My Japanese Business Partner is a Corporation: Who Has the Authority to Represent It in Court?

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read

When business disputes escalate to litigation in Japan, and your counterparty is a corporation (hōjin 法人), a critical preliminary question arises: who within that corporate structure has the legal authority to act on its behalf in court? A corporation, being an artificial legal person, cannot physically appear or make decisions; it must act through designated individuals. Identifying these individuals and understanding the scope of their representative authority is not merely a formality. It is a fundamental aspect of Japanese civil procedure that impacts the validity of procedural acts, the binding nature of settlements, and the overall legitimacy of the litigation. Errors in this area can lead to significant procedural complications.

I. Corporations as Litigants in Japan: The Need for Representation

A. Legal Personality and Capacity to Be a Party (Tōjisha nōryoku - 当事者能力)

Under Japanese law, corporations, once validly established (typically through registration), are recognized as legal persons distinct from their shareholders or members. As such, they possess "capacity to be a party" (Tōjisha nōryoku 当事者能力), meaning they can sue and be sued in their own corporate name (Code of Civil Procedure - Minji Soshō Hō 民事訴訟法, Art. 28).

B. The Inherent Need for Natural Persons to Act

Despite having legal personality, a corporation is an abstract entity. It requires natural persons to carry out its actions, including those related to legal proceedings. This involves making decisions about litigation strategy, instructing legal counsel, filing pleadings, appearing at hearings, and entering into settlements or other procedural agreements.

C. Distinguishing Corporate Representatives from Legal Counsel (Attorneys)

It's important to clarify that this discussion focuses on the internal legal representative(s) of the corporation—those individuals who are empowered by law and the company's own governance structure to act as the corporation in legal matters. While these representatives will almost invariably appoint external lawyers (bengoshi 弁護士) to handle the day-to-day conduct of the litigation, the authority of those lawyers derives from the corporation via its authorized representative. The core question is: who has the intrinsic power to bind the corporation in court?

The individual(s) authorized to represent a Japanese corporation in litigation are generally determined by the Companies Act (Kaisha Hō 会社法) or other statutes governing specific types of legal entities, as well as the corporation's own articles of incorporation (teikan 定款). Article 37 of the Code of Civil Procedure states that provisions concerning legal representatives (e.g., for minors) shall apply mutatis mutandis to representatives of corporations.

A. The Concept of the Legal Representative in Litigation

For litigation purposes, the "legal representative" of a corporation is the person whose procedural acts are deemed to be the acts of the corporation itself. This individual effectively exercises the corporation's "capacity to litigate" (Soshō nōryoku 訴訟能力).

B. For a Kabushiki Kaisha (KK - 株式会社 - Joint-Stock Company)

The kabushiki kaisha is the most common corporate form for businesses in Japan.

  1. General Rule: The Representative Director (Daihyō Torishimariyaku - 代表取締役)
    Under Article 349, Paragraph 4 of the Companies Act, the Representative Director(s) represent the KK. They have the authority to perform all judicial and extra-judicial acts relating to the business of the company (Art. 349, Para. 5). This naturally includes the authority to initiate and defend lawsuits on behalf of the company.
  2. Multiple Representative Directors: A KK may have more than one Representative Director. In such cases, unless specifically restricted by the articles of incorporation or by a resolution of the board of directors (and such restriction is duly registered if required to be effective against third parties), each Representative Director generally has full authority to represent the company independently in litigation.
  3. Provisional Director or Special Representative: In rare situations, such as a deadlock among directors or a conflict of interest involving all existing representative directors, a court might appoint a provisional director (karichō 仮取締役) or a special representative (tokubetsu dairi'nin 特別代理人) who could then represent the company in specific matters, including litigation.

C. For a Mochibun Kaisha (持分会社 - Membership Company)

Membership companies include Gōdō Kaisha (GK - 合同会社, similar to an LLC), Gōmei Kaisha (合名会社, general partnership company), and Gōshi Kaisha (合資会社, limited partnership company).

  • General Rule: Executive Partners (Gyōmu Shikkō Shain - 業務執行社員)
    For mochibun kaisha, Article 599, Paragraph 1 of the Companies Act provides that partners who execute the business (executive partners) represent the company. If there are multiple executive partners, each generally has individual representative authority, unless the articles of association provide otherwise (e.g., by designating specific representative partners).

