Multiple Claims on One Asset: How Does Japan Handle Competing Seizures and Deposits (Kyotaku)?

It's a common scenario in debt collection: a debtor owes money to several different creditors, and all those creditors identify the same valuable asset ripe for seizure. This is particularly prevalent when the asset is a monetary claim held by the debtor against a third party—such as a bank account, wages due from an employer, or a trade receivable. When multiple seizure orders converge on the same third-party debtor for the same underlying debt owed to the original debtor, a situation of "competing seizures" (sashiosae no kyōgō, 差押えの競合) arises. Japanese law has specific rules to manage these competing claims, with a central role played by the third-party debtor (garnishee) and the mechanism of making a "deposit with a legal affairs bureau" (kyōtaku, 供託).

Understanding Competing Seizures (Sashiosae no Kyōgō) of Monetary Claims

Under Article 149 of Japan's Civil Execution Act (民事執行法 - Minji Shikkō Hō), competing seizures occur when two or more seizure orders (sashiosae meirei, 差押命令) or provisional attachment orders (kari-sashiosae meirei, 仮差押命令) issued against the same debtor are served on the same third-party debtor concerning the same monetary claim (the "seized claim" or 被差押債権 - hi-sashiosae saiken).

• Effect of Competing Seizures:
  1. Each Seizure Extends to the Entire Claim: Crucially, regardless of the individual amount each creditor is claiming, when multiple seizure orders are served, each order is generally deemed to cover the entirety of the seizable portion of the debt owed by the third-party debtor to the original debtor. It's not that each seizure only attaches to a fraction of the claim.
  2. No Priority Based on Order of Service (Generally for Unsecured Creditors): For general unsecured creditors, the timing of when their respective seizure orders are served on the third-party debtor does not typically grant them priority over one another in sharing the proceeds (i.e., a "first-come, first-served" principle does not directly apply to the distribution of the collected funds among these competing general creditors). If the total amount seized from the third-party debtor is insufficient to satisfy all competing general creditors, they will usually share the available funds proportionally through a subsequent court-supervised distribution (haitō, 配当) process. This is distinct from the priority rules that might apply to secured creditors or tax authorities, whose priorities are determined by other specific laws (e.g., date of mortgage registration, statutory tax lien rules).
  3. Seizing Creditors Obtain a Right to Distribution: The effect of the seizure for these creditors is to give them a right to participate in the distribution of any funds eventually collected from the third-party debtor or deposited by them.

This situation can arise, for example, if multiple suppliers of a company (the debtor) all obtain judgments and simultaneously attempt to seize payments owed to that company by one of its major customers (the third-party debtor). Similarly, an individual's bank account or wages could be targeted by multiple creditors concurrently. The concepts illustrated in Case 30 from the provided materials (involving competing seizures of salary) highlight this dynamic, where the employer, as the third-party debtor, faces demands from multiple creditors of their employee.

The Third-Party Debtor's (Garnishee's) Dilemma

When a third-party debtor is served with multiple seizure orders from different creditors of their own creditor (the original debtor), they are placed in a precarious position. They face several questions:

• Which creditor should they pay, if any?
• If they pay one, what about their obligations to the others?
• What if the total amount claimed by all seizing creditors exceeds the actual debt they owe to the original debtor?
• Paying the wrong party or miscalculating the amounts could expose them to the risk of having to pay twice or facing liability for any shortfall to a rightfully entitled creditor.

The Solution for Third-Party Debtors: Deposit with a Legal Affairs Bureau (Kyōtaku, 供託)

To shield third-party debtors from these risks and to ensure a fair and orderly process for dealing with competing creditor claims, Article 156 of the Civil Execution Act provides for a system of "deposit" (kyōtaku). The third-party debtor can discharge their obligation by depositing the amount of the seized debt with a competent official deposit office, which is typically a branch of the Legal Affairs Bureau (法務局 - Hōmukyoku). This act effectively removes the funds from the direct control of the third-party debtor and places them under the administration of the legal system for proper allocation.

There are two main types of deposits in this context:

1. Permissive Deposit / Deposit by Right (Kenri Kyōtaku, 権利供託 - Article 156, paragraph 1):
   The third-party debtor has the right (but is not necessarily obligated, unless other conditions trigger an obligation) to deposit the funds if:
   • Competing seizure orders or provisional attachment orders concerning the same monetary claim have been served on them.
   • Even if only a single seizure order has been served, if a "demand for distribution" (haitō yōkyū, 配当要求) from another qualified creditor (such as a tax authority or a creditor with a prior-ranking security interest that doesn't require a separate seizure) has also been served on them.
   • A provisional attachment order has been served on them (even if no other competing claims are immediately apparent, the deposit protects against future complications).
     In such cases, the third-party debtor deposits the entire amount of the debt they owe to the original debtor (or the portion covered by the seizures if the debt owed is larger than the total seized amount). This deposit, when properly made, has the critical legal effect of discharging the third-party debtor's obligation to both their original creditor (the debtor in the execution) and all the seizing creditors who have claims against that specific debt.
2. Mandatory Deposit / Deposit by Obligation (Gimu Kyōtaku, 義務供託 - Article 156, paragraph 2):
   In certain circumstances, the third-party debtor is obligated to make a deposit. This occurs when:
   • Multiple seizure orders and/or provisional attachment orders have been served, AND the total amount of the monetary claim owed by the third-party debtor is less than the combined total of the individual creditors' claims as specified in those seizure orders. In simpler terms, if there clearly isn't enough money to satisfy every seizing creditor based on the amounts they are trying to seize from this particular debt, the third-party debtor must deposit the full amount they owe.
   • OR, if a formal "demand for distribution" (haitō yōkyū) has been served on the third-party debtor (in addition to any seizure order). This typically comes from creditors with statutory rights to claim from the proceeds without necessarily issuing their own seizure order (e.g., tax authorities).
     The mandatory deposit is crucial because it forces the funds into the court's purview, triggering the formal court-supervised distribution procedure to ensure fairness among all competing claimants.

