My Company Has a Small Monetary Claim in Japan: Is There a Simplified Procedure Available? A Look at Japan's Small Claims Litigation

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

For businesses, pursuing smaller monetary claims through standard litigation can often feel like a Pyrrhic victory; the costs, time, and procedural complexities involved might outweigh the amount recovered. Recognizing this challenge, the Japanese legal system offers a dedicated, streamlined process known as "Small Claims Litigation" (shōgaku soshō tetsuzuki – 少額訴訟手続). This procedure, conducted in Summary Courts (kan'i saibansho – 簡易裁判所), is designed to provide a simpler, faster, and less expensive avenue for resolving minor monetary disputes.

This article delves into Japan's Small Claims Litigation system, exploring its eligibility criteria, key procedural characteristics, unique features like court-ordered installment payments, the appeal (or rather, objection) process, and how it compares to similar mechanisms in other jurisdictions, such as U.S. Small Claims Courts.

What is Small Claims Litigation in Japan? (CCP Arts. 368-381)

Introduced as part of reforms aimed at making the civil justice system more accessible and user-friendly, Japan's Small Claims Litigation procedure is specifically tailored for minor monetary disputes. The core objective is to enable parties, often individuals but also businesses within certain limits, to resolve these smaller claims without the full panoply of procedures and expenses associated with ordinary civil litigation.

Eligibility Criteria:

  1. Nature of Claim: Monetary Claims Only: The procedure is exclusively available for claims seeking the payment of money. Claims for specific performance (other than payment of money), declaratory judgments, or other non-monetary relief cannot be brought under this system.
  2. Amount in Dispute (Monetary Cap): The amount claimed must not exceed JPY 600,000. This threshold was increased from an initial JPY 300,000 by a 2003 amendment to the Code of Civil Procedure (CCP), reflecting the procedure's utility and acceptance.
  3. Plaintiff's Usage Limitation: To prevent the system from being overly utilized by businesses for routine, large-scale debt collection, a plaintiff (including a corporate plaintiff) is restricted from using the Small Claims Litigation procedure more than ten times in the same Summary Court within a single calendar year (CCP Art. 368(1) proviso, Art. 368(3); Rules of Civil Procedure, Rule 223).

Initiating a Small Claims Action: Procedural Choices

When a monetary claim falls within the JPY 600,000 limit and is to be filed in a Summary Court, the plaintiff has a choice:

  • Ordinary Proceedings in Summary Court: They can opt for the standard procedural track available in Summary Courts, which, while simpler than District Court proceedings, is more formal than Small Claims Litigation.
  • Small Claims Litigation Procedure: To utilize this specialized track, the plaintiff must explicitly state their choice when filing the lawsuit (CCP Art. 368(2)).

However, the plaintiff's choice is not final. The defendant also has a say:

  • Defendant's Right to Opt for Ordinary Proceedings: The defendant has an absolute right to request that the case be transferred to the ordinary proceedings of the Summary Court. This request must be made before the defendant presents arguments on the merits of the case during the first oral hearing session (CCP Art. 373(1)-(2)). If such a request is made, the transfer to ordinary proceedings occurs automatically. To ensure parties are aware of these options, court officials typically provide written explanations of the Small Claims Litigation procedure when summoning parties for the first hearing (Rules of Civil Procedure, Rule 222).
  • Court's Discretion to Transfer: Independently, the court itself can decide to transfer the case to ordinary proceedings if it determines that the Small Claims Litigation procedure is unsuitable. This might occur if specific requirements are not met, if the defendant's whereabouts are unknown and service cannot be effected by ordinary means (service by public notification is not permitted for initiating small claims), or if the issues in the case are deemed too complex for the expedited process (CCP Art. 373(3)).

Key Characteristics of the Small Claims Hearing and Judgment

The Small Claims Litigation procedure is defined by its emphasis on speed, simplicity, and practical resolution.

