Suffered Damage Due to a Public Official's Unlawful Act in Japan? Understanding Your Right to State Compensation (Kokka Baisho)

Japanese Attorney at Law - Bengoshi L.L.

• 10 min read

When businesses or individuals suffer harm as a result of the actions (or inactions) of public officials, or due to defects in public infrastructure in Japan, a crucial legal avenue for seeking monetary redress is provided by the State Redress Act (国家賠償法 - Kokka Baishō Hō). This Act, underpinned by Article 17 of the Constitution of Japan which guarantees the right to sue for redress if damage is suffered through the illegal act of any public official, establishes the principles for state compensation. This article delves into the two primary pillars of the State Redress Act: Article 1, concerning liability for unlawful acts of public officials, and Article 2, addressing liability for defects in public structures.

The State Redress Act: An Overview

The State Redress Act (SRA) allows individuals and entities, including businesses, to claim monetary compensation from the State or public entities (such as prefectural or municipal governments) when they have incurred damages under specific circumstances. It primarily distinguishes between:

  1. Liability for illegal acts of public officials during the exercise of public power (SRA Article 1).
  2. Liability for damages caused by defects in the installation or management of public structures (SRA Article 2).

Understanding the distinct requirements and interpretations of these two articles is essential for anyone considering a state compensation claim in Japan.

State Redress Act - Article 1: Liability for Unlawful Acts of Public Officials

SRA Article 1, Paragraph 1 stipulates: "When a public official who is exercising public power of the State or a public entity has, in the course of performing his/her duties, illegally inflicted damage on another person either intentionally or negligently, the State or the public entity concerned shall be liable to compensate for such damage."

This provision is often compared to employer liability under the Civil Code (Article 715), but with key differences. For instance, unlike typical employer liability, the SRA does not allow the State or public entity to be exempted from liability by proving due care in the appointment or supervision of the official. Furthermore, the State or public entity's right of recourse against the responsible public official is limited to cases where the official acted with intent or gross negligence (SRA Article 1, Paragraph 2).

Key Elements for a Claim under SRA Article 1

To successfully claim compensation under Article 1, several elements must be established:

  1. "Exercise of Public Power" (kōkenryoku no kōshi):
    This term is interpreted broadly by Japanese courts, encompassing not only authoritative actions (like issuing orders or permits) but also non-authoritative activities conducted in an official capacity, such as public education services (Supreme Court, February 6, 1987) or administrative guidance. This broad interpretation means a wide range of governmental activities could potentially fall under Article 1 if other conditions are met. For businesses, this could include damages arising from improper regulatory enforcement, flawed inspections, or even detrimental administrative guidance that oversteps legal bounds.
  2. "Public Official" (kōmuin):
    This includes not only civil servants in the narrow sense but also any person engaged in public duties under the authority of the State or a public entity.
  3. "In the Course of Performing His/Her Duties" (shokumu o okonau ni tsuite):
    Japanese courts apply an "objective appearance theory" (gaikei riron). If the public official's actions outwardly appeared to be part of their official duties, the State or public entity can be held liable, even if the official was acting beyond their actual authority or for personal motives. A frequently cited example is a Supreme Court case of November 30, 1956, where an off-duty police officer, wearing his uniform and using his service pistol, caused harm; the public entity was held liable because the actions had the objective appearance of official duty.
  4. "Intentionally or Negligently" (koi mata wa kashitsu ni yotte):
    Intent (koi) is straightforward. Negligence (kashitsu) is judged objectively based on the standard of care expected of an average, reasonable public official in the same position. This can also include "organizational negligence," where systemic flaws in an administrative organization contribute to the harmful act. If a public official misinterprets a law, negligence might be negated if the interpretation, though later found incorrect, was based on reasonable grounds at the time (e.g., following established administrative circulars before a definitive court ruling to the contrary – Supreme Court, February 18, 1969).
  5. "Illegally" (ihō ni):
    This is often the most complex and litigated element.
    • Relationship with "Illegality" in Revocation Litigation: A crucial point is that an administrative act being "illegal" enough to be revoked in administrative litigation (see ACLA) does not automatically mean it is "illegal" for the purposes of a state compensation claim under SRA Article 1. Japanese courts, particularly in a leading Supreme Court decision on March 11, 1993 (concerning a tax reassessment), have adopted what is often termed the "duty of care standard theory" (shokumu kōi kijun setsu). This theory posits that for state compensation, illegality generally requires a breach of a specific duty of care that public officials are expected to observe in their functions, and this breach resulted in foreseeable harm. Simply being incorrect or procedurally flawed in a way that justifies revocation in an administrative lawsuit is not always sufficient to establish illegality for a damages claim.
    • Illegality of Omissions (fusakui no ihōsei): An agency's failure to act can also be deemed illegal. This often arises when an agency fails to exercise its regulatory powers, leading to harm. Courts typically examine whether the agency had a legal duty to act, whether the harm was foreseeable, whether exercising the power could have averted the harm, and whether, under the circumstances, it was reasonable to expect the agency to act. This is often discussed in terms of "discretion shrinking to zero" (sairyō-ken shūshuku zero ron), where specific circumstances effectively eliminate an agency's discretion not to act (Supreme Court, November 24, 1989).
    • No Need for Prior Revocation of Administrative Acts: A party can generally pursue a state compensation claim for damages caused by an illegal administrative act without first having that act formally revoked through administrative litigation (Supreme Court, April 21, 1961). This is because the kōtei-ryoku (presumption of validity) of an administrative act does not prevent a court in a damages claim from independently assessing its legality for the purpose of compensation. A Supreme Court decision on June 3, 2010, affirmed this for damages related to illegal tax dispositions.
  6. "Inflicted Damage on Another Person":
    This requires proof of actual damage and a causal link between the illegal act (or omission) and the damage suffered.

