Q: Understanding Japanese Administrative Procedures: What Are the Key Steps and Protections for Businesses?

Interactions with administrative agencies are an inevitable part of doing business in Japan, whether it involves applying for licenses, complying with regulations, or responding to agency inquiries. The manner in which these interactions unfold is largely governed by specific procedural rules, primarily consolidated in Japan's Administrative Procedure Act (APA - 行政手続法 Gyōsei Tetsuzuki Hō). A clear understanding of these procedures is vital for businesses to ensure they are treated fairly, to protect their legal rights, and to navigate regulatory processes effectively and predictably. This article outlines the key administrative procedures in Japan and the safeguards they offer to businesses.

The Foundation: Due Process and the Administrative Procedure Act (APA)

The concept of "due process of law" (tekisei tetsuzuki - 適正手続), ensuring fairness and regularity in governmental actions that affect individual rights, is a fundamental principle. While Article 31 of the Japanese Constitution explicitly guarantees due process in criminal proceedings, its application to administrative procedures has been a subject of judicial and scholarly discussion. The Supreme Court, in cases like the Narita Shinpō (New Law) case (judgment of July 1, 1992), acknowledged that the spirit of Article 31 could extend to administrative procedures, requiring a balancing of public interest with individual rights. However, the Court has generally granted the legislature broad discretion in determining the specific content of administrative due process.

This led to the recognition of a strong need for comprehensive statutory rules governing administrative procedures. After several earlier attempts, Japan enacted its Administrative Procedure Act in 1993 (Law No. 88 of 1993), which came into effect in 1994. The APA was significantly revised in 2005 (notably adding procedures for administrative rulemaking) and further amended in 2014 (effective 2016, enhancing remedial measures).

The primary purposes of the APA are to:

• Ensure fairness in administrative operations.
• Enhance transparency in administrative decision-making.
• Protect the rights and interests of citizens and businesses in their dealings with administrative organs.

The APA achieves this by standardizing key procedures for several major categories of administrative actions. However, it's important to note that the APA contains a number of exclusions (detailed in its Articles 3 and 4). For example, it generally does not apply to: matters handled by the Diet or courts; criminal procedures; tax-related dispositions (which have their own detailed procedures under tax laws); immigration control dispositions; actions by local public entities based solely on their own ordinances or rules (though actions based on national law executed by local entities are covered); and various other specific categories. Businesses should always verify if the APA applies to a particular interaction or if specific procedural rules under another statute take precedence.

I. Procedures for Dispositions on Applications (申請に対する処分 - Shinsei ni taisuru Shobun)

This part of the APA (Chapter II) governs how administrative agencies must handle applications submitted by businesses or individuals for licenses, permits, approvals, and other similar administrative dispositions that confer a benefit or legal status.

