Does My Company Have "Standing" to Bring This Lawsuit in Japan?

Successfully navigating the Japanese legal system requires more than just a valid claim and the general capacity to be a party in court. A crucial, and sometimes complex, procedural hurdle is establishing "standing to sue or be sued," known in Japanese as Tōjisha tekikaku (当事者適格). This concept addresses whether the specific plaintiff is the right entity to bring the particular lawsuit, and whether the specific defendant is the correct party to be defending against that claim. Unlike the general capacity to be a party (Tōjisha nōryoku), which concerns whether an entity can be a litigant at all, Tōjisha tekikaku focuses on whether they should be the litigant for the dispute at hand. Failure to demonstrate proper standing can lead to the dismissal of a lawsuit, regardless of the underlying merits.

I. Understanding "Standing to Sue/Be Sued" (Tōjisha tekikaku) in Japanese Litigation

A. Definition and Purpose

Tōjisha tekikaku refers to the legally recognized qualification or authority of a particular plaintiff to initiate and pursue a specific claim, and of a particular defendant to be sued on that specific claim. It ensures that the court adjudicates a genuine controversy between parties who have a direct and legally protectable interest in its outcome.

The primary purposes of this requirement are:

• Ensuring Real Controversy: To ensure that lawsuits are brought by those who have actually suffered or are imminently threatened with an injury that the court can redress, and against those who are allegedly responsible for that injury.
• Preventing Unnecessary or Abusive Litigation: It prevents individuals or entities with no direct stake in a dispute from initiating lawsuits, thereby conserving judicial resources and protecting potential defendants from unwarranted litigation.
• Guaranteeing the Effectiveness of Judgments: Judgments are intended to bind the actual parties in interest. Ensuring Tōjisha tekikaku means the judgment will have a meaningful effect on those whose rights and obligations are truly at issue.
• Maintaining Proper Scope of Judicial Power: It confines the courts to adjudicating concrete disputes between legitimately interested parties, rather than issuing advisory opinions or resolving abstract legal questions.

B. Distinction from Other Capacities

It's vital to distinguish Tōjisha tekikaku from:

1. Capacity to Be a Party (Tōjisha nōryoku 当事者能力): The general ability to be a plaintiff or defendant (e.g., natural persons, corporations). An entity can have Tōjisha nōryoku but lack Tōjisha tekikaku for a specific lawsuit.
2. Capacity to Litigate (Soshō nōryoku 訴訟能力): The ability to validly perform procedural acts (e.g., a legally competent adult). A company (with Tōjisha nōryoku) acts through its representative who has Soshō nōryoku, but the company itself must also have Tōjisha tekikaku for the claim.

C. How Tōjisha tekikaku is Determined: The Principle of Management and Disposition Rights (Kanri shobunken setsu 管理処分権説)

The prevailing view in Japan is that Tōjisha tekikaku generally belongs to the person who has the right to manage and dispose of the substantive right or legal relationship that forms the subject matter of the lawsuit (soshōbutsu 訴訟物). In most cases, this means the actual holder of the right or the bearer of the obligation in dispute. For example, the creditor has standing to sue for a debt; the owner of property has standing to sue for trespass.

D. Consequence of Lacking Tōjisha tekikaku
If a plaintiff lacks standing to bring the claim, or if the defendant is not the proper party to be sued, the court will dismiss the action (uttae kyakka 訴え却下) as procedurally improper, without ruling on the merits of the case. This is a matter the court can investigate ex officio.

II. The General Rule: The Rights Holder as the Proper Party

A. Plaintiff's Standing (Genkoku tekikaku 原告適格)
Generally, the plaintiff must be the entity whose rights have allegedly been infringed or who is entitled to the relief sought. They must demonstrate a direct and personal stake in the outcome.

B. Defendant's Standing (Hikoku tekikaku 被告適格)
Correspondingly, the defendant must be the entity allegedly responsible for infringing the plaintiff's rights or who is under the obligation that the plaintiff seeks to enforce.

C. "Allegation-Based Standing" (Shuchō jitai tekikaku 主張自体適格)
In determining Tōjisha tekikaku at the initial stage, Japanese courts typically look at the allegations made in the plaintiff's complaint. If the complaint, on its face, alleges facts that (if proven true) would confer standing on the plaintiff and make the defendant the proper party, then Tōjisha tekikaku is provisionally affirmed for the purpose of proceeding with the case. Whether those allegations are actually true is a matter for the trial on the merits. This means that a case is not dismissed for lack of standing merely because the plaintiff's asserted right is ultimately found not to exist; rather, it is dismissed if, even assuming the plaintiff's factual allegations are true, they are not the proper party to assert that claim.

III. Exceptions to the General Rule: Third-Party Standing (Soshō tantō - 訴訟担当)

There are specific situations where an entity that is not the direct holder of the substantive right or obligation may nevertheless have Tōjisha tekikaku to sue or be sued. This is known as Soshō tantō (訴訟担当), or third-party standing. This authority is typically granted by law or, in very limited circumstances, by the will of the rights holder.

A. Statutory Third-Party Standing (Hōtei soshō tantō 法定訴訟担当)
The law itself designates certain persons or entities to litigate on behalf of others or concerning certain rights, even if they are not the primary beneficiaries.

