What is the Objective Scope of Res Judicata in Japan? Impact on Partial Claims and Set-Offs

A fundamental principle in any well-ordered legal system is that of res judicata (既判力 - kihanryoku), the doctrine ensuring the finality and binding effect of a court judgment. Once a judgment becomes final and unappealable, it generally prevents the same parties (or those in privity with them) from re-litigating the same claims or issues that have already been decided. In Japan, a key aspect of this doctrine is its "objective scope" (kihanryoku no kakkanteki han'i), which delineates precisely what specific determinations within a judgment are endowed with this conclusive, binding force. While the general rule is seemingly straightforward, its application becomes intricate in common litigation scenarios involving set-off defenses and partial claims. This article will explore the general rule governing the objective scope of res judicata and then delve into these more complex applications.

The General Rule: Res Judicata Attaches to the Judgment in the Main Text (CCP Art. 114(1))

Article 114(1) of the Japanese Code of Civil Procedure (CCP) provides the foundational rule: "A final and binding judgment shall have res judicata effect only with respect to the matters contained in the main text of the judgment (判決主文 - hanketsu shubun)."

• Main Text vs. Reasoning: This means that the court's ultimate, operative conclusion regarding the existence or non-existence of the specific legal claim that formed the subject matter of the litigation (soshōbutsu - 訴訟物) is what becomes binding. This conclusion is formally expressed in the "main text" or the dispositive part of the judgment.
• Reasoning Generally Not Binding (Hanketsu Riyū Chū no Handan - 判決理由中の判断): Conversely, the detailed factual findings, legal reasoning, and analysis of issues (hanketsu riyū) that lead the court to its ultimate conclusion, as set out in the body of the judgment, do not typically acquire independent res judicata effect. Parties are generally not precluded from re-arguing or taking different positions on these underlying factual or legal points in subsequent, different litigation, provided the subject matter of the new litigation is distinct.

The rationale for limiting res judicata to the main text's pronouncement on the subject matter includes:

• Party Focus: The primary focus of the parties and the court in a given lawsuit is the resolution of the specific claim being asserted, not every collateral factual or legal issue that might arise during the proceedings.
• Preventing Overly Broad Preclusion: If every factual finding or legal interpretation in the reasoning were to have res judicata effect, it could unduly broaden the scope of preclusion, potentially preventing parties from litigating genuinely different claims that might share some common underlying facts or legal questions. This could also chill full and robust argumentation on all points during the initial trial for fear of unintended preclusive consequences.
• Judicial Flexibility: Limiting res judicata to the main disposition allows courts some flexibility in their reasoning without the concern that every intermediate step will become rigidly binding in unrelated future contexts.
• Clarity and Certainty: The main text provides a relatively clear and concise statement of what has been definitively decided.

It is important to note that while the reasoning section does not have res judicata effect itself, it is often indispensable for interpreting the main text and understanding precisely which claim (the soshōbutsu) was actually adjudicated and is therefore covered by res judicata. This is particularly true for judgments that simply dismiss a plaintiff's claim, where the main text alone offers little insight into the specific right or obligation that was found not to exist.

When a subsequent lawsuit involves the exact same subject matter between the same parties (or their privies), the prior judgment's determination on that subject matter is conclusive. The parties cannot re-litigate it, and the court in the second suit is bound by the prior determination. Typically, if a party attempts to re-assert a claim that has already been definitively lost, or to deny a right that has already been definitively established against them, the second suit will be dismissed on the basis of res judicata (or the relevant claim/defense within it will be rejected).

Exception 1: Judgments on Set-Off Defenses (Sōsai no Kōben) (CCP Art. 114(2))

A significant statutory exception to the rule confining res judicata to the main text's decision on the plaintiff's claim is found in CCP Article 114(2). This provision deals with claims asserted by a defendant for the purpose of set-off. It states: "A judicial decision on the existence or non-existence of a claim asserted for the purpose of set-off shall have res judicata effect only with respect to the amount of said claim for which set-off was asserted against the claim litigated."

Rationale for this Exception:
When a defendant raises a set-off defense, they are, in essence, using their own claim against the plaintiff (the "active claim" or jidō saiken - 自動債権) to extinguish or reduce the plaintiff's claim (the "passive claim" or judō saiken - 受動債権). To do this, the court must necessarily adjudicate the validity and amount of the defendant's active claim. If this judicial determination on the active claim did not have res judicata effect, several problematic scenarios could arise:

• If the set-off was successfully asserted (meaning the court found the defendant's active claim valid and used it to cancel out the plaintiff's claim), the defendant might unfairly attempt to re-assert the same active claim in a new, separate lawsuit against the plaintiff, effectively seeking double recovery.
• Conversely, if the set-off attempt failed because the court found the defendant's active claim to be invalid or non-existent, the defendant might try to re-litigate the validity of that same active claim by filing a new lawsuit.
  Such outcomes would lead to legal uncertainty, potential injustice, and wasted judicial resources. CCP Article 114(2) prevents this by making the court's finding on the existence or non-existence of the active claim (up to the amount that was actually asserted for the purpose of set-off) binding in future disputes between the parties.

