What Types of Damages Can Be Claimed and How Are They Calculated in Japanese Torts?

Japanese Attorney at Law - Bengoshi L.L.

• 13 min read

When a tortious act causes harm in Japan, the primary remedy available to the victim is monetary compensation for damages (損害賠償 - songai baishō). Understanding the types of damages that can be claimed and the principles governing their calculation is essential for both plaintiffs and defendants in tort litigation. This article explores these key aspects of Japanese tort law.

The Fundamental Concept of Damages: The "Difference Theory"

The prevailing approach to defining "damages" (損害 - songai) in Japanese tort law is the "difference theory" (差額説 - sagaku setsu). According to this theory, damages represent the monetary difference between the victim's hypothetical overall financial position had the tort not occurred and their actual financial position as a result of the tort. This principle was affirmed by the Supreme Court in a judgment on January 28, 1964 (Minshu 18-1-136). The aim is to financially restore the victim to their pre-tort state.

While the difference theory is foundational, it's not without its theoretical critiques and practical nuances:

  • Alternative View: "Damage Fact Theory" (損害事実説 - Songai Jijitsu Setsu): Some scholars advocate for the "damage fact theory," which posits that "damage" refers to the disadvantageous facts or state of affairs brought about by the tort, distinguishing this factual harm from its subsequent monetary valuation. One interpretation of this theory views damage as the adverse difference between the factual state the victim would have been in without the tort and their actual factual state post-tort.
  • Judicial Refinements: Courts have shown flexibility. For instance, even if a victim's current income has not decreased post-injury, damages for lost earning capacity might still be awarded if the maintenance of income is due to the victim's extraordinary efforts or other factors unrelated to the tort, or if there's a demonstrable risk of future disadvantage in employment (e.g., promotions, changing jobs) due to the injury (Supreme Court, December 22, 1981, Minshu 35-9-1350). Furthermore, in some complex cases, like those involving misrepresentation in securities transactions, courts appear to distinguish between the "damage" itself (e.g., being induced to acquire stocks based on false information) and the subsequent "calculation of the amount of damage" using the difference theory (e.g., Supreme Court, September 13, 2011, Minshu 65-6-2511; Supreme Court, March 13, 2012, Minshu 66-5-1957).
  • Procedural Aid for Quantifying Damages: Article 248 of the Code of Civil Procedure provides a crucial mechanism. If the occurrence of damage is proven, but, due to the nature of the damage, it is extremely difficult to prove its precise monetary amount, the court has the discretion to determine a "reasonable amount of damages" based on the overall import of oral arguments and the results of evidence examination.

Categorization and Calculation Methods

In practice, the "difference" under the difference theory is calculated using the individual damage item accumulation method (個別損害項目積上げ方式 - kobetsu songai kōmoku tsumiage hōshiki). This involves identifying, itemizing, and summing up various specific heads of damage.

Types of Damages

Damages are broadly categorized as follows:

  1. Pecuniary (Property) Damages (財産的損害 - Zaisanteki Songai): These relate to financial losses.
    • Positive Damages (積極的損害 - Sekkyokuteki Songai): Actual out-of-pocket expenses incurred or the loss of existing assets due to the tort. Examples include medical treatment costs, hospital fees, transportation costs for medical visits, repair costs for damaged property, or the cost of replacing destroyed property.
    • Negative Damages (消極的損害 - Shōkyokuteki Songai) / Lost Profits (逸失利益 - Isshitsu Rieki): This refers to income, profits, or other economic benefits that the victim would have gained had the tort not occurred, but which were lost as a result. A common example is lost wages or future earning capacity due to injury or death. This can also be termed ubekarishi rieki (得べかりし利益 - benefits that should have been obtained).
  2. Non-Pecuniary Damages (非財産的損害 - Hi-zaisanteki Songai) / Consolation Money (慰謝料 - Isharyō): This category primarily covers non-financial harm, most significantly mental suffering, pain, and emotional distress. For legal entities, non-pecuniary damages can also include harm to reputation or creditworthiness that impacts business operations, provided such harm can be monetarily assessed (Supreme Court, January 28, 1964).

In mass tort situations, such as those arising from widespread pollution or pharmaceutical side effects, a "comprehensive uniform claim" (包括一律請求 - hōkatsu ichiritsu seikyū) method is sometimes employed. This involves claiming a "comprehensive" amount for the overall "destruction of human well-being" without detailed itemization for each individual loss, and often a "uniform" amount for victims falling into similar categories of harm. This approach is justified by the principle of the equal value of human life and the practical difficulties of individual proof in mass scenarios, aiming to avoid undue delays in providing relief. Such claims are often termed "comprehensive consolation money" (包括慰謝料 - hōkatsu isharyō) and have been accepted by courts to expedite victim compensation.

Principles of Damage Calculation: Concrete vs. Abstract

When quantifying specific damage items, a key distinction is made between concrete and abstract calculation methods:

