Facing an Issue with a Japanese Government Agency? A Roadmap to Administrative Remedies: Litigation, Complaint Review, and Compensation

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read

Businesses operating in Japan may, at times, encounter challenges stemming from the actions or inactions of Japanese government agencies. These can range from unfavorable administrative decisions and regulatory hurdles to damages caused by official conduct or losses incurred due to lawful public projects. Fortunately, Japan's legal system provides a structured framework of "administrative remedies" (行政救済 - gyōsei kyūsai) designed to address such grievances. This roadmap outlines the main avenues for relief: administrative disputed claims (encompassing court litigation and administrative complaint reviews) and state compensation (covering redress for illegal acts and compensation for lawful takings). Understanding these options is crucial for businesses seeking to protect their interests.

The Two Main Pillars of Administrative Remedies in Japan

The Japanese system of administrative remedies can be broadly categorized into two main pillars, each serving distinct but sometimes overlapping purposes:

  1. Administrative Disputed Claims System (行政争訟制度 - Gyōsei Sōshō Seido): This pillar is primarily concerned with challenging the legality or propriety of administrative actions (or inactions) themselves. The goal is often to have an unfavorable decision overturned, altered, or to compel an agency to take a required action or refrain from an unlawful one. It comprises two main branches:
    • Administrative Litigation (行政訴訟 - Gyōsei Soshō): Formal judicial review by courts.
    • Administrative Complaint Review (行政不服審査 - Gyōsei Fufuku Shinsa): An internal administrative review process.
  2. State Compensation System (国家補償制度 - Kokka Hoshō Seido): This pillar focuses on providing monetary relief for damages or losses suffered by private parties as a result of governmental activities, whether those activities were illegal or lawful. It includes:
    • State Redress/Compensation for Illegal Acts (Kokka Baishō - 国家賠償).
    • Loss Compensation for Lawful Acts (Sonshitsu Hoshō - 損失補償).

Let's explore each of these in more detail.

Pillar 1: Challenging Government Actions - Administrative Disputed Claims

When a business seeks to directly challenge the validity, legality, or propriety of a government agency's decision or inaction, the Administrative Disputed Claims System offers formal avenues.

A. Administrative Litigation (行政訴訟 - Gyōsei Soshō)

Administrative litigation, governed by the Administrative Case Litigation Act (ACLA - 行政事件訴訟法 - Gyōsei Jiken Soshō Hō), involves seeking judicial review from Japan's court system. It is generally more formal, potentially more time-consuming, and costlier than administrative complaint review, but court judgments have greater finality and binding power. Key types of administrative litigation relevant to businesses include:

  • Revocation Litigation (Torikeshi Soshō - 取消訴訟): This is the most common and central type of administrative lawsuit. It aims to obtain a court judgment revoking (nullifying) an existing illegal "administrative disposition" (行政処分 - gyōsei shobun – a formal agency action directly affecting rights/duties). Examples include challenging the denial of a permit, an order imposing a sanction, or an unlawful tax assessment.
  • Litigation for Confirmation of Illegality of Inaction (Fusakui no Ihō Kakunin Soshō - 不作為の違法確認訴訟): This can be filed when an administrative agency fails to make a decision or take action in response to an application within a reasonable period, where it has a legal duty to do so.
  • Mandamus Litigation (Gimuzuke Soshō - 義務付け訴訟): Formally codified in the 2004 ACLA revision, this powerful tool allows a plaintiff to seek a court order compelling an administrative agency to make a specific disposition. It has two main forms:
    • Non-Application Type (or Direct Mandamus): Typically used by a third party to compel an agency to take regulatory action against another party (e.g., ordering a competitor to cease an illegal practice).
    • Application Type: Used by an applicant to compel an agency to issue a disposition (e.g., a permit) that was unlawfully refused or has been unduly delayed. This must be filed in conjunction with revocation litigation (against the refusal) or inaction litigation.
  • Injunctive Litigation (Sashitome Soshō - 差止訴訟): Also formalized in 2004, this allows a plaintiff to seek a court order prohibiting an administrative agency from making an anticipated illegal disposition that would cause serious and irreparable harm. It's a form of preventative relief.
  • Party Litigation (Tōjisha Soshō - 当事者訴訟): This type of litigation addresses disputes concerning public law legal relationships, rather than directly challenging an administrative disposition. It can be used, for example, to seek confirmation of a legal status under public law or to claim payments due under a public law contract or scheme. Disputes arising from what are considered public law contracts may fall here, though many contracts with government entities are treated as private law matters.

Administrative litigation primarily focuses on the legality of administrative actions. Courts generally do not review the mere "impropriety" or policy wisdom of a discretionary decision if it is otherwise lawful.