Scope of Res Judicata under Article 114(2):

• It applies to the court's specific finding on the existence or non-existence of the active claim used for set-off.
• This binding effect is limited to the amount of the active claim that was effectively "used up" or adjudicated in relation to the set-off against the plaintiff's claim. If the defendant's active claim was larger than the plaintiff's passive claim (or the portion of it against which set-off was successfully applied), res judicata would typically cover only the portion of the active claim that was actually offset.
  • For example, if Plaintiff A sues Defendant B for ¥8 million, and B raises a set-off defense using an active claim of ¥10 million against A, and the court finds B's active claim valid and uses ¥8 million of it to extinguish A's claim, the res judicata effect on B's active claim covers the ¥8 million portion used. B would still be able to sue A for the remaining ¥2 million of their active claim.
  • Conversely, if B's ¥10 million active claim was found entirely invalid by the court when ruling on the set-off, the non-existence of that entire ¥10 million claim would have res judicata effect (assuming the full ¥10m was pleaded in relation to the set-off, even if only ¥8m was needed).

Procedural Implications for Set-Off:
Because of this special res judicata effect, courts are required to carefully adjudicate the active claim when a set-off defense is properly raised and becomes relevant to the disposition of the case. A court cannot, for instance, simply dismiss the plaintiff's main claim on some other ground (e.g., finding the plaintiff's claim itself invalid from the outset) and then ignore a fully pleaded set-off defense without making a determination on it, especially if the plaintiff's claim were found valid. The defendant has a legitimate interest in obtaining a binding determination on their active claim if it is necessarily adjudicated as part of the set-off. This often leads to a sequential approach in judicial reasoning: the court first determines the validity of the plaintiff's main claim, and only if it is found to exist will the court then proceed to fully adjudicate the set-off defense and the defendant's active claim.

Exception 2 (or a Complex Application): Partial Claims (Ichibu Seikyū)

Another area where the objective scope of res judicata presents challenges is in litigation involving "partial claims" (ichibu seikyū). This occurs when a plaintiff holds a quantitatively divisible claim (e.g., a monetary debt of ¥10 million) but, for strategic or other reasons, chooses to file a lawsuit for only a portion of that total amount (e.g., suing for only ¥6 million out of the ¥10 million). The central question is: if a judgment is rendered on this partial claim, what is its res judicata effect on a potential subsequent lawsuit for the remaining, un-sued portion of the claim (e.g., the remaining ¥4 million)?

The Dilemma:

• Formal View: From a purely formal standpoint, the subject matter (soshōbutsu) of the first lawsuit was only the explicitly claimed partial amount (e.g., ¥6 million). Therefore, one might argue that the res judicata of the judgment should be strictly limited to that amount, leaving the plaintiff free to sue for the remainder.
• Substantive View: In reality, however, to decide the partial claim, the court in the first lawsuit may have had to make findings and rulings on issues pertinent to the entire underlying right or obligation (e.g., the validity of the entire contract from which the ¥10 million debt arose, or the total amount of damages if the partial claim was for a segment of a larger tort claim).

Evolution of Japanese Case Law on Partial Claims:

1. Implicit Partial Claim (黙示の一部請求 - Mokuji no Ichibu Seikyū): If a plaintiff sues for a lesser amount than their full potential claim without clearly indicating that it is only a part of a larger, known entitlement, a judgment on that lesser amount has often been treated by Japanese courts as having res judicata effect over the entirety of the underlying claim that could have been brought at that time. The plaintiff, by not specifying the partial nature of the claim, is often deemed to have sought a full and final resolution of the dispute for that asserted amount, effectively waiving or being precluded from later claiming more. A Supreme Court decision on June 7, 1957 (Minshū Vol. 11, No. 6, p. 948) is a leading case in this area. A subsequent suit for any remainder is generally barred.
2. Explicit Partial Claim (明示の一部請求 - Meiji no Ichibu Seikyū): The situation changes if the plaintiff explicitly states in their pleadings that they are suing for only a portion of a larger, identified claim (e.g., "Plaintiff claims ¥6 million, this being a part of a total debt of ¥10 million owed by the Defendant under the loan agreement dated X"). In such cases, the Supreme Court has held that the subject matter (soshōbutsu) of the litigation is limited to the specifically claimed partial amount. Consequently, the res judicata of the judgment rendered on this explicit partial claim applies only to that part. A subsequent lawsuit for the remaining portion is, in principle, not barred by the res judicata of the first judgment concerning the subject matter (Supreme Court, August 10, 1962, Minshū Vol. 16, No. 8, p. 1720).
   • Effect when an Explicit Partial Claim is Dismissed: If, as in Setsumon 3 of the reference material, Plaintiff A sues Defendant B for ¥600 (explicitly as part of a larger ¥800 underlying right), and the court dismisses this ¥600 claim (e.g., because B successfully argued fraud and proved the entire underlying contract was rescinded), can A later sue for the unpleaded remainder of ¥200?
     While the 1962 precedent suggests that res judicata is limited to the ¥600 subject matter, the Supreme Court later introduced a doctrine based on procedural good faith (shingisoku - 信義則) to address the potential for abuse. If the dismissal of the explicit partial claim was based on grounds that effectively negate the entire underlying right (such as the invalidity of the entire contract or a successful defense that extinguishes the whole debt), then allowing a subsequent suit for the remainder, even if not strictly barred by res judicata on the soshōbutsu, might be considered contrary to good faith and an abuse of the litigation process. This is because it would compel the defendant to re-litigate issues that were already thoroughly examined and decided in the first suit in relation to the common underlying right. In such circumstances, a subsequent suit for the remainder may be dismissed on grounds of procedural good faith (Supreme Court, June 12, 1998, Minshū Vol. 52, No. 4, p. 1147).
   • Effect when an Explicit Partial Claim is Upheld: If the plaintiff's explicit partial claim is upheld by the court, res judicata attaches to the existence of that specific portion of the debt. The plaintiff remains free to subsequently sue for the remaining portion, and the prior judgment does not, by its res judicata effect on the soshōbutsu, bar this second suit. (The findings of fact or law from the first suit might, however, have evidentiary value or influence the second suit through principles of issue preclusion if applicable, but that is distinct from the res judicata on the subject matter itself).