D. For Other Types of Legal Entities

For other legal entities, such as General Incorporated Associations and General Incorporated Foundations (Ippan Shadan Hōjin / Ippan Zaidan Hōjin 一般社団法人・一般財団法人), Non-Profit Organizations (NPOs), etc., their representative authority is determined by their respective governing statutes and their articles of association or equivalent constitutional documents. Typically, a Director (Riji 理事) or a Representative Director (Daihyō Riji 代表理事) will hold this authority.

E. Foreign Corporations Operating in Japan

When a foreign corporation is a party to a lawsuit in Japan:

  1. Registered Representative in Japan (Companies Act, Art. 817): A foreign company that intends to engage in transactions on a continuous basis in Japan must appoint at least one representative in Japan and register this representative and a business office in Japan (Art. 817, Para. 1; Art. 818, Para. 1 Companies Act). This registered representative in Japan generally has the authority to represent the foreign company in all judicial and extra-judicial acts concerning the company's business in Japan.
  2. Authority Under Home Country Law: While the authority of representatives under the foreign company's home country law is relevant for its internal governance, for the purpose of litigation within Japan, the authority of the registered Japanese representative is usually paramount for procedural acts and binding the company in Japanese courts, especially concerning its Japanese operations. If there is no registered representative in Japan, questions about who can validly receive service or act for the company can become more complex, potentially involving rules of international private law.

III. Scope and Potential Limitations on Representative Authority in Litigation

While a legal representative generally has broad authority, certain nuances and limitations exist.

A. General Presumption of Broad Authority for Procedural Acts
A duly appointed and registered legal representative of a corporation is generally presumed to possess the authority to perform all procedural acts necessary for litigation on behalf of the corporation. This includes filing a lawsuit, appointing counsel, making allegations, presenting evidence, and entering into settlements or withdrawing claims (though internal approvals might be required for some of these).

B. Internal Corporate Limitations vs. External Effect on Third Parties

  • Internal Approvals: Many corporations have internal rules (in their articles of incorporation, board of directors regulations, etc.) requiring approval from the board of directors or even a shareholders' meeting for significant actions, such as initiating major litigation, settling substantial claims, or waiving valuable rights.
  • Effect on External Acts (including litigation): As a general principle, if a legal representative (e.g., a Representative Director) performs a procedural act in court that falls within their general statutory authority to represent the company, that act is usually binding on the company externally, even if the representative failed to obtain a necessary internal corporate approval. The opposing party in litigation and the court can generally rely on the registered representative's authority.
    • However, this does not mean internal breaches are without consequence; the representative might face internal liability to the company for acting without proper authorization.
  • Exception for Bad Faith Opponent: If the opposing party in the litigation knew or should have known that the corporate representative was acting in clear violation of a significant, externally apparent restriction on their authority (e.g., a restriction explicitly stated in the commercial register), the validity of the representative's act could potentially be challenged.
  • A well-known Supreme Court case, Judgment of December 15, 1970 (Minshu Vol. 24, No. 13, p. 2072), addressed a situation involving a representative director's authority and internal board resolutions, generally affirming that actions within the scope of a representative director's external authority are binding on the company even if internal procedures were not perfectly followed, unless the third party was aware of the lack of authority.

C. Specific Acts Requiring Careful Consideration of Authority
While general litigation conduct is covered, acts that dispose of the very subject matter of the litigation—such as:

  • Settling the lawsuit (wakai 和解)
  • Waiving the claim (seikyū no hōki 請求の放棄)
  • Admitting the opponent's claim (seikyū no nindaku 請求の認諾)
    —are particularly significant. While a Representative Director generally has the power for these, it is crucial from a corporate governance perspective that they are supported by proper internal authorization (e.g., board resolution, especially for material settlements).

D. Conflict of Interest Situations (Rieki sōhan torihiki - 利益相反取引)
If a lawsuit involves a conflict of interest between the corporation and its usual legal representative (e.g., the corporation suing its own Representative Director, or vice-versa), that representative cannot validly act for the corporation in that specific litigation. In such cases, Article 35 of the Code of Civil Procedure allows for the court, upon petition, to appoint a "special representative" (tokubetsu dairi'nin 特別代理人) to represent the corporation for that particular lawsuit. The Companies Act also has provisions regarding representation in conflict-of-interest transactions.

