What Are a Business's Legal Options When Its Notification (Todokede) is Rejected Under a Local Japanese Ordinance?

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

In Japan's intricate regulatory landscape, understanding the distinction between a "permit" (許可, kyoka) and a "notification" (届出, todokede) is paramount for any business. While a permit involves a substantive review and discretionary approval from an administrative body, a notification is often a simpler procedural requirement. But what happens when a local government blurs these lines, treating a simple notification as a permit application and rejecting it? This creates a precarious legal limbo for the business, which finds itself unable to operate but without a clear administrative decision to challenge.

This article explores this complex issue through a case study involving a local groundwater protection ordinance. It delves into the fundamental legal differences between these two administrative procedures and outlines the primary legal strategy for a business caught in this situation: the declaratory judgment action (確認訴訟, kakunin soshō). Furthermore, it examines how to challenge the substantive reasoning behind a government's decision, particularly when it relies on internal administrative standards (審査基準, shinsa kijun).

To illustrate the legal principles at stake, consider a case based on a dispute that arose in a Japanese village blessed with abundant groundwater.

The Factual Background

A village, heavily reliant on its pristine groundwater, enacted the "Y Village Groundwater Resource Protection Ordinance" to manage this vital resource. The ordinance stipulated that any new well installation required a permit from the village mayor. However, for those who acquired a pre-existing, legally established well, the ordinance required only that the new owner submit a "succession notification" (承継届, shōkei todoke) to continue its use.

A real estate development company purchased a plot of land within the village that included one such pre-existing well. The company's business plan was to bottle and sell the village's high-quality water. Following the ordinance, the company duly submitted a succession notification to the village mayor.

The mayor, however, returned the notification. He argued that because the company's intended use (commercial sale of water) differed from the previous owner's use (small-scale factory and domestic use), a simple succession notification was insufficient. He instructed the company to apply for a formal "change of use permit," which would be subject to a new round of substantive review.

The company refused, contending that it had legally succeeded to the rights of the previous well owner and that the ordinance only required a notification of that succession. The company resubmitted the notification, and the mayor rejected it again. This left the company in a state of uncertainty, facing the threat of legal action and penalties from the village if it proceeded with its bottling business without the mayor's blessing.

This scenario raises a critical question: When a government agency refuses to accept a legally prescribed notification, what is the proper legal remedy?

The Core of the Issue: Notification (Todokede) vs. Permit (Kyoka)

To answer this, one must first grasp the fundamental distinction between a notification and a permit under Japan's Administrative Procedure Act (行政手続法, Gyōsei Tetsuzuki Hō). While local ordinances like the one in Y Village are not directly subject to the national Act, they often incorporate its principles, and courts frequently refer to the Act's logic in their analyses.

Notification (届出, Todokede)

A notification is a procedural act through which an individual or a business informs the government of a particular fact or plan, as required by law. Its primary purpose is to provide the administration with necessary information.

Article 37 of the Administrative Procedure Act defines the legal effect of a notification. It states that the legal obligation to notify is fulfilled when the notification document, containing all required information and attachments, "arrives at the office of the organ… to which the notification should be submitted."

This is a crucial point. The legal effect—in this case, the right to continue using the well under new ownership—is perfected upon the arrival of the correctly completed form at the correct office. The law does not require the administrative body to "accept" or "approve" the notification on substantive grounds. The agency's role is largely passive and procedural. It can only reject a notification if it is formally deficient (e.g., missing required information or not submitted to the correct authority). The Y Village mayor's rejection, based on his substantive disagreement with the company's intended use of the water, goes beyond the procedural check envisioned for a notification system.

Permit (許可, Kyoka)

A permit, in contrast, is the result of a substantive review process. An applicant requests permission to engage in a certain activity, and the administrative body has the discretion to grant or deny it based on criteria set forth in the law. Article 2 of the Administrative Procedure Act defines an "application" as an act "seeking some disposition from an administrative agency, to which the administrative agency is to respond by granting or denying it."

The denial of a permit is a formal "administrative disposition" (行政処分, gyōsei shobun), a decision that directly affects the rights and obligations of the applicant. This formal disposition can then be challenged in court through a revocation lawsuit (取消訴訟, torikeshi soshō).

In the Y Village case, the mayor was treating a notification procedure as if it were a permit procedure, a legally flawed approach that created the central conflict.

Given the mayor's refusal, the company's first instinct might be to file a lawsuit to revoke his decision. However, this path is legally blocked.

A revocation lawsuit can only be filed to challenge a formal "administrative disposition." The mayor’s act of returning the notification document does not qualify as such. It is merely a factual act of refusal, not a formal decision denying a legal right in response to an application. Because the law deems the company's legal obligation fulfilled upon the notification's arrival, there is, in a legal sense, no decision to revoke.

This leaves the company in a perilous position. It believes it is operating legally, but the government disagrees and threatens punishment. The company needs a way to obtain a definitive judicial ruling on its legal status.