The Hearing Process:

  1. Principle of a Single-Session Hearing (Ichijitsu Shinri no Gensoku – 一期日審理の原則) (CCP Art. 370): The cornerstone of the procedure is the aim to complete the entire hearing, including the examination of evidence, in a single court session. This necessitates focused presentations and immediate availability of evidence.
  2. Restrictions to Ensure Speed:
    • No Counterclaims (Hanso – 反訴) Permitted (CCP Art. 369): To maintain the streamlined nature and prevent the single session from becoming overly complicated, the defendant is not allowed to file a counterclaim within the Small Claims Litigation procedure. If the defendant has a claim against the plaintiff, it must be pursued separately.
    • Evidence Limited to Immediate Examination (CCP Art. 371): The evidence considered is generally restricted to that which can be examined by the court immediately during the single scheduled hearing. This means parties should come prepared with all their documents and witnesses. Requests for extensive future evidence gathering that would delay proceedings are typically not accommodated.
  3. Simplified Examination of Witnesses (CCP Art. 372):
    • The court has greater flexibility in how it conducts the examination of witnesses and parties.
    • Importantly, the requirement for witnesses to take an oath before testifying may be omitted at the court's discretion.
    • The judge can also determine the order of questioning more flexibly than in ordinary proceedings.
  4. Active Judicial Role: While not explicitly detailed as a unique feature in the provided excerpt for small claims, judges in Summary Court proceedings, particularly in a system designed for speed and often involving unrepresented litigants, tend to play a more active role in questioning parties and clarifying facts to expedite the process.

The Judgment:

  1. Immediate Pronouncement of Judgment (CCP Art. 374(1)): In keeping with the principle of swift resolution, the court is, in principle, required to pronounce its judgment immediately after the conclusion of the oral arguments in the single hearing session.
  2. Simplified Judgment Record (Chōsho Hanketsu – 調書判決) (CCP Art. 374(2)): A full, formal written judgment with detailed reasoning is typically not prepared. Instead, the judgment (including its essential findings and order) is entered into the official court record (chōsho), and this record serves as the official judgment. This significantly reduces the time and formality associated with judgment drafting.
  3. Ex Officio Declaration of Provisional Execution (CCP Art. 376(1)): The judgment, if it orders payment, will generally include a declaration of provisional execution (kari-shikkō sengen – 仮執行宣言) issued by the court of its own accord. This allows the successful plaintiff to seek enforcement of the judgment even if the defendant subsequently files an objection (though the execution can be stayed under certain conditions).

Unique Feature: Judgments Allowing Deferred or Installment Payments (CCP Art. 375)

Perhaps one of the most distinctive features of Japan's Small Claims Litigation is the court's authority to issue judgments that include terms for deferred payment or payment in installments.

  • Discretionary Power: The court, after considering the defendant's financial capacity, the circumstances leading to the debt, and other relevant factors, may order that the adjudged sum be paid by a specified future date or in installments over a period not exceeding three years (CCP Art. 375(1)).
  • Rationale: This provision aims to achieve a practical and realistic resolution. It acknowledges that a defendant, even if liable, might genuinely be unable to pay the full sum immediately. By allowing structured payment terms within the judgment itself, the system encourages voluntary compliance and can obviate the need for the plaintiff to initiate separate, often difficult, compulsory execution proceedings.
  • Justification for Modifying Substantive Rights: Allowing a court to impose installment payments on a debt that might have been contractually due in full immediately is a significant intervention. This is generally justified on the grounds that:
    • The plaintiff, by opting for the Small Claims Litigation procedure, implicitly consents to the possibility of such a judgment and the court's broader discretion in crafting a workable solution.
    • The defendant's actual financial situation might be precarious, making an immediate full payment order unrealistic.
    • The decision reflects the full scope of discussions during the hearing, which may include the defendant's ability to pay, thus tailoring the judgment to the specific realities of the case.

This feature underscores the problem-solving and pragmatic orientation of the Small Claims Litigation system in Japan.

