Court Costs and Attorneys' Fees in Japan: Who Pays, and Can the Losing Party Be Ordered to Cover All Expenses?

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

Engaging in civil litigation invariably involves financial outlay. Beyond the emotional and time commitments, parties must consider the tangible expenses associated with pursuing or defending a claim. A critical question for any litigant, particularly businesses involved in cross-border disputes, is: who ultimately bears these costs? Specifically, if you win a lawsuit in Japan, can you expect the losing party to cover all your expenses, including your attorneys' fees? The answer, rooted in Japanese procedural law, requires a careful distinction between statutory "court costs" and "attorneys' fees."

This article explores the rules governing the allocation of these litigation expenses in Japanese civil proceedings, highlighting how they differ and the limited circumstances under which a losing party might be ordered to contribute to the winner's legal representation costs.

I. What Constitutes "Court Costs" (Soshō Hiyō) in Japanese Civil Litigation?

In the Japanese legal context, "court costs" (soshō hiyō - 訴訟費用) have a specific, relatively narrow definition, primarily referring to statutory or court-imposed costs directly associated with the formal court process. These are distinct from the broader category of all expenses a party might incur in relation to a lawsuit.

A. Narrow Definition: Statutory or Court-Imposed Costs

Statutory court costs typically include:

  1. Filing Fees (Stamp Duty - 印紙代 inshi-dai): These are fees paid to the court when initiating a lawsuit (filing a complaint - 訴状 sojō) and for certain other significant procedural actions (e.g., filing an appeal). The amount is calculated based on a statutory schedule, typically linked to the monetary value of the claim or the subject matter of the litigation.
  2. Travel Expenses and Daily Allowances for Witnesses and Experts: Costs for witnesses, court-appointed experts (kanteinin), and court-appointed interpreters to attend hearings, as stipulated by law.
  3. Costs for Service of Documents by the Court: Fees associated with the formal service of process and other court documents.
  4. Costs for Preparing Court Records: Expenses for transcription of oral arguments (if ordered), making copies of evidence required by the court, and other similar administrative expenses.

These costs are regulated by specific laws, such as the Act on Costs of Civil Procedure (民事訴訟費用等に関する法律 - Minji Soshō Hiyō-tō ni Kansuru Hōritsu).

B. Broader Sense (and the exclusion of Attorneys' Fees)

While in everyday language, "litigation costs" might encompass all expenses a party incurs, including what they pay their lawyers, Japanese procedural law sharply distinguishes statutory court costs from attorneys' fees for the purpose of cost allocation between parties. Crucially, attorneys' fees are generally NOT included in the "court costs" automatically shifted to the losing party.

II. Allocation of Statutory Court Costs: The "Loser Pays" Principle

For statutory court costs as defined above, Japan generally follows a "loser pays" principle.

A. The Basic Rule: CCP Article 61

Article 61 of the Code of Civil Procedure (CCP) (民事訴訟法 - Minji Soshō Hō) states:
"Court costs shall be borne by the party defeated in the action." (訴訟費用は、敗訴の当事者の負担とする。- Soshō hiyō wa, haiso no tōjisha no futan to suru.)
This is the fundamental rule for allocating these specific, court-related expenses. The party who loses the lawsuit on the merits is, in principle, responsible for bearing the statutory court costs incurred by both sides (or, more precisely, for reimbursing the successful party for their advanced court costs and bearing their own).

B. Partial Success/Partial Defeat (CCP Art. 64)

Litigation often results in outcomes where neither party entirely wins or loses. If each party succeeds in part and is defeated in part (e.g., a plaintiff claims JPY 10 million in damages but is awarded only JPY 6 million), CCP Article 64 empowers the court, at its discretion, to allocate the burden of court costs between the parties.

  • This allocation is often done proportionally to each party's degree of success or failure.
  • The court can also order each party to bear the court costs they individually incurred, or make any other allocation it deems equitable in the circumstances.