Special Cases: Diet Members, Judges, and Prosecutors
The SRA Article 1 framework also applies to the actions of Diet members in their legislative capacity, judges in their judicial capacity, and prosecutors in their prosecutorial capacity. However, due to the special nature of their duties and the public interest in their independent functioning, establishing the "illegality" of their actions for compensation purposes often involves a very high threshold. For example, for legislative acts, liability is generally only found if Diet members act in clear violation of their duties with intent to cause harm or with gross negligence that is self-evident (Supreme Court, November 21, 1985). Similarly, for a prosecutor's decision to indict, illegality for compensation purposes is typically found only if the prosecution was initiated or maintained with intent or gross negligence that is evident from the circumstances (Supreme Court, October 20, 1978).

No Direct Personal Liability of the Public Official (Generally)
A significant aspect of SRA Article 1 is that if the conditions for state liability are met, the claim is directed against the State or the relevant public entity. The individual public official is generally not personally liable to the victim for damages arising from acts covered by SRA Article 1 (Supreme Court, April 19, 1955). This is a key difference from some other legal systems and from general tort law within Japan (e.g., Civil Code Article 709). The rationale is to allow public officials to perform their duties without undue fear of personal lawsuits, while ensuring victims are compensated by the entity on whose behalf the official acted.

State Redress Act - Article 2: Liability for Defects in Public Structures

SRA Article 2, Paragraph 1 states: "When damage is inflicted on another person due to a defect in the installation or management of a road, river or other public structure, the State or the public entity shall be liable to compensate for such damage."

This provision establishes a distinct basis for state liability, focusing on the condition of public infrastructure and facilities.

Key Elements for a Claim under SRA Article 2

  1. "Public Structure" (Kō no Eizōbutsu):
    This term is interpreted broadly to mean "public property" (kōbutsu) used for public purposes. It includes not only immovable structures like roads, bridges, rivers, public buildings, and parks, but also movable items that are part of a public facility or service. For example, a Supreme Court decision on March 30, 1993, applied Article 2 to a defective tennis court umpire's stand, confirming that movables can be "public structures". Thus, defective equipment within a public school or even a police officer's service weapon, if its defect in installation or management causes harm, could potentially fall under this article.
  2. "Defect in Installation or Management" (setchi mata wa kanri ni kashi):
    This is the core of Article 2 liability. A "defect" exists when the public structure lacks the safety that it should ordinarily possess and, as a result, poses a risk of harm to others. The Supreme Court (e.g., judgments of January 26, 1984, and December 16, 1981) has established that the existence of a defect is to be judged objectively, considering various factors such as the structure's design, purpose, location, usage conditions, and the level of danger it presents.
    • Generally No-Fault Liability: A key characteristic of Article 2 liability is that it is generally considered a form of no-fault liability (mukashitsu sekinin). The claimant typically does not need to prove intent or negligence on the part of public officials concerning the defect. If the structure was defective and caused harm, the public entity is liable. However, the objective standard allows for considerations of foreseeability and avoidability; for instance, damage caused by an entirely unforeseeable natural disaster exceeding all reasonable safety expectations might not lead to liability (often discussed as an "act of God" or force majeure).
    • Budgetary Constraints: As a general rule, an agency cannot use lack of budget as a defense for failing to maintain ordinary safety standards, especially for artificial structures like roads (Supreme Court, August 20, 1970).
    • Different Standards for Different Structures: The expected level of safety can vary. For example, artificial structures like roads are expected to meet high safety standards. For natural public structures like rivers, courts may apply a "transitional safety" standard, acknowledging that achieving complete safety from natural phenomena like floods is an ongoing process and may be limited by current technological and financial capabilities (Supreme Court, January 26, 1984). However, if a river has been substantially modified or improved by human intervention, the expected safety standard might be higher.
    • "Use-Related Defects" (kyōyō kanren kashi): Even if a public structure is physically sound, its use can give rise to a "defect" if that use causes harm to third parties (typically nearby residents) that exceeds socially tolerable limits (junin gendo). The leading case is the Osaka Airport noise pollution litigation (Supreme Court, December 16, 1981), where the operation of the airport, causing severe noise damage to residents, was found to constitute a defect under Article 2. Determining what exceeds "tolerable limits" involves a complex balancing of various factors, including the nature and degree of harm, the public utility of the structure, and available preventative measures.

