My Permit Was Revoked in Japan. What Are the Substantive and Procedural Grounds to Challenge the Revocation?
For any business operating in a regulated industry in Japan, a government-issued permit or license is often its most valuable asset. The sudden revocation of that permit can be an existential threat, capable of shutting down operations overnight. When faced with such a drastic measure, it is crucial for a business to understand its legal rights and the avenues available to challenge the government's decision.
A successful legal challenge to a permit revocation typically requires a two-pronged attack: one aimed at the substance of the decision (arguing that the government had no valid reason to act) and another at the procedure (arguing that the government failed to follow the legally required steps).
This article provides a detailed guide to these grounds for challenge, using a case study involving the revocation of a slaughterhouse permit. It will also explain the most critical immediate step a business must take: seeking a court-ordered stay of execution to keep the business running while the legal battle unfolds.
The Case Study: The Revoked Slaughterhouse Permit
To illustrate the legal principles, consider the following representative case.
The Factual Background
A small business cooperative has operated a slaughterhouse for over a decade under a permit from the prefectural governor. The land and buildings are owned by the prefecture and leased to the cooperative under a series of one-year lease agreements.
Citing financial reasons and the facility's age, the prefecture decides to close the slaughterhouse and redevelop the land. It notifies the cooperative that it will not renew the lease. Immediately thereafter, the governor revokes the cooperative's operating permit.
The governor justifies the revocation under Article 18 of the Abattoir Act, which allows a permit to be revoked if the facility no longer meets the operational standards laid out in Article 5 of the same Act. The governor's logic is that because the lease was terminated, the cooperative no longer has a legal right to use the facility's equipment, and therefore, it fails to meet the operational standards.
Crucially, the governor revokes the permit without providing the cooperative with any prior notice or an opportunity to be heard in a formal hearing. The cooperative, believing its lease was improperly terminated, immediately files a civil lawsuit and obtains a provisional court order affirming its right to continue using the property. Now, it must challenge the permit revocation itself to resume its business.
Part 1: The Substantive Challenge – Was the Revocation Justified?
The first line of attack is to argue that the governor’s decision was substantively illegal. This involves demonstrating that the facts of the case did not meet the legal requirements for a permit revocation.
Argument 1: Misinterpretation of the Law and Irrelevant Considerations
A core principle of Japanese administrative law is that an agency's discretionary power is limited by the purpose of the statute that grants it. A decision based on factors unrelated to that purpose is an illegal abuse of discretion.
In this case, the governor's power to revoke under Article 18 of the Abattoir Act is explicitly tied to the standards found in Article 5. A close reading of Article 5 reveals that its standards are exclusively concerned with public health and sanitation—for example, requiring that a slaughterhouse not be located in a densely populated area and that it not risk contaminating public drinking water.
The cooperative would argue that the governor's reason for revocation—the status of a property lease—has absolutely nothing to do with public health or sanitation. The lease is a private law matter between the cooperative and the prefecture as a landlord. By using a commercial lease dispute as the basis for revoking a public health permit, the governor relied on a legally irrelevant consideration. The revocation was not made to protect public health but to advance the prefecture's separate commercial interest as a landowner. This makes the decision an abuse of power and illegal.
Argument 2: The Decision Was Based on a Factual Error
An administrative decision based on a clear error of fact is also illegal. The governor's entire justification rested on the premise that the cooperative had lost its legal right to use the facility because the lease was terminated.
However, the cooperative had already secured a provisional disposition from a civil court affirming its tenancy rights. This court order, while temporary, fundamentally contradicts the governor's factual premise. The cooperative would argue that the revocation was based on a demonstrable factual mistake. A decision founded on a false premise cannot stand.
Part 2: The Procedural Challenge – The Right to a Fair Hearing
Even if the government has a valid substantive reason to revoke a permit, it must follow the correct procedure. Failure to do so can render the decision illegal on its own.
A permit revocation is a quintessential "disadvantageous disposition" (不利益処分, furieki shobun), and as such, it is governed by Japan's Administrative Procedure Act (APA).
