard, a claim for specific performance will be denied. The creditor must then resort to other remedies, such as damages (if the impossibility is attributable to the debtor) or rescission of the contract.

The Scope of "Impossibility" under the Revised Code:
The phrase "in light of the contract or other cause of the obligation and transactional common sense" indicates that "impossibility" is not confined to absolute physical or strict legal impossibility. It's a broader, more flexible concept assessed contextually.

1. Traditional Meanings of Impossibility (Still Relevant):
   • Physical Impossibility (物理的不能 - Butsuriteki Funō): This occurs when performance has become physically unachievable. The classic example is the destruction of the unique subject matter of a contract (e.g., a specific painting sold is destroyed by fire before delivery).
   • Legal Impossibility (法律的不能 - Hōritsuteki Funō): This arises when performance becomes prohibited by law after the contract is formed. For instance, if a contract is made for the export of certain goods, and a subsequent government embargo makes such export illegal. While Article 412-2(1) doesn't explicitly list "legal impossibility," it's generally understood that performance prohibited by overriding law would fall under the broader concept of impossibility "in light of...transactional common sense" or as a separate public policy limitation.
2. Expanded Concept of Impossibility: When Expectation of Performance is Unreasonable:
   The key innovation of Article 412-2, paragraph 1 lies in its potential to encompass situations where performance, while not strictly impossible in a physical or legal sense, has become so impracticable or contrary to reasonable commercial expectations that compelling it would be unjust. This can include:
   • Excessive Cost / Economic Impossibility (著しく過大な費用 - Ichijirushiku Kadai na Hiyō): If the cost, effort, or difficulty of rendering performance has escalated to a point where it is grossly disproportionate to the benefit the creditor would receive from that performance. For example, if a contract requires retrieving a common ring that has fallen into the deep ocean, the cost of recovery might be so extreme relative to the ring's value that performance could be deemed "impossible" under this standard. This reflects principles found in some comparative doctrines concerning when specific performance becomes an unreasonable burden. It effectively absorbs some situations previously discussed under theories of "economic impossibility" or "practical impossibility."
   • Severe Frustration of Contractual Purpose: While often analyzed under the "doctrine of change of circumstances" (jijō henkō no hōri), if the fundamental purpose for which the obligation was undertaken has been completely and irremediably frustrated by supervening events, rendering literal performance entirely pointless or absurd, it might also be considered "impossible" in light of transactional common sense.
   • Other Situations Contravening Transactional Common Sense: The flexible wording allows courts to consider various factual scenarios where insisting on literal performance would be commercially nonsensical or violate fundamental notions of good faith in business dealings.

Initial vs. Supervening Impossibility:
It's important to note that the limitation on claiming performance due to impossibility applies regardless of whether the impossibility existed at the time the contract was formed (initial impossibility - genshi-teki funō) or arose subsequently (supervening impossibility - kōhatsu-teki funō). Article 412-2, paragraph 2 of the revised Civil Code clarifies that a contract is not necessarily ineffective merely because performance was impossible at the time of its formation. If such a contract is valid (e.g., if the parties knowingly contracted regarding an uncertain performance), but performance is indeed impossible, the creditor cannot demand specific performance but may have claims for damages if the debtor bore the risk of that initial impossibility.

Burden of Proof for Impossibility:
The debtor who asserts impossibility as a defense against a creditor's claim for performance bears the burden of proving the facts establishing such impossibility under the standard of Article 412-2, paragraph 1.

No Requirement of Debtor's "Non-Attributability" for This Defense:
When impossibility is raised as a defense specifically against a claim for performance, the issue is simply whether performance can realistically be compelled. Whether the impossibility was due to grounds attributable to the debtor (formerly "debtor's fault") is not relevant for this particular defense. The debtor's fault or non-attributable grounds become critical when determining liability for damages for non-performance (under Article 415) or the right to rescind the contract.

Limiting Performance Claims: Efficiency and Substitute Transactions – A Cautious Approach in Japan

Some legal systems and academic theories, particularly those influenced by law and economics, advocate for limiting specific performance when monetary damages would be an adequate remedy or when the creditor can easily and reasonably obtain a substitute performance in the market (an "efficient breach" or "duty to mitigate" argument against specific performance).

While these considerations are not entirely absent from Japanese legal thought, Japanese contract law traditionally places a strong emphasis on the creditor's right to the bargained-for performance itself. The prevailing view is less inclined to deny specific performance solely on grounds of economic efficiency if performance remains possible and not excessively burdensome under the Article 412-2 standard. The idea is that the creditor contracted for a specific outcome, and the choice of pursuing that specific outcome, rather than accepting damages, generally rests with the creditor, provided performance is not "impossible" as defined.

Consequences When Specific Performance is Barred by Impossibility

If a court determines that performance of an obligation is indeed "impossible" under Article 412-2, paragraph 1, the creditor cannot obtain a judgment compelling specific performance. The creditor must then look to other available remedies, which may include:

1. Claim for Damages (損害賠償請求権 - Songai Baishō Seikyūken):
   If the impossibility of performance is due to grounds attributable to the debtor (as per Article 415, paragraph 1), the creditor can claim damages for the losses suffered as a result of the non-performance. This would typically be "compensatory damages in lieu of performance" (rikō ni kawaru songai baishō).
2. Rescission of the Contract (契約の解除 - Keiyaku no Kaijo):
   The creditor may be entitled to rescind (terminate) the contract due to the impossibility of performance by the debtor (Civil Code Article 542, paragraph 1, item 1). This releases both parties from future obligations and triggers duties of restitution for any performance already rendered.
3. Right to Claim Substitute Value (Daishō Seikyūken - 代償請求権 - Civil Code Article 422-2):
   A notable provision in the revised Civil Code is Article 422-2, which codifies the "right to claim substitute value." If the debtor, as a result of the same circumstances that caused the performance to become impossible, acquires a right or benefit that is a substitute for the object of the obligation (e.g., insurance proceeds received for a specific good that was destroyed, or compensation received from a third party who caused the destruction), the creditor may demand the transfer of that acquired right or the surrender of the benefit, up to the extent of the loss the creditor suffered.
   • Requirements for Daishō Seikyūken:
     • The debtor's original performance must have become impossible.
     • The debtor must have acquired a substitute right or benefit.
     • The acquisition of this substitute must be due to the same cause that rendered the original performance impossible.
     • The creditor's claim is limited to the extent of the damage they suffered due to the non-performance of the original obligation.
       This right provides a specific mechanism for the creditor to capture value that directly replaces the impossible performance, reflecting principles of fairness. The question of whether the impossibility needs to be non-attributable to the debtor for this right to arise is a subject of some academic debate, as the text of Article 422-2 does not explicitly require the debtor to be faultless regarding the impossibility.

Conclusion: Upholding Performance within Reasonable Bounds

The right to claim performance is a central remedy for breach of contract in Japan, underscoring the legal system's respect for the parties' agreed-upon exchange. However, this right is not absolute. The doctrine of impossibility of performance, as articulated in Article 412-2 of the revised Civil Code, provides a crucial limitation, barring claims for specific performance when it would be physically, legally, or practically (in light of the contract and transactional common sense) unachievable or grossly unreasonable. This expanded understanding of "impossibility" allows courts to take a pragmatic and context-sensitive approach. When specific performance is unavailable due to impossibility, creditors can still pursue other remedies such as damages, rescission, or, where applicable, a claim for substitute value, ensuring that while the exact bargained-for performance may not be obtainable, appropriate legal recourse is still available.