Shared Aspects and Procedural Considerations

Several aspects are common to claims under both Article 1 and Article 2:

  • Liable Entity (SRA Article 3): If the public entity responsible for installing/managing the structure or supervising the official is different from the entity that bears the costs associated with that structure or official, the cost-bearing entity is also directly liable to the injured party. For instance, for public elementary school teachers whose salaries are paid by the prefecture but who are supervised by the municipality, both entities could be liable to a victim. Internally, the entity ultimately bearing the financial burden is often determined to be the one responsible for the costs related to the specific function (Supreme Court, October 23, 2009).
  • Application of Civil Code Provisions (SRA Article 4): Unless the SRA provides otherwise, general Civil Code principles regarding torts apply. This includes rules on comparative negligence (where the victim's own negligence can reduce the compensation amount), calculation of damages (e.g., lost income, medical expenses, pain and suffering), and the statute of limitations for filing a claim (generally 3 years from awareness of damage and perpetrator, or 20 years from the tortious act).
  • Reciprocity for Foreign Claimants (SRA Article 6): The SRA guarantees compensation to foreign nationals only if their home country provides reciprocal guarantees to Japanese nationals regarding state compensation. In practice, this reciprocity requirement is often interpreted broadly or presumed to exist to ensure access to remedies, especially in light of international human rights considerations.
  • Court Jurisdiction: State compensation claims are typically filed as civil lawsuits in the appropriate district court.

Implications for Businesses

The State Redress Act can be highly relevant for businesses in Japan:

  • Damages from Unlawful Regulatory Actions (Article 1): Businesses might suffer losses due to improper denial or revocation of permits, incorrect administrative guidance leading to financial detriment, unfair enforcement actions, or flawed inspections. Article 1 provides a basis for seeking compensation in such cases, provided the elements of illegality and negligence/intent can be proven.
  • Damages from Defective Public Infrastructure (Article 2): Poorly maintained roads affecting transportation and logistics, disruptions from malfunctioning public utilities, or damage to business property from flooding due to defective river management could all potentially lead to claims under Article 2. Businesses affected by noise, vibration, or pollution from adjacent public works or facilities might also consider claims based on "use-related defects."
  • Understanding Government Accountability: The SRA establishes that government entities are not immune from liability for the harm they cause, providing a mechanism for accountability and redress.

Brief Comparison with the U.S. Federal Tort Claims Act (FTCA)

For context, the Japanese State Redress Act can be compared to the U.S. Federal Tort Claims Act (FTCA), which allows private parties to sue the United States for torts committed by federal employees.

  • Waiver of Sovereign Immunity: Both the SRA and FTCA represent waivers of sovereign immunity.
  • Scope of Liability: The FTCA generally covers "negligent or wrongful act or omission" of federal employees acting within the scope of their employment. SRA Article 1 is similar in its focus on official acts but has its own distinct tests for "exercise of public power" and "illegality." SRA Article 2, with its objective defect standard for public structures, creates a form of liability (often no-fault) not directly mirrored by a single FTCA provision, although FTCA claims can certainly arise from negligence in maintaining federal property.
  • Exclusions and Exceptions: The FTCA has numerous exceptions, most notably the "discretionary function exception," which shields the government from liability for policy judgments. While Japanese law also respects administrative discretion, the SRA's approach to "illegality" in Article 1, particularly under the "duty of care standard theory," involves a different analytical framework than the FTCA's discretionary function test. The FTCA also excludes many intentional torts, though the Westfall Act provides for substitution of the U.S. as defendant for common law torts committed by employees in scope. SRA Article 1 can cover intentional illegal acts by officials.
  • Liability of Individual Employees: Under SRA Article 1, individual officials are generally shielded from direct personal liability to the victim if the State/public entity is liable. Similarly, the FTCA and the Westfall Act in the U.S. generally provide for the substitution of the United States as the defendant, protecting federal employees from personal tort liability for actions within the scope of their employment.
  • No-Fault Aspects: SRA Article 2's liability for defects in public structures is often closer to strict liability, which is not the general standard under the FTCA, which is grounded in negligence or wrongful acts.

Conclusion

The State Redress Act (Kokka Baishō Hō) provides an indispensable framework in Japan for holding the State and public entities accountable for damages caused by the unlawful conduct of public officials or by defects in public structures. For businesses operating in or interacting with the Japanese public sector, understanding the distinct requirements of Article 1 (focusing on official conduct) and Article 2 (focusing on the condition of public property) is crucial for assessing potential claims and seeking appropriate monetary relief. While the paths to compensation have their complexities, the Act affirms the principle that governmental power is not absolute and that redress is available when that power is misused or when public facilities fail to meet requisite safety standards, thereby harming private interests.