• A. Establishment and Publication of Screening Standards (審査基準 - Shinsa Kijun) (APA Art. 5):
  Agencies are obligated to establish concrete screening standards that they will use to judge whether an application meets the legal requirements for approval. Crucially, these standards must be made publicly available (e.g., by posting in the agency's office or on its website), unless there are extraordinary administrative reasons not to do so. This requirement for transparency builds upon earlier judicial pronouncements, such as in the Personal Taxi license case (Supreme Court, October 28, 1971), which emphasized the need for clear, pre-established standards to ensure fairness when selecting among multiple applicants.
  • Impact: Published screening standards enhance predictability for businesses preparing applications and allow them to understand the criteria against which their application will be assessed. While these standards are typically internal agency rules (gyōsei kisoku) rather than law themselves, an agency's deviation from its own published standards without a rational justification can be grounds for challenging a decision.
• B. Duty to Screen and Standard Processing Times (標準処理期間 - Hyōjun Shori Kikan) (APA Arts. 6, 7):
  • Agencies have a duty to commence screening an application without delay once it has been formally filed and has arrived at the relevant agency office (APA Art. 7). The APA clarifies that an application is deemed to have "arrived" when it reaches the agency; no separate formal act of "acceptance" (juri - 受理) is generally required for the screening process to begin, aiming to prevent agencies from indefinitely holding applications without action. If an application is formally incomplete, the agency should promptly request supplementation or reject it.
  • Furthermore, agencies are required to make efforts to establish standard processing times for typical applications they handle and to make these publicly available (APA Art. 6).
  • Impact: These provisions aim to prevent undue delays in processing applications and to provide businesses with a reasonable expectation of when a decision might be forthcoming.
• C. Provision of Reasons for Denial (理由の提示 - Riyū no Teiji) (APA Art. 8):
  If an agency denies an application, it must, simultaneously with the notice of denial, provide the applicant with written reasons for the denial. These reasons must be shown in sufficient detail to allow the applicant to understand the basis for the adverse decision. This requirement is a cornerstone of procedural fairness, enabling applicants to assess whether the denial was lawful and to prepare any subsequent appeal or challenge. This codifies principles developed in extensive case law that stressed the importance of reasoned decisions.
  • Impact: This allows businesses to understand precisely why their application failed (e.g., which criteria were not met, what facts were found wanting) and provides a basis for any further action. The APA stipulates that this duty applies when denying an application, but not explicitly when granting an application with conditions (though conditions themselves should be lawful).
• D. Provision of Information (APA Art. 9):
  Upon request from an applicant, agencies must endeavor to provide information regarding the progress of the screening of their application and an outlook on when a decision might be made. They must also endeavor to provide other information necessary for the applicant's convenience in relation to the application. This does not, however, grant a general right to inspect all internal agency documents related to the application during the screening process.
• E. Public Hearings (公聴会 - Kōchōkai) (APA Art. 10):
  In cases where a decision on an application may significantly affect the interests of third parties (i.e., parties other than the applicant), the administrative agency has the discretion to hold public hearings to gather opinions from these stakeholders before making its decision. The scope of "interested parties" who might be invited to participate often aligns with those who might have legal standing to challenge the eventual decision.

II. Procedures for Adverse Dispositions (不利益処分 - Furieki Shobun)

Chapter III of the APA sets out crucial procedural protections when an administrative agency intends to make an "adverse disposition" – a disposition that directly and specifically imposes duties, restricts rights, or otherwise unfavorably affects the legal interests of a named party. Examples include sanctions, fines, business suspension orders, or the revocation of a license or permit.

