"Judgments for Performance in Exchange for Counter-Performance" in Japan: How Do Defenses Involving Counter-Performance Affect Court Fees?

In Japanese contract law, particularly concerning bilateral contracts (双務契約 - sōmu keiyaku) where each party owes obligations to the other, the principle of simultaneous performance (同時履行の原則 - dōji rikō no gensoku) is fundamental. This means a party can often refuse to perform their obligation until the other party performs or tenders performance of their corresponding counter-obligation. When a lawsuit is filed to compel performance, and the defendant validly asserts their right to receive counter-performance, a Japanese court may issue a "judgment for performance in exchange for counter-performance" (引換給付判決 - hikikae kyūfu hanketsu). Similarly, a defendant might assert a lien (留置権 - ryūchiken) over property, refusing to return it until a claim related to that property is satisfied.

A key question for litigants is how these defenses involving counter-performance, and the resulting exchange judgments, impact the calculation of the "value of suit" (訴額 - so'gaku), which is the basis for court filing fees, both at the trial stage and on appeal. It is important to note that this discussion focuses on counter-performance as a defense, not on formal "counterclaims" (反訴 - hanso) filed by the defendant, which have their own distinct set of rules for court fee calculation.

"So'gaku" at First Instance: The Principle of Non-Deduction of Plaintiff's Counter-Performance

When a plaintiff files a lawsuit seeking performance from the defendant (e.g., payment of a purchase price, delivery of goods), the general rule for calculating the so'gaku is the principle of non-deduction of counter-performance (反対給付の控除禁止の原則 - hantai kyūfu no kōjo kinshi no gensoku).

This means:

• The value of the plaintiff's claim, as asserted, is the sole basis for the so'gaku calculation.
• The plaintiff's own obligation to provide counter-performance to the defendant (e.g., the seller's obligation to deliver goods when suing for the purchase price) is not deducted from the value of their claim when determining the so'gaku. This principle applies broadly, not just to bilateral contracts.
• Even if the plaintiff, in their initial complaint, proactively requests a judgment ordering the defendant's performance "in exchange for" the plaintiff's own counter-performance, the so'gaku of the plaintiff's primary claim is not thereby reduced.

Rationale for Non-Deduction:
The reasoning behind this principle, as supported by the author of the source text, is that the plaintiff is seeking judicial confirmation and the eventual enforcement of their entire asserted claim. The fact that the execution of the judgment might be conditioned upon their own counter-performance does not diminish the value of the right they are seeking to have judicially recognized. To value the suit merely as the difference between the claim and the counter-obligation would not accurately reflect the plaintiff's interest in obtaining a judgment for their full claim.

The Challenge: When Only the Counter-Performance is Genuinely Disputed

The principle of non-deduction can appear somewhat problematic in situations where the plaintiff's main claim is largely undisputed, and the core of the legal battle revolves solely around the defendant's assertion of a right to withhold performance due to the plaintiff's failure to tender counter-performance, or where the defendant asserts a lien for a sum significantly smaller than the value of the plaintiff's main claim.

For example, if a plaintiff sues for the return of property valued at ¥10 million, and the defendant does not dispute the plaintiff's title but validly asserts a lien for repair costs of ¥500,000, should the so'gaku still be based on the ¥10 million property value?

• The source material notes that this issue has been debated, particularly with reference to German law, where views are divided. The dominant German view tends to maintain that the so'gaku remains the full value of the plaintiff's claim, even if only the lien or right to counter-performance is actively contested. An opposing German view suggests that if the main claim is effectively admitted and the dispute centers only on the (often smaller value) counter-performance or lien, the economic reality of the dispute should be reflected by focusing the so'gaku on the value of that contested counter-right (capped by the value of the main claim if the counter-right is larger). However, this opposing view is itself criticized for creating inconsistencies in how so'gaku is determined based on the nature of the defendant's arguments. In Japan, the principle of non-deduction generally holds for the initial so'gaku calculation.

Court Fees on Appeal: Nuances Based on the Grounds for Dissatisfaction

While the plaintiff's counter-performance obligation does not reduce the so'gaku at first instance, the value of that counter-performance can become highly relevant when calculating the so'gaku for an appeal from an exchange judgment. The appeal so'gaku depends on which party is appealing and the specific aspect of the judgment they are dissatisfied with.

A. Plaintiff Appeals an Exchange Judgment (Seeking an Unconditional Judgment)

If a plaintiff sought unconditional performance but the court ordered performance only in exchange for the plaintiff's counter-performance (due to a valid defense of simultaneous performance or a lien raised by the defendant), the plaintiff may appeal, arguing they are entitled to an unconditional judgment.