C. Exceptions to the "Loser Pays" Rule for Court Costs

There are statutory exceptions where the winning party might still be ordered to bear some or all of the court costs:

  • Unnecessary Acts by Winning Party (CCP Art. 62): If the winning party caused unnecessary court costs through acts that were not essential for asserting or defending their rights (e.g., filing irrelevant motions, requesting examination of unnecessary witnesses, submitting excessively voluminous or duplicative evidence).
  • Delay Caused by Winning Party (CCP Art. 63): If the winning party, through their own fault (e.g., unjustified requests for adjournment, failure to comply with procedural deadlines), delayed the proceedings, they may be ordered to bear the court costs arising from that delay, regardless of their ultimate success on the merits.
  • Settlement (CCP Art. 66): If the case is terminated by a judicial settlement (saibanjō no wakai), unless the parties agree otherwise in their settlement terms or the court orders differently, each party typically bears the statutory court costs they themselves have incurred up to that point. The settlement terms themselves will often address cost allocation.

D. Procedure for Fixing the Amount of Recoverable Court Costs (Soshō Hiyōgaku Kakutei Tetsuzuki)

The trial judgment itself usually only determines who bears the court costs or the proportion of the burden (e.g., "Court costs shall be borne by the defendant," or "Court costs shall be divided, with three-fifths to be borne by the plaintiff and two-fifths by the defendant").

  • After the judgment becomes final and binding, the party entitled to recover court costs must file a separate application (申立て - mōshitate) with the court clerk (裁判所書記官 - saibansho shokikan) of the first-instance court.
  • The court clerk then calculates the specific, legally allowable amount of recoverable court costs based on statutory schedules and evidence of expenses (e.g., receipts for witness travel). This calculation is formalized in a "disposition to fix the amount of court costs" (訴訟費用額確定処分 - soshō hiyōgaku kakutei shobun), which is an order by the court clerk (CCP Arts. 71-73).
  • This disposition, once final, becomes a separate title of obligation and can be enforced. Parties can file an objection with the court if they dispute the clerk's calculation.

III. Attorneys' Fees (Bengoshi Hiyō - 弁護士費用): The Critical Distinction – Each Party Generally Bears Its Own

This is the most significant area where Japanese practice differs from "English Rule" jurisdictions (where the loser pays the winner's reasonable attorneys' fees) and aligns more closely with the traditional "American Rule."

A. General Rule: Not Included in Recoverable "Court Costs"

In Japan, the fees a party pays to their own attorney (bengoshi) for legal representation are NOT considered part of the statutory "court costs" that are automatically shifted to the losing party under CCP Article 61.

The prevailing principle for attorneys' fees is that each party is responsible for paying their own lawyer's fees, regardless of whether they win or lose the lawsuit. There is no general statutory entitlement for a successful litigant to have their attorneys' fees reimbursed by the losing opponent as a matter of course.

B. Can Attorneys' Fees Ever Be Recovered from the Losing Party?

Yes, but only in specific, limited circumstances, and typically not as "court costs" but as an element of substantive damages to which the party is entitled under a separate legal basis (e.g., tort or contract).

  1. In Tort Cases (不法行為 - Fuhō Kōi):
    • This is the most common situation where a portion of attorneys' fees might be recovered. If the lawsuit itself is based on a tort committed by the defendant (e.g., negligence causing injury, patent infringement, defamation, unfair competition), the successful plaintiff may be able to claim their attorneys' fees incurred in prosecuting that specific tort litigation as part of the damages proximately caused by the defendant's tortious conduct.
    • This recovery is not automatic or for the full amount. The plaintiff must specifically plead and prove these fees as an item of damage.
    • Scope of Recovery: Japanese courts, when awarding attorneys' fees as tort damages, typically do not award the full amount of fees actually paid by the plaintiff. Instead, they usually award an amount deemed "reasonable and necessary" in relation to the nature of the tort and the main damages awarded. A common (though not fixed) judicial practice has been to award an amount roughly equivalent to 10% of the principal compensatory damages recognized by the court for the tort itself. This can be higher or lower depending on the complexity of the case and other factors.
    • A landmark Supreme Court judgment (February 27, 1969, First Petty Bench, Minshū Vol. 23, No. 2, Page 441) is often cited for establishing the principle that attorneys' fees incurred by a tort victim can be recovered as part of their damages if a reasonable causal link exists between the tort and the necessity of incurring those fees.
  2. Contractual Agreement:
    • If the parties have a contractual clause that explicitly provides for the losing party in any dispute arising from that contract to pay the prevailing party's reasonable attorneys' fees, Japanese courts will generally enforce such a clause as a binding contractual obligation (subject to general principles of contract law, such as ensuring the amount is not grossly excessive or against public policy).
  3. Vexatious or Bad Faith Litigation (Abuse of Process):
    • In rare and egregious cases, if a party initiates or conducts litigation in a manner that is clearly vexatious, entirely baseless, for an improper purpose (e.g., harassment), or in extreme bad faith, and this conduct itself constitutes a tort (an abuse of the right to litigate) against the opposing party, the attorneys' fees incurred by the victim of such abusive litigation might be claimed as damages in a separate action or as a counterclaim. Establishing this is very difficult.