1. Examples Relevant to Business:
   • Bankruptcy Trustee (hasan kanzai'nin 破産管財人): Appointed in bankruptcy proceedings, the trustee has exclusive standing to manage and dispose of the bankrupt's estate, including bringing and defending lawsuits related to it (Bankruptcy Act, Art. 78).
   • Executor of a Will (yuigon shikkōsha 遺言執行者) or Estate Administrator (sōzoku zaisan kanrinin 相続財産管理人): These individuals have standing to litigate matters concerning the deceased's estate.
   • Shareholder Derivative Suits (kabunushi daihyō soshō 株主代表訴訟): Under Article 847 of the Companies Act, shareholders meeting certain criteria can bring an action on behalf of the company against its directors (or other officers) to enforce the company's rights, typically when the company itself fails to do so. The company is the real party in interest, but qualified shareholders are given standing.
   • Creditor's Subrogation Action (saikensha daii soshō 債権者代位訴訟): Article 423 of the Civil Code allows a creditor, in order to preserve their own claim, to exercise a right belonging to their debtor if the debtor fails to exercise it. The creditor sues in their own name but effectively stands in the debtor's shoes for that specific right.
   • Actions by Certain Organizations: Specific statutes may grant standing to certain organizations to sue on behalf of their members or in the public interest (e.g., qualified consumer organizations under the Consumer Contract Act for certain types of injunctive relief).

B. Voluntary or Consensual Third-Party Standing (Nin'i-teki soshō tantō 任意的訴訟担当)
This category involves a third party litigating based on some form of authorization or relationship with the actual rights holder. This is more narrowly construed by Japanese courts than statutory standing.

1. General Caution: Courts are generally wary of recognizing broad Nin'i-teki soshō tantō to prevent potential abuses, such as unauthorized litigation, champerty (trafficking in lawsuits), or conflicts of interest. There usually needs to be a legitimate and reasonable necessity for such third-party litigation, and it must not circumvent public policy or legal principles.
2. Examples (subject to specific conditions and often debated):
   • Assignee for Collection (toritate inin jōjutsunin 取立委任譲受人): Where a claim is assigned to another purely for the purpose of collection. The standing of such an assignee has been a subject of debate. While a full assignment of a claim (transferring beneficial ownership) generally transfers standing, a mere assignment for collection might be scrutinized more closely, especially if it appears to be a sham or an attempt to circumvent rules regarding legal representation.
   • Certain Trust Arrangements (soshō shintaku 訴訟信託): In specific trust contexts, a trustee may have standing to litigate concerning trust property on behalf of beneficiaries. The Trust Act provides a framework for this. However, a "litigation trust" established solely for the purpose of enabling someone else to sue who otherwise couldn't might be deemed invalid if it's against public policy.

C. Appointed Parties (Sentei tōjisha 選定当事者) (Code of Civil Procedure, Art. 30)
When numerous individuals have a common interest in a lawsuit and their claims or defenses arise from a common factual or legal basis, they can appoint one or more persons from among themselves to act as the "appointed party (or parties)" to sue or be sued on behalf of the entire group. This is a procedural device to streamline multi-party litigation and is a form of representative standing. The judgment will bind all who are represented by the appointed party.

IV. Proving and Challenging Tōjisha tekikaku

• Plaintiff's Initial Burden: The plaintiff's complaint must contain allegations that, if true, would establish their standing and the defendant's standing for the specific claim.
• Defendant's Defense: A defendant can raise the lack of the plaintiff's Tōjisha tekikaku, or their own lack thereof, as a defense to dismiss the action.
• Court's Examination: Standing is a fundamental procedural requirement, and the court can (and often will) examine it ex officio, even if not explicitly challenged by the defendant.

V. Practical Scenarios in Business Litigation

Understanding Tōjisha tekikaku is crucial in many business contexts:

• Corporate Group Litigation:
  • Generally, a parent company does not automatically have standing to sue for harm suffered directly by its subsidiary (or vice versa), as each is a separate legal entity. Exceptions include shareholder derivative actions or, in very rare cases, where the corporate veil might be pierced (hōjinkaku hinin no hōri 法人格否認の法理).
• Contractual Disputes:
  • As a rule, only the direct parties to a contract (or their valid assignees or legal successors) have standing to sue for its breach. Japan's recognition of third-party beneficiary rights to sue directly under a contract is more limited than in some common law jurisdictions.
• Intellectual Property Litigation:
  • The registered owner of a patent, trademark, or copyright typically has standing to sue for infringement.
  • An exclusive licensee (sen'yō jisshikensha 専用実施権者) of a patent or registered trademark often has independent standing to sue for injunctive relief and damages in their own name.
  • A non-exclusive (ordinary) licensee (tsūjō jisshikensha 通常実施権者) generally does not have independent standing to sue infringers directly. Their recourse is typically through the licensor, though they may have contractual claims against the licensor if the licensor fails to protect the IP.
• Successors in Interest (e.g., after Mergers & Acquisitions):
  • If a company acquires rights or assumes obligations through an M&A transaction, proper documentation of the assignment or succession is vital to establish Tōjisha tekikaku for the successor entity in any subsequent litigation concerning those rights or obligations.

Conclusion

Tōjisha tekikaku, or standing, is a critical gateway to justice in Japan. It ensures that lawsuits are pursued by and against those who have a legitimate, legally recognized connection to the specific dispute. For businesses, this means careful analysis is required before initiating or defending a lawsuit to confirm that the correct entities are named as plaintiff and defendant based on who holds the actual rights or obligations at issue. Missteps in identifying the proper parties can lead to a costly and time-consuming dismissal, underscoring the importance of understanding this fundamental principle of Japanese civil procedure.