• Ground of Dissatisfaction: The plaintiff's dissatisfaction is with the imposition of the condition of counter-performance.
• Appeal So'gaku: The so'gaku for the plaintiff's appeal is generally determined by the value of the counter-performance they were ordered to provide. For instance, if ordered to pay ¥1 million in exchange for receiving goods, the appeal so'gaku related to removing this condition would be based on that ¥1 million.
• Cap on Appeal So'gaku: This appeal so'gaku based on the counter-performance is, however, capped by the so'gaku of the lawsuit at the first instance. The plaintiff cannot be deemed to have a higher appellate interest than the value of their original suit.

B. Defendant Appeals an Exchange Judgment (Seeking Full Dismissal of Plaintiff's Claim)

If the court issued an exchange judgment, and the defendant appeals seeking a complete dismissal of the plaintiff's claim (arguing the plaintiff is not entitled to performance at all, even in exchange), their dissatisfaction is with the main claim being upheld.

• Appeal So'gaku: The so'gaku for the defendant's appeal in this scenario is the value of the plaintiff's original claim (i.e., the so'gaku as determined at the first instance).

C. Defendant Appeals an Unconditional Judgment (Where Their Lien or Simultaneous Performance Defense was Rejected)

Consider a scenario where the defendant raised a lien or a defense of simultaneous performance, but the first instance court rejected it and ordered unconditional performance by the defendant.

1. Defendant Appeals Seeking Full Dismissal: If the defendant appeals the unconditional judgment with the aim of having the plaintiff's entire claim dismissed (challenging the validity of the main claim itself), the appeal so'gaku is the value of the plaintiff's claim. The rejected lien or simultaneous performance defense does not, in this context, increase the appeal so'gaku beyond the value of the claim being resisted.
2. Defendant Appeals Only to Have the Lien/Simultaneous Performance Recognized: If the defendant does not contest the validity of the plaintiff's main claim on appeal but appeals solely because their asserted lien or right to simultaneous counter-performance was denied (i.e., they seek to change the unconditional judgment into an exchange judgment), then the appeal so'gaku is the value of the counter-performance that underlies their asserted lien or defense.
   • A Potential Complication (from German Law Discussion in Source): What if the value of this asserted counter-performance (e.g., the amount of the lien claimed) is greater than the value of the plaintiff's main claim? Is the defendant's appeal so'gaku capped by the plaintiff's main claim value, or can it be higher? The source material indicates divided views in German jurisprudence on this point. The dominant German view appears to cap the appeal so'gaku at the value of the plaintiff's main claim. However, some German cases and scholarly opinions argue that if the defendant has a legitimate economic interest in establishing a larger lien or counter-right (even if it exceeds what the plaintiff is currently claiming from them), their appeal so'gaku might reflect that larger interest. The precise application in Japan for such a scenario would depend on specific court interpretation, but the value of the asserted counter-performance is the starting point for the appeal so'gaku.

D. Appeals Involving a Defense of Simultaneous Performance (Not a Lien)

If a defendant was ordered to make an unconditional payment (e.g., for a purchase price) and appeals solely on the ground that the judgment should have been in exchange for the plaintiff's simultaneous counter-performance (e.g., delivery of the purchased goods), the defendant's dissatisfaction lies with the unconditional nature of the order.

• Appeal So'gaku: The appeal so'gaku is generally the value of the counter-performance that the defendant insists should be a condition (e.g., the value of the goods to be delivered). If the defendant can demonstrate that the counter-performance (e.g., the entire object of the sale) is effectively unusable or worthless, this value might equate to the full amount of the plaintiff's claim (e.g., the entire sales price).

Conclusion

In Japanese litigation involving bilateral obligations, the principle that the plaintiff's own counter-performance obligation does not reduce the "value of suit" for their primary claim is well-established for first-instance court fee calculations. The focus remains on the value of what the plaintiff is demanding from the defendant. However, when these cases proceed to appeal, particularly from "judgments for performance in exchange for counter-performance," the calculation of the appeal so'gaku becomes more nuanced. It critically depends on which party is appealing and the specific nature of their grievance with the lower court's decision—whether they are challenging the entirety of the main claim, the imposition of an exchange condition, or the rejection of their asserted right to counter-performance. Understanding these distinctions is vital for accurately assessing potential court fees at each stage of such disputes.