Challenging a Small Claims Judgment: The Objection Process

The pursuit of speed and simplicity in Small Claims Litigation comes with a trade-off in terms of appeal rights:

  1. No Ordinary Appeal (Kōso – 控訴) (CCP Art. 377): A judgment rendered under the Small Claims Litigation procedure is not subject to an ordinary appeal (kōso) to a higher court (e.g., a District Court or High Court).
  2. The "Objection" (Igi Mōshitate – 異議申立) System (CCP Art. 378): The sole avenue for a party dissatisfied with a small claims judgment is to file an "objection" (igi mōshitate).
    • This objection is filed with the same Summary Court that delivered the small claims judgment.
    • It must be filed within an unextendable period of two weeks from the date the party received service of the judgment document (or the court record serving as the judgment) (CCP Art. 378(1)).
  3. Effect of a Valid Objection (CCP Art. 379): If a valid objection is filed:
    • The lawsuit reverts to the procedural stage it was at before the conclusion of the oral arguments in the Small Claims Litigation hearing.
    • The case then proceeds as an ordinary civil action within that same Summary Court, following the standard rules for Summary Court litigation (which are themselves somewhat simplified compared to District Court rules but more formal than the small claims track).
  4. Finality After Objection and Subsequent Judgment (CCP Art. 380): Crucially, the judgment rendered by the Summary Court after the case has transitioned to ordinary proceedings due to an objection is also not subject to an ordinary appeal (kōso). This means that disputes handled within this framework, even if an objection is filed, are ultimately resolved at the Summary Court level, ensuring a relatively high degree of finality and preventing minor disputes from escalating through multiple appellate tiers.

Enforcement of Small Claims Judgments

The simplified nature of the procedure extends to the enforcement of its outcomes:

  • No Formal Writ of Execution Usually Needed: To reduce the burden on the successful plaintiff (now a creditor), a formal "writ of execution" (shikkōbun – 執行文), which is typically required to initiate compulsory execution for ordinary judgments, is generally not necessary for enforcing a judgment from Small Claims Litigation or a settlement recorded in such proceedings (Proviso to Article 25 of the Civil Execution Act).
  • Small Claims Monetary Claim Execution (Shōgaku Soshō Saiken Shikkō – 少額訴訟債権執行): Since a 2004 amendment to the Civil Execution Act, a special, simplified procedure for executing small claims judgments against monetary claims held by the debtor (such as bank deposits or wages) is available. This "small claims monetary claim execution" can be handled by the clerk of the Summary Court that issued the judgment, rather than requiring the creditor to go to a District Court or engage an execution officer for more complex execution processes (Civil Execution Act Arts. 167-2 to 167-14).
  • Role of Judicial Scriveners: Certified judicial scriveners (shiho shoshi – 司法書士), who have broader agency rights in Summary Court proceedings than in District Courts, are also authorized to represent parties in these Summary Court-level execution procedures for small claims.

Small Claims in Japan vs. U.S. Small Claims Courts: A Comparative Glance

While both Japan's Small Claims Litigation and U.S. Small Claims Courts aim to provide accessible justice for minor disputes, there are notable differences alongside similarities:

  • Similarities: Both typically feature lower monetary limits, simplified procedural rules, reduced formality, and often encourage or accommodate self-represented litigants. The goal is speed and reduced cost.
  • Differences:
    • Monetary Limits: While Japan has a uniform national limit of JPY 600,000, limits in the U.S. vary significantly by state.
    • Procedural Specifics: Japan's single-session hearing principle and prohibition on counterclaims are specific features.
    • Judicial Powers: The explicit power of Japanese Summary Court judges in small claims to order installment payments within the judgment is a distinctive characteristic.
    • Appeal/Review: The Japanese system's "objection to the same court" followed by a final judgment (not subject to ordinary appeal) contrasts with diverse U.S. state systems, some of which allow for a de novo appeal to a higher trial court.
    • Corporate Use: Japan's explicit annual limit on use by a single plaintiff aims to curb routine business debt collection, whereas rules for corporate plaintiffs in U.S. small claims courts vary.

Conclusion

Japan's Small Claims Litigation procedure offers a distinct and valuable avenue for resolving minor monetary disputes up to JPY 600,000. Its core tenets—a single-session hearing, immediate judgment, simplified evidence rules, and the unique possibility of court-ordered installment payments—are designed to provide swift, practical, and accessible justice. While it imposes certain limitations, such as the preclusion of counterclaims and a specific objection process in lieu of ordinary appeals, these are generally aimed at maintaining the efficiency and focus of the system.

For businesses, including U.S. companies, with eligible small-value monetary claims in Japan, this procedure can represent a significantly more cost-effective and less burdensome alternative to navigating the full complexities of ordinary civil litigation. However, the choice to use this system should be made with a clear understanding of its specific rules and limitations.