The Intricate Interaction of Partial Claims and Set-Off Defenses

The doctrines governing res judicata become particularly complex when an explicit partial claim by a plaintiff is met with a set-off defense by the defendant (as explored in Setsumon 4 of the reference material).

Suppose Plaintiff A sues Defendant B for ¥600, explicitly stating this is a partial claim out of a larger underlying right which A asserts to be ¥800. Defendant B then raises a set-off defense, using an active claim of, say, ¥600 that B has against A.

Adjudication Method – The "Outside Method" (Sotogawa-setsu - 外側説):
The prevailing approach adopted by Japanese courts, including the Supreme Court (decision of November 22, 1994, Minshū Vol. 48, No. 7, p. 1355), is known as the "outside method" of calculation. The court will typically proceed as follows:

1. First, it determines the total amount of Plaintiff A's underlying claim (e.g., it might find that A's entire underlying right is indeed ¥800, not just the pleaded ¥600).
2. Next, it determines the valid amount of Defendant B's active claim asserted for set-off.
3. It then subtracts the valid set-off amount from A's total underlying claim (i.e., from the ¥800, not merely from the ¥600 partial claim amount).
4. The remaining amount of A's claim (after this "outside" set-off) is then compared to A's pleaded partial claim amount (¥600). Plaintiff A will be awarded an amount up to their pleaded ¥600, provided the remainder calculated in step 3 is equal to or greater than ¥600. If the remainder is less than ¥600, A will be awarded that lesser remaining amount.

Res Judicata Effect on Defendant B's Active Claim (Used for Set-Off):
The 1994 Supreme Court decision clarified that the res judicata effect on Defendant B's active claim (as per CCP Art. 114(2)) attaches only to the extent that B's active claim was effectively used to offset Plaintiff A's pleaded partial claim amount. It does not extend to any portion of B's active claim that might have notionally offset the unpleaded remainder of A's total underlying claim during the court's internal "outside method" calculation. This preserves the defendant's ability to use any "unused" portion of their active claim (i.e., the part that exceeded what was necessary to defeat A's partial claim, or the part that was found valid but not applied because A's total claim was larger) in any subsequent litigation concerning A's unpleaded remainder.

The precise delineation of which part of the set-off claim gains res judicata can be intricate, often visualized by comparing the amount of the plaintiff's partial claim that was "defeated" or satisfied by the set-off, and the portion of the defendant's set-off claim that was adjudicated in direct relation to that pleaded partial amount.

Conclusion

The objective scope of res judicata in Japanese civil procedure is a cornerstone of legal finality, generally limited to the court's ultimate determination on the specific subject matter of the litigation as articulated in the main text of the judgment. Findings of fact and legal reasoning within the body of the judgment, while crucial for understanding the decision, typically do not acquire independent res judicata effect.

However, this general rule is subject to important statutory exceptions and complex judicial interpretations, particularly in the context of judgments on set-off defenses (where the determination on the active claim used for set-off becomes binding up to the amount adjudicated for that purpose) and in litigation involving partial claims. The treatment of partial claims, especially explicit ones, involves a nuanced interplay between the formally defined subject matter, the potential for preclusion of remainder claims based on principles of procedural good faith, and the specific rules governing how set-offs are applied and how their res judicata effect is circumscribed. These doctrines collectively attempt to strike a delicate balance between the imperative for the finality of judgments and judicial economy, on one hand, and the demands of fairness to the parties and the practical realities of complex litigation strategies, on the other.