IV. Proving Representative Authority in Court (Code of Civil Procedure, Art. 34, Art. 37)

The authority of an individual to act as a legal representative for a corporation in litigation must be proven to the court, typically in writing. Article 34, Paragraph 1 CCP (applied to corporations via Art. 37) requires this.

  • Primary Document: Certificate of Registered Matters (Tōki jikō shōmeisho 登記事項証明書):
    • For Japanese corporations, the standard proof is a "Certificate of Registered Matters" obtained from the Legal Affairs Bureau (法務局 - Hōmukyoku). Commonly used types are the "Certificate of All Historical Matters" (rireki jikō zenbu shōmeisho 履歴事項全部証明書) or the "Certificate of Current Matters" (genzai jikō shōmeisho 現在事項証明書), which will list the currently registered Representative Director(s) and other key corporate data. This certificate should be recent (usually issued within the last 3 months).
  • For Foreign Corporations:
    • Proof typically involves submitting official corporate registration documents from the company's home jurisdiction that evidence its legal existence and identify its authorized representatives.
    • Documents evidencing the appointment and authority of any registered representative in Japan.
    • These foreign documents usually require certified Japanese translations and may need to be authenticated (e.g., by apostille under the Hague Apostille Convention, or by consular legalization).
  • Power of Attorney (Ininjō 委任状) for Legal Counsel:
    When the authorized corporate representative appoints an external lawyer (bengoshi) to conduct the litigation, the lawyer's authority to act for the corporation is proven by a power of attorney (ininjō) executed by that corporate representative. The PoA should clearly delineate the scope of the lawyer's authority.

V. Consequences of Lack of Proper Representative Authority (Daihyōken no kenketsu - 代表権の欠缺)

If a person purports to act for a corporation in litigation but lacks the proper legal authority:

  • Procedural Acts May Be Deemed Ineffective or Voidable: Acts performed by such an unauthorized individual may be considered invalid or ineffective by the court.
  • Court's Order to Rectify the Defect (Hosei meirei 補正命令): Under Article 32 CCP (applied via Art. 37), if the court finds that representation is defective, the presiding judge may order the defect to be rectified within a specified period (e.g., for the proper representative to take over, ratify the acts, or for correct documentation to be submitted).
  • Dismissal of Action or Rejection of Procedural Acts: If the defect is not cured within the given timeframe, the court may dismiss the action (if the plaintiff corporation's representation was defective from the outset) or reject the specific procedural acts performed without authority.
  • Ratification (Tsuinin 追認): Article 34, Paragraph 2 CCP (applied via Art. 37) allows for procedural acts performed by an unauthorized representative to be subsequently ratified by a person with proper authority. Such ratification generally has retroactive effect, curing the initial defect.

VI. Practical Advice for Businesses

  • When Suing a Japanese Corporation: Always obtain an up-to-date Certificate of Registered Matters to verify the correct legal name and current legal representative(s). Ensure pleadings accurately reflect this and that service of process is directed appropriately.
  • When Your Corporation is Sued in Japan: Ensure that all court filings, appearances, and significant decisions are made or authorized by individuals who possess clear, documented legal authority to represent the company (typically the Representative Director or counsel duly appointed by them).
  • Maintain Clear Internal Governance: While external acts by a registered representative may often bind the company, sound internal corporate governance dictates that decisions to initiate or settle significant litigation, or to perform other major procedural acts, should be supported by appropriate internal approvals (e.g., board resolutions) as required by law or the company's articles.
  • Foreign Corporations: Navigating representative authority can be more complex. Ensure your Japanese representative (if any) is correctly registered and their authority is clear. Be prepared to provide duly authenticated and translated corporate documents from your home jurisdiction to satisfy the Japanese court.

Conclusion

In the context of Japanese civil litigation, a corporation, though a legal entity capable of being a party, must act through natural persons vested with the proper legal authority to represent it. For Japanese companies, this is typically a Representative Director, whose status is confirmed by official registration. For foreign companies, the representative registered in Japan often plays this crucial role. Verifying and proving this representative authority is a fundamental procedural step. Failure to ensure proper representation can lead to serious procedural impediments, delays, or even the nullification of actions taken in court. Therefore, meticulous attention to the rules of corporate representation is an indispensable aspect of effective litigation involving corporate entities in Japan.