• A. Classification of Procedures based on Severity (APA Art. 13):
  The APA distinguishes between two main types of procedures depending on the potential severity of the adverse disposition and other factors:
  • Hearings (Chōmon - 聴聞): This is the more formal and robust procedure, generally required for more serious adverse dispositions. These include actions that would revoke a qualification or status (like a license), or that would directly order the removal of a person from a position based on their will.
  • Opportunity for Explanation (Benmei no Kikai no Fuyo - 弁明の機会の付与): This is a simpler, often primarily written, procedure used for less severe adverse dispositions not requiring a full hearing.
    The APA also allows for exceptions where neither procedure is required, such as in cases of urgent public necessity or for very minor dispositions.
• B. The Hearing Procedure (Chōmon Tetsuzuki) (APA Arts. 15-27):
  When a hearing is required, the APA mandates several key procedural steps:
  • Prior Notice (APA Art. 15): The affected party must receive detailed advance written notice of: (a) the content of the proposed adverse disposition; (b) the legal provisions that are alleged to be the basis for the disposition; (c) the factual causes that are alleged to warrant the disposition; and (d) the date and place of the hearing, as well as the name of the division responsible for it.
  • Presiding Official (主宰者 - Shusaisha) (APA Art. 19): The hearing is conducted by a presiding official designated by the administrative agency. This official must be an employee of the agency who is not, and has not been, involved in the investigation or prosecutorial functions related to the case, to ensure a degree of impartiality in conducting the hearing.
  • Rights of the Affected Party during the Hearing:
    • Representation by an agent (e.g., a lawyer) and assistance by experts or advisors (hosa-nin - 補佐人) (APA Arts. 16, 20(3)).
    • Inspection of relevant documents possessed by the agency that form the basis of the proposed adverse disposition (APA Art. 18). This allows the party to understand the evidence against them.
    • Opportunity to make oral statements, submit documentary evidence, and present arguments at the hearing (APA Art. 20).
    • Opportunity to question the officials of the administrative agency who are presenting the case for the adverse disposition (APA Art. 20(1)).
    • Submission of written statements and evidence in lieu of, or in addition to, appearing at the hearing (APA Art. 21).
  • Interested Third-Party Participation (APA Art. 17): Other persons whose interests are likely to be harmed by the proposed adverse disposition may, with the permission of the presiding official, participate in the hearing.
  • Hearing Record and Report: The presiding official is responsible for creating a formal record of the hearing (chōmon chōsho - 聴聞調書) and, after the hearing concludes, preparing a report containing their opinion (hōkokusho - 報告書) on the merits of the proposed disposition based on the evidence and arguments presented (APA Art. 24).
  • Agency's Final Decision (APA Art. 26): The administrative agency (the decision-making authority) must make its final decision on the adverse disposition by giving "due consideration" to the contents of the hearing record and the presiding official's report. While not strictly bound by the presiding official's opinion, the agency must take it into account.
  • The APA does not provide for an appeal against this final decision within the hearing process itself (APA Art. 27); any challenge would typically be through administrative appeal to a higher body (if available) or judicial review.
• C. Opportunity for Explanation Procedure (APA Arts. 29-31):
  This is a less formal procedure than a full hearing. It typically involves the agency providing notice of the proposed adverse disposition and the reasons for it, and then allowing the affected party to submit a written explanation (benmei sho - 弁明書) and supporting evidence. Oral explanation may be permitted if the agency deems it appropriate.
• D. Common Requirements for All Adverse Dispositions:
  • Establishment and Publication of Disposition Standards (処分基準 - Shobun Kijun) (APA Art. 12): Similar to screening standards for applications, agencies must make efforts to establish and publicly disclose the standards they will use when deciding whether to make adverse dispositions and, if so, what kind (e.g., the severity of a sanction). This promotes consistency and predictability.
  • Provision of Reasons (理由の提示 - Riyū no Teiji) (APA Art. 14): When an agency makes an adverse disposition, it must concurrently provide the addressee with written reasons for its decision. These reasons must be sufficiently detailed to explain the factual findings and the application of law or disposition standards that led to the outcome. The Supreme Court, in a judgment on June 7, 2011 (concerning a disciplinary action against a physician), emphasized that the reasons provided must be detailed enough to enable the recipient to understand which specific disposition standards were applied to the particular facts of their case and how the agency reached its conclusion.

III. Procedures for Administrative Rulemaking (意見公募手続等 - Iken Kōbo Tetsuzuki-tō)

As discussed in a previous article in this series, Chapter VI of the APA (added in 2005) mandates a "Public Comment Procedure" for the formulation or amendment of most legally binding orders (hōki meirei), as well as for important administrative rules like agency-set screening standards, disposition standards, and administrative guidance standards. This procedure generally involves:

1. Publication of the draft rule and related materials by the rulemaking agency.
2. A period (usually 30 days or more) for the public (including businesses) to submit comments and opinions (APA Art. 39).
3. A requirement for the agency to give due consideration to the submitted comments when finalizing the rule (APA Art. 42).
4. Publication of the finalized rule, a summary of the comments received, and the agency's response to those comments, including reasons for adopting or not adopting the suggestions (APA Art. 43).
   This process aims to enhance transparency in rulemaking and provide an avenue for stakeholder input.