B. Administrative Complaint Review (行政不服審査 - Gyōsei Fufuku Shinsa)

This system, governed by the Administrative Complaint Review Act (ACRA - 行政不服審査法 - Gyōsei Fufuku Shinsa Hō), offers an internal administrative process for challenging agency actions. It was significantly reformed in 2014 to enhance fairness and neutrality.

  • Key Features:
    • Scope of Review: A crucial advantage is that it can review not only the illegality but also the impropriety (不当 - futō) of an administrative disposition. This means it can examine whether a discretionary decision, even if technically legal, was unreasonable, unfair, or inappropriate under the circumstances.
    • Procedure: Generally simpler, less formal, and less costly than court litigation. The process involves a designated "review officer" (shinri'in) who was not involved in the original decision, and often, consultation with an independent "Administrative Complaint Review Board" (Gyōsei Fufuku Shinsakai) before the reviewing agency makes its final adjudication.
    • Types of Complaints: The main type is a "Request for Administrative Review" (shinsa seikyū). In specific cases defined by individual laws, an optional preliminary "Request for Reinvestigation" (sai-chōsa no seikyū) to the original agency or a subsequent "Request for Re-examination" (sai-shinsa seikyū) against a shinsa seikyū decision may be available.
  • Outcome: The reviewing agency issues an "adjudication" (裁決 - saiketsu) or "decision" (決定 - kettei), which can uphold the original disposition, revoke it, alter it (but not to the complainant's disadvantage), or, in cases of inaction on an application, declare the inaction illegal/improper and order the agency to act.

Relationship Between Litigation and Complaint Review

Under ACLA Article 8, there's generally a "free choice" principle (jiyū sentaku shugi): a party can often choose to file administrative litigation directly in court, or file an administrative complaint, or pursue them sequentially (complaint first, then court if dissatisfied). However, numerous specific laws mandate a "complaint review first" principle (fufuku mōshitate zenchi shugi), requiring a party to exhaust the administrative complaint process before they can bring the matter to court. This is common in areas like tax disputes and disciplinary actions against national public servants. If a party files litigation after an administrative complaint review, the lawsuit generally challenges the original agency disposition, not the review decision itself, unless the review decision contains its own independent illegality (this is the "original disposition principle" or 原処分主義 - gen shobun shugi).

Pillar 2: Seeking Monetary Relief - State Compensation

When an administrative action (or inaction) causes monetary damage or loss, the State Compensation System provides avenues for financial relief. This system is distinct from challenging the administrative action itself, though the two can be related.

A. State Redress/Compensation for Illegal Acts (Kokka Baishō - 国家賠償)

Governed by the State Redress Act (SRA - 国家賠償法), this provides compensation for damages caused by unlawful governmental activity. It is based on Article 17 of the Constitution. The SRA has two main pillars:

  • SRA Article 1: Addresses damages caused by the intentional or negligent illegal exercise of public power by a public official acting in the course of their duties. This can cover a wide range of wrongful conduct, from improper regulatory enforcement to misleading administrative guidance that causes financial loss. Liability rests with the State or the public entity to which the official belongs.
  • SRA Article 2: Addresses damages caused by defects in the installation or management of "public structures" (kō no eizōbutsu - 公の営造物), such as roads, rivers, public buildings, or even movable public property. This is generally a form of no-fault liability for the public entity responsible for the structure; if a defect exists and causes harm, compensation is due regardless of official negligence concerning the defect itself (though the standard of "defect" involves whether the structure lacked the safety it should ordinarily possess).

B. Loss Compensation (Sonshitsu Hoshō - 損失補償)

This provides compensation for specific losses of private property rights caused by lawful exercises of public power. It is based on Article 29, Paragraph 3 of the Constitution, which mandates "just compensation" when private property is taken for public use.

  • Key Scenarios:
    • Public Expropriation (Kōyō Shūyō): When land or other property is lawfully taken by the government for public projects (e.g., under the Land Expropriation Act - 土地収用法). Compensation typically aims to cover the value of the property taken and other associated losses.
    • Lawful Restrictions on Property Use Imposing a "Special Sacrifice": If a lawful regulation or land-use restriction (e.g., severe building restrictions for historical preservation) imposes a burden on a property owner that goes beyond the general social obligations inherent in property ownership (a "special sacrifice" - 特別の犠牲 - tokubetsu no gisei), compensation may be required even though the restriction itself is lawful.