Beyond these execution-specific grounds, a third-party debtor might also be entitled to make a deposit under general provisions of the Civil Code (e.g., Article 494), for instance, if their creditor (the original debtor) refuses to accept payment, is unable to accept payment, or if the third-party debtor cannot, without their own fault, ascertain who the true creditor is (perhaps due to conflicting assignments of the claim).

Procedure for Making a Deposit and Subsequent Steps

• Making the Deposit: The third-party debtor makes the actual payment to the designated official deposit office, following the prescribed deposit procedures.
• Statement of Circumstances (Jijō Todoke, 事情届 - Article 156, paragraph 3): After making any deposit under Article 156 (whether permissive or mandatory), the third-party debtor has a crucial obligation to promptly file a "statement of circumstances" with the execution court that issued the seizure order. If multiple seizure orders were issued by different courts, the statement is typically filed with the court that first served its seizure order, or as directed. This jijō todoke officially informs the court about the deposit, provides details of the competing claims known to the third-party debtor (including names of creditors, dates of service of orders, amounts claimed), and any other relevant facts concerning the deposit. This is exemplified conceptually in Case 32 of the provided materials, which touches upon the third-party debtor's considerations and the deposit process.
• Consequences of Failing to File the Jijō Todoke: Failure to file this statement in a timely manner can have adverse consequences for the third-party debtor. If creditors are prejudiced by the delay or lack of information (e.g., if distribution is improperly delayed or miscalculated), the third-party debtor could potentially face liability for damages.
• Transition to Court-Supervised Distribution Proceedings: Once the deposit is made and the statement of circumstances is duly filed with the execution court, the court will then take over. It will initiate formal distribution proceedings (haitō tetsuzuki) to allocate the deposited funds among all the entitled creditors according to their respective legal priorities (a complex topic detailed in a separate article).

Why the Deposit (Kyōtaku) System is Important

The kyōtaku system plays a vital role in managing competing claims:

• Protection for Third-Party Debtors: It provides a "safe harbor." By depositing the funds, the third-party debtor can completely discharge their debt and effectively remove themselves from the often complex and potentially contentious disputes between their original creditor and that creditor's own array of creditors. They avoid the risk of making an incorrect payment or facing multiple lawsuits.
• Ensuring Fair and Orderly Distribution: It centralizes the contested funds under the control of the execution court. This allows the court to apply the intricate statutory priority rules systematically, ensuring that all competing claims are considered and that the funds are allocated in a fair and legally sound manner.
• Preventing a "Race to the Swift" Among General Creditors: Because the order of service generally doesn't grant priority among competing unsecured creditors for the same seized claim, the deposit system, followed by court distribution, ensures that no single seizing creditor can unfairly gain an advantage by, for example, being the first to pressure the third-party debtor into making a direct payment when other competing seizures are also in effect.

What if the Third-Party Debtor Fails to Deposit Despite Competing Seizures?

If a third-party debtor is faced with multiple competing seizure orders (especially in a situation that would trigger a mandatory deposit) but, instead of depositing the funds, chooses to pay one of the seizing creditors directly (outside the formal distribution process initiated by a deposit), they do so at their peril. Other competing seizing creditors whose rights to a share of the funds are thereby prejudiced (i.e., they would have received a portion had a proper deposit and distribution occurred) may have grounds to sue the third-party debtor for the amount they should have received. The third-party debtor cannot unilaterally decide which creditor to favor when multiple valid seizures are in place and a deposit is legally warranted or required.

Conclusion

When the financial waters become turbulent with multiple creditors vying for the same monetary asset held by a third party, Japan's Civil Execution Act provides a structured approach through the concepts of "competing seizures" and the crucial "deposit" (kyōtaku) mechanism. This system is designed to bring order to a potentially chaotic situation. It primarily aims to protect the third-party debtor (garnishee) from the untenable position of having to adjudicate competing claims or risk double payment, while simultaneously ensuring that the seized funds are marshaled and ultimately distributed fairly and lawfully among all entitled creditors through a court-supervised process. For any entity that finds itself in the position of a third-party debtor in Japanese enforcement proceedings, a clear understanding of the implications of competing seizures and the correct use of the deposit procedure is essential to mitigate risks and fulfill their legal obligations.