C. No General "Fee-Shifting" Statutes by Type of Case

Unlike the United States, which has numerous specific federal and state "fee-shifting" statutes that authorize or mandate the award of attorneys' fees to the prevailing party in certain categories of cases (e.g., civil rights litigation, some consumer protection statutes, certain intellectual property statutes like the U.S. Patent Act), Japan does not have a widespread system of such general fee-shifting legislation that automatically entitles a winner to their lawyer's fees based solely on the type of case. Recovery of attorneys' fees as tort damages (as described above) is the most common route outside of explicit contractual provisions.

IV. Comparing Cost Allocation: Japan, the "American Rule," and the "English Rule"

It can be helpful to summarize the Japanese approach in comparison to these well-known international benchmarks:

  • Statutory Court Costs in Japan: The "loser pays" principle under CCP Article 61 for these narrowly defined costs means Japan's approach here is conceptually similar to the "English Rule."
  • Attorneys' Fees in Japan: The general principle that each party bears its own attorneys' fees aligns closely with the traditional "American Rule." The exceptions (primarily recovery as tort damages or by contract) are specific and do not constitute a general fee-shifting regime.

Thus, Japan employs a hybrid system: "loser pays" for direct court-related expenses, but "each pays their own" for the typically much larger expense of legal representation, unless specific exceptional circumstances apply.

V. Other Important Considerations Regarding Costs

  1. Security for Court Costs (Soshō Hiyō no Tanpo) (CCP Arts. 75-81):
    • If a plaintiff does not have a domicile, office, or business presence in Japan, the defendant can petition the court to order the plaintiff to provide security for court costs (this typically covers the defendant's anticipated statutory court costs for which the plaintiff might become liable if they lose, not the defendant's attorneys' fees).
    • If the court orders security and the plaintiff fails to provide it, the court may dismiss the plaintiff's action without prejudice (CCP Art. 78). This is a very important provision for foreign plaintiffs to be aware of.
  2. Legal Aid (Soshōjō no Kyūjo) (CCP Arts. 82-86):
    • For litigants (individuals or sometimes small entities) who lack sufficient financial resources to pay court costs or retain an attorney, Japan has a system of legal aid. This can include a temporary reprieve from paying their own court filing fees and, in some government-funded schemes (e.g., through the Japan Legal Support Center – "Houterasu"), assistance with attorney retainer fees (though success fees might still be payable by the litigant if they win and recover funds).

VI. Conclusion

Understanding the allocation of litigation expenses in Japanese civil cases requires a clear demarcation between (1) statutory "court costs" and (2) "attorneys' fees."

For statutory court costs—such as filing fees, witness expenses, and costs for court-appointed experts—Japan generally adheres to a "loser pays" principle, with the court allocating these costs based on the parties' respective degrees of success or failure.

However, for the often much more substantial expense of attorneys' fees, the primary rule in Japan is that each party bears its own costs. This is akin to the "American Rule." Recovering one's own attorneys' fees from the losing opponent is not a standard outcome and is generally possible only in limited circumstances, most notably as an element of damages in tort litigation (and even then, usually only a portion of the fees is awarded) or where there is an explicit contractual agreement for fee shifting.

This framework has significant implications for budgeting litigation, assessing the financial risks and rewards of pursuing or defending claims, and making strategic decisions in Japanese courts. International parties, in particular, should be mindful of these distinctions and the potential requirement to provide security for costs if they are non-resident plaintiffs.