For businesses facing issues with Japanese government agencies, selecting the most appropriate remedy (or combination of remedies) requires careful consideration of several factors:

  1. Nature of the Grievance:
    • Is the primary concern an unfavorable decision or action that needs to be overturned, altered, or stopped? → Consider Administrative Litigation (Revocation, Mandamus, Injunction) or Administrative Complaint Review.
    • Is it an agency's failure to act on an application? → Consider Litigation for Confirmation of Illegality of Inaction, Application-Type Mandamus Litigation, or Administrative Complaint Review for inaction.
    • Is the business suffering monetary damages due to an illegal government act or a defective public structure? → Consider a State Redress (Kokka Baishō) claim.
    • Is the business facing property loss or severe use restriction due to a lawful government project or regulation? → Consider a Loss Compensation (Sonshitsu Hoshō) claim.
  2. Desired Outcome:
    • Nullification or Alteration of a Decision: Revocation Litigation or Administrative Complaint Review.
    • Compelling a Specific Agency Action: Mandamus Litigation or, in some cases, an order via Administrative Complaint Review.
    • Preventing an Agency Action: Injunctive Litigation.
    • Financial Compensation: State Redress or Loss Compensation.
  3. Urgency and Availability of Interim Relief:
    • Administrative Litigation: Offers various provisional measures, including "suspension of execution" (shikkō teishi) for revocation litigation, and the more potent "provisional mandamus" (kari no gimuzuke) and "provisional injunction" (kari no sashitome) for mandamus and injunctive litigation, respectively.
    • Administrative Complaint Review: Also has a mechanism for suspension of execution of the challenged disposition.
  4. Time Limits: All these systems have strict statutes of limitation or filing periods. Missing these deadlines can extinguish the right to seek relief.
  5. Cost, Complexity, and Adversarial Nature:
    • Administrative Complaint Review: Generally less formal, quicker, and less expensive. It also allows review of "impropriety," which courts usually don't address.
    • Administrative Litigation: More formal, can be lengthy and costly, but court judgments offer greater finality and can establish broader legal precedents. Primarily focuses on "illegality."
  6. Scope of Review (Legality vs. Impropriety):
    • If the core issue is not just whether an agency acted illegally, but whether its discretionary decision was unreasonable, unfair, or poor policy (i.e., "improper" - futō), Administrative Complaint Review is often the more suitable (or only) avenue for that specific ground of challenge.

Interplay and Potential Sequencing of Remedies

These remedial systems are not always mutually exclusive and can sometimes be used sequentially or in parallel:

  • Complaint Review then Litigation: This is a common sequence, either by choice or due to a "complaint review first" requirement. An unfavorable outcome in an administrative complaint can often be followed by administrative litigation in court.
  • Challenging an Act and Seeking Damages: A business might file revocation litigation to overturn an illegal administrative act and, separately or subsequently, file a state compensation lawsuit to recover damages caused by that same illegal act. A successful revocation can strengthen the damages claim by establishing the act's illegality, although the specific standard for "illegality" might differ slightly between the two types of proceedings (e.g., the "duty of care standard" in state compensation cases). It's generally possible to file a state compensation suit even if the underlying administrative act has not been formally revoked.

Practical Scenarios for Businesses

  • Scenario 1: Denial of a Critical Business Permit:
    • Options: Administrative Complaint Review (to challenge legality and/or impropriety of denial); Revocation Litigation (to challenge legality of denial) potentially combined with Application-Type Mandamus Litigation (to compel issuance if denial is revoked and criteria are met).
  • Scenario 2: Damage to Business Property from a Faulty Public Road:
    • Option: State Redress (Kokka Baishō) claim under Article 2 of the SRA against the public entity responsible for road management.
  • Scenario 3: Business Land Expropriated for a Public Infrastructure Project:
    • Option: Seek Loss Compensation (Sonshitsu Hoshō) through the procedures outlined in the Land Expropriation Act (negotiation, review by an expropriation committee, and potential court challenge regarding the compensation amount).
  • Scenario 4: Financial Loss Due to Misleading or Coercive Administrative Guidance:
    • Option: If the guidance is deemed illegal (e.g., beyond authority, coercive in a way that breaches a duty of care) and caused damage through official negligence, a State Redress (Kokka Baishō) claim under Article 1 of the SRA might be considered.

Conclusion

Japan's system of administrative remedies provides a comprehensive, albeit complex, set of tools for businesses and individuals to address issues arising from interactions with government agencies. From challenging the legality and propriety of decisions through administrative complaint reviews and various forms of administrative litigation, to seeking monetary relief for damages via state redress or compensation for lawful takings via loss compensation, there are distinct pathways designed to ensure accountability and provide redress. Successfully navigating this roadmap requires a clear understanding of the nature of the grievance, the desired outcome, and the specific requirements and strategic advantages of each available remedy. Given the intricacies involved, seeking expert legal counsel is often essential for businesses to effectively protect their interests within this framework.