The Fundamental Right to a Prior Hearing (聴聞, Chōmon)
The cornerstone of procedural fairness under the APA is the right to a hearing (聴聞, chōmon) before a disadvantageous disposition is made. Article 13 of the APA requires an agency to provide the affected party with formal notice and an opportunity to present evidence and arguments to an impartial presiding officer.
In the slaughterhouse case, the governor completely skipped this step. This failure to hold a hearing is a serious procedural flaw.
Analyzing the Government's Justification for Skipping the Hearing
The APA provides a few very narrow exceptions to the hearing requirement. The governor claimed one of these exceptions, found in Article 13, Paragraph 2, Item 2. This exception allows an agency to bypass a hearing for a mandatory, non-discretionary revocation when the facts justifying it are "directly proven by objective materials."
The governor’s argument is that the lease contract is "objective material" that proves the cooperative can no longer operate. This argument fails for two critical reasons:
- The Revocation Was Discretionary. The exception applies only to non-discretionary actions that an agency must take. The Abattoir Act states the governor "may" revoke the permit, clearly indicating a discretionary power.
- A Disputed Contract Is Not "Objective Material." The "objective materials" envisioned by the law are things that are legally indisputable, such as a final criminal court conviction or an official entry in a public registry. A lease agreement, whose termination is the subject of an ongoing civil lawsuit, is the very opposite of an objective, indisputable fact. Its legal effect is the central point of contention.
Because the governor's action was discretionary and was based on a disputed legal document rather than an objective fact, the exception does not apply. The failure to provide a hearing was a clear violation of the Administrative Procedure Act. Courts view the right to a hearing as a fundamental procedural safeguard, and its complete denial is almost always considered a "grave violation" sufficient to invalidate the entire administrative decision.
Part 3: Urgent Relief – Keeping the Business Alive with a Stay of Execution
A successful lawsuit can take months or even years. For a business whose operations have been shut down by a permit revocation, a legal victory may come too late. This is why seeking immediate provisional relief is the most critical first step.
The primary tool for this is a Stay of Execution (執行停止, shikkō teishi), governed by Article 25 of the Administrative Case Litigation Act. For a permit revocation, the applicant would specifically ask the court for a stay of the disposition's effect (効力の停止, kōryoku no teishi). If granted, this court order temporarily suspends the revocation, allowing the business to legally resume operations while the main lawsuit proceeds.
A court will grant a stay if the applicant can demonstrate three things:
- The Revocation will Cause "Grave Harm" (重大な損害, Jūdai na Songai).
This refers to harm that is serious and difficult or impossible to remedy with a later award of monetary damages. In our case, the cooperative earns 90% of its revenue from the slaughterhouse, and its members are small businesses that depend on it. The shutdown is an existential threat that would lead to bankruptcy. This clearly constitutes "grave harm." - There is an Urgent Need.
The harm is not a future possibility; it is occurring every day the business remains closed. The need for relief is urgent. - A Stay Will Not Harm the Public Welfare.
The court must balance the applicant's harm against the public interest. Here, the permit revocation was not based on any public health or safety concerns. The facility itself is safe to operate. Therefore, allowing it to continue operating temporarily poses no risk to the public welfare.
Given the strength of the substantive and procedural arguments against the revocation, and the clear and present threat of grave harm to the cooperative, a court would almost certainly grant the stay of execution.
Conclusion
When a Japanese government agency revokes a business's operating permit, the law provides a robust framework for challenging the decision. A successful strategy requires a two-pronged attack focused on both substance and procedure.
- Substantively, a business should attack the agency's legal reasoning, arguing that the decision was based on a misinterpretation of the law, irrelevant considerations, or a clear error of fact.
- Procedurally, a business must insist on its right to a prior hearing, as the exceptions to this fundamental rule are very narrowly interpreted by the courts.
Most importantly, a business must act swiftly to file for a stay of execution. This provisional relief is often the most critical step in the entire process, as it is the only way to keep the business operational and ensure that it survives to see its ultimate vindication in court.