IV. Procedures for Notifications (Todokede - 届出)

APA Article 37 addresses notifications that businesses or individuals are required by law to file with administrative agencies (e.g., notification of commencement of certain business activities, changes in registered information). It stipulates that such a notification is deemed to have fulfilled its procedural obligation upon its arrival at the competent agency's office, provided it conforms to the formal requirements set out in the relevant law or regulation (e.g., using the correct form, including all necessary information). This "arrival principle" means that, generally, no separate act of "acceptance" (juri - 受理) by the agency is needed for the notification to be legally effective as a completed filing. This simplifies procedures and provides clarity for businesses. Exceptions exist if a specific law explicitly requires an act of acceptance by the agency.

V. Requesting Agency Action (処分等の求めの手続 - Shobun-tō no Motome no Tetsuzuki)

A significant addition to the APA in 2014 (effective 2016) was the introduction of a procedure (Article 36-3) allowing any person (nanbito - 何人も), including businesses, who believes that a specific violation of a law or regulation is occurring by a third party, to formally request, in writing, that the competent administrative agency take corrective action by issuing a necessary administrative disposition or administrative guidance (if such action is authorized by law).
While this procedure allows anyone to flag potential violations, it does not grant the requester a direct right to compel the agency to take the specific action sought, nor does it mandate a direct response to the requester. However, the agency is obligated to conduct necessary investigations based on the request and, if it deems action necessary as a result of its findings, to take the appropriate disposition or guidance. This mechanism serves as a formal channel to alert agencies to potential non-compliance by others and to prompt agency consideration of enforcement action.

Procedures Beyond the General APA

It's important to remember that the APA provides a general framework, but many specific administrative areas have their own detailed procedural rules set out in individual enabling statutes, which may supplement or, in some cases (where the APA is excluded), replace the APA's provisions.

• Administrative Planning: Comprehensive procedures for formulating broad administrative plans (e.g., urban plans, national development plans) are generally not covered in detail by the APA. Specific laws, such as the City Planning Act, often include their own requirements for public inspection of draft plans, opportunities for submitting opinions, public hearings, and consultation with specialized advisory councils (shimon kikan - 諮問機関). The adequacy and fairness of these specific planning procedures can themselves be subject to legal scrutiny. The Gunma Chuo Bus case (Supreme Court, May 29, 1975), for instance, indicated that if a legally required consultation process with an advisory council was flawed in a way that undermined its legislative purpose (e.g., ensuring fairness or protecting specific interests), a subsequent administrative disposition based on that flawed process could be deemed illegal.
• Administrative Adjudication (Gyōsei Shinpan - 行政審判): Certain types of disputes or regulatory decisions in Japan are handled through quasi-judicial procedures before specialized administrative tribunals or commissions (e.g., patent dispute adjudications by the Japan Patent Office, some aspects of Fair Trade Commission proceedings). These bodies often have their own detailed procedural rules designed to ensure a high degree of fairness and expert consideration, sometimes resembling court-like proceedings with rights to present evidence, cross-examine, and receive reasoned decisions.

Conclusion: Leveraging Procedural Rights for Fair Treatment

The Japanese Administrative Procedure Act, along with procedural rules found in specific regulatory statutes, provides an important framework of rights and safeguards for businesses interacting with administrative agencies. Key protections include the right to be informed (through published standards and reasons for decisions), the right to be heard (through hearings or opportunities for explanation before adverse actions), the right to participate in certain rulemaking processes, and streamlined procedures for applications and notifications.

For businesses, a proactive understanding of these procedural requirements is essential. It allows them to:

• Prepare applications effectively by knowing the screening criteria.
• Understand the basis for agency decisions, particularly adverse ones.
• Defend their interests adequately when faced with potential sanctions or unfavorable dispositions.
• Engage constructively in the development of new rules that may affect their industry.
• Hold agencies accountable for adhering to fair and transparent processes.

While the APA has certain limitations and exclusions, its principles reflect a broader commitment within the Japanese legal system to ensuring that administrative power is exercised not only in accordance with substantive law but also through procedures that are fair, transparent, and respectful of the rights of those affected.