The appropriate legal tool in this situation is a declaratory judgment action (確認の訴え, kakunin no uttae), specifically as a form of "public law-related party-initiated litigation" (公法上の当事者訴訟, kōhōjō no tōjisha soshō) under Article 4 of the Administrative Case Litigation Act.

This type of lawsuit is designed for disputes over legal relationships under public law that do not involve a formal administrative disposition. Instead of asking the court to revoke an action, the company would ask the court to confirm a legal fact.

The central claim would be for the court "to confirm the company's status as possessing the right to extract and use groundwater based on the succession notification legally submitted on [Date]."

To succeed, the company must demonstrate a "legal interest in seeking the declaration" (確認の利益, kakunin no rieki). This interest is established by the ongoing legal dispute with the village and the direct threat of legal sanctions. The mayor's explicit threat to take legal action if the company begins its water bottling operations creates a tangible and immediate need for judicial clarification, thus satisfying the requirement for legal interest. The Kofu District Court decision of July 17, 2012, which serves as a model for this case, was adjudicated through this type of lawsuit, affirming its appropriateness for resolving such regulatory impasses.

Challenging the Substance: The Illegality of the Permit Denial

Let's explore the second phase of the case, where the company, in an attempt to move forward, acquiesces to the mayor's demand and applies for a "change of use permit." The permit is subsequently denied. Now, because a permit denial is a formal administrative disposition, the company can file a revocation lawsuit. The focus of this lawsuit would be to challenge the substantive legality of the reasons for the denial.

The mayor based his denial on two internal "screening standards" (審査基準, shinsa kijun):

  1. The new well must be at least 200 meters from any existing well.
  2. The applicant must obtain the consent of the local community association.

The company's well was only 180 meters from a neighbor's well, and the local community association, influenced by a competitor, refused to give consent.

The Legal Status of Screening Standards (Shinsa Kijun)

Screening standards are internal guidelines established by an administrative agency to ensure consistency and fairness in its exercise of discretion. However, these standards are not laws. They cannot create new obligations for citizens that are not found in the ordinance itself. A court will therefore review whether the application of these standards is consistent with the purpose and text of the governing ordinance.

Ground 1: The Irrationality of Mechanical Application

The company's first argument would be that the mayor's mechanical application of the 200-meter standard was an abuse of discretion. The ordinance's actual requirement was simply that the new use "not hinder existing wells."

The company could present evidence that its water usage would be quantitatively similar to the previous owner's and that the previous owner's use had caused no issues for neighboring wells. The key legal principle here is that an agency cannot rigidly apply an internal standard in a way that ignores the specific facts of a case, especially when those facts indicate that the underlying purpose of the law is not being violated. By failing to consider the actual impact of the company's proposed water usage, the mayor's decision was not based on a rational assessment of the facts but on an arbitrary application of an internal rule. This constitutes an abuse of discretion.

Ground 2: The Illegality of Irrelevant Considerations

The company's second, and more powerful, argument concerns the requirement of community consent. This standard is illegal because it introduces a consideration that is entirely irrelevant to the purpose of the Groundwater Protection Ordinance.

The ordinance’s stated purpose is the "protection of groundwater resources." The local community association’s refusal to consent was not based on any concerns about groundwater preservation. Rather, it was motivated by economic protectionism—a desire to block a new competitor from entering the market.

When an administrative agency makes a decision based on factors that are unrelated to the purpose of the empowering statute, this is a classic example of an abuse of discretion. The agency is using its public power for a purpose it was not intended for. Even if the ordinance grants the mayor broad discretion to consider "other necessary matters," that discretion is always constrained by the statute's purpose. Protecting a local business from competition is not a valid purpose under the groundwater ordinance, and relying on the community's economically motivated opposition to deny the permit renders the decision illegal.

Conclusion for Businesses

The Y Village case offers several critical lessons for businesses navigating Japan's regulatory environment:

  1. Know the Difference: The distinction between a notification (todokede) and a permit (kyoka) is not merely semantic; it is a fundamental legal divide. A notification is a right and a duty, while a permit is a request for discretionary approval. Understanding which category a specific requirement falls into is the first step in defending your rights.
  2. Don't Assume No Remedy: When a government body improperly rejects a notification, it may seem like there is no formal "decision" to challenge. However, the Japanese legal system provides for a declaratory judgment action to resolve the resulting legal uncertainty. This is a vital tool for compelling an agency to recognize a right that has been legally perfected through a notification.
  3. Challenge the Rationale: When challenging the denial of a permit, the focus must be on the legality of the agency's reasoning. Administrative agencies do not have unlimited discretion. Their decisions must be rationally connected to the facts of the case and, most importantly, must be based on the purposes and criteria laid out in the governing law. Introducing irrelevant considerations or mechanically applying internal guidelines in a way that ignores specific facts can be grounds for a court to find an abuse of discretion and overturn the decision.

Ultimately, while Japanese administrative law grants significant authority to regulatory bodies, it also provides a framework for holding them accountable. For businesses, successfully operating within this framework requires a precise understanding of its rules and a willingness to use the legal tools available to ensure that administrative power is exercised lawfully and rationally.