  • Concrete Damage Calculation (具体的損害計算 - Gutaiteki Songai Keisan): This is the default principle in Japanese tort law. It aims to calculate damages based on the specific, actual losses suffered by the individual victim, taking into account their particular circumstances. The rationale is that damages should compensate for the actual harm experienced by that specific victim (Supreme Court, January 28, 1997, Minshu 51-1-78).
  • Challenges with Purely Concrete Calculation: A strict adherence to concrete calculation can create significant difficulties for certain categories of victims, such as young children, students, full-time homemakers, or unemployed individuals, who may find it hard to prove specific future lost income or quantify certain losses with precision.
  • Judicial Use of Abstract Calculation / Statistical Averages: To address these challenges, courts often employ a more abstract method (抽象的損害計算 - chūshōteki songai keisan) for certain damage items or victim groups, particularly for lost future earnings. This involves using statistical data, such as:
    • Labor capacity loss tables.
    • Wage census data (e.g., average earnings for workers of a certain age, sex, or educational level).
    • Standard working life expectancy (often up to age 67 in Japan).
      This allows courts to derive a probable income figure even when specific individual proof is lacking. This is often described as a "conservative calculation method" (控えめな算定方法 - hikaeme na santei hōhō), designed to provide fair compensation without unduly burdening the tortfeasor (Supreme Court, June 24, 1964, Minshu 18-5-874, concerning a child's lost future income). A similar approach may be taken for likely but unreceipted expenses like future medical or transportation costs. Thus, while concrete calculation is the guiding principle, abstract calculation using averages is a common and accepted practice.
  • Abstract Calculation in Special Laws: Some statutes, particularly in intellectual property law, explicitly allow for damages calculated on an abstract basis, such as a reasonable royalty or license fee, irrespective of the victim's actual proven loss (e.g., Patent Act Art. 102(3), Copyright Act Art. 114(3)).

Calculating Lost Profits for Specific Demographics

The use of statistical averages for lost profits has led to specific considerations for different groups:

  • Gender Disparity in Lost Earnings (男女間格差 - Danjo-kan Kakusa): Historically, significant gender-based disparities in average wages in Japan posed a challenge when calculating lost future earnings for female victims. Early attempts to compensate by adding the value of unpaid housework to the lower female average wage were generally not accepted by the Supreme Court, which viewed it as potential double counting if average female earnings were already used (Supreme Court, January 19, 1987, Minshu 41-1-1). However, a more recent trend, particularly for young female victims (e.g., students) whose future career paths are not yet established, has seen courts use the average wage for "all workers" rather than just "female workers." This aims to better reflect their diverse future earning potential and mitigate the impact of existing gender wage gaps on their compensation (e.g., rationale cited in Tokyo High Court, August 20, 2001, Hanrei Jihō 1757-38).
  • Lost Profits for Temporary Foreign Residents: For foreigners temporarily residing and working in Japan, courts typically calculate lost profits based on their projected earnings in Japan for the anticipated duration of their stay, and thereafter based on their projected earnings in the country to which they are expected to return (Supreme Court, January 28, 1997, Minshu 51-1-78).
  • Lost Pension Benefits (公的年金の逸失利益性 - Kōteki Nenkin no Isshitsu Riekisei): If a recipient of public pension benefits dies as a result of a tort, future pension payments they would have received can generally be claimed as lost profits. This applies to the deceased's own pension entitlements, such as retirement, old-age, or disability pensions, which are seen as a form of lost income and are inheritable by their survivors (e.g., Supreme Court, April 7, 1966, Minshu 20-4-499; Supreme Court, October 21, 1975, Hanrei Jihō 799-39). However, benefits that are specifically for survivors (e.g., dependent additions to the deceased's pension or survivor's pensions received directly by family members) are generally not considered part of the deceased's lost profits. This is because these benefits are intended for the direct livelihood support of the survivors themselves, not as compensation for the deceased's lost income stream (e.g., Supreme Court, October 22, 1999, Minshu 53-7-1211; Supreme Court, November 14, 2000, Minshu 54-9-2683).

Property Damage (物損の場合 - Busson no Baai)

For damage to tangible property:

  • If repair is impossible or economically unfeasible, damages are typically the market cost of acquiring an equivalent item (of the same type and condition), less any salvage value of the damaged item (Supreme Court, April 15, 1974, Minshu 28-3-385).
  • If repair is possible and more economical than replacement, damages are generally the reasonable cost of repair, plus any reasonable costs for a temporary replacement during the repair period (e.g., rental car fees for a damaged vehicle).

Pleading and Proving Damages

The victim (plaintiff) bears the burden of pleading and proving their pecuniary damages, including both the existence of each damage item and its monetary amount. As mentioned, Article 248 of the Code of Civil Procedure offers some flexibility when the amount is extremely difficult to prove despite the occurrence of damage being established. Certain special laws may also contain provisions that presume the amount of damages, such as allowing the infringer's profits to be considered the rights holder's damages in intellectual property cases (e.g., Patent Act Art. 102(2)).

Consolation Money (Isharyō 慰謝料) for Non-Pecuniary Harm

Isharyō is awarded for non-pecuniary harm, primarily mental suffering. Its calculation differs significantly from pecuniary damages:

  • Wide Judicial Discretion: Courts have considerable discretion in determining the amount of isharyō. Judges are not required to provide a detailed breakdown of how they arrived at the awarded sum (Supreme Court, June 22, 1947, Hanrei Jihō 673-41, though this date seems an error in the source, likely referring to a Showa-era judgment post-1947).
  • No Need for Victim to Prove Specific Amount: The victim does not need to prove a specific monetary value for their suffering; the court considers all circumstances, including the victim's social standing, profession, age, the nature of the injury, the severity of pain and suffering, as well as the tortfeasor's social position and financial status (e.g., Taishin-in, May 20, 1920, Minroku 26-710).
  • Functions of Isharyō:
    • Primary Function: Compensation for Mental Suffering (損害填補機能 - Songai Tenpo Kinō).
    • Secondary Function: Supplementing Pecuniary Damages (財産的損害を補完する機能 - Zaisanteki Songai o Hokan Suru Kinō): Isharyō can be adjusted upwards if pecuniary losses are difficult to prove with precision but are nonetheless considered to have likely occurred. This "supplementary function" allows courts to achieve a more equitable overall compensation.
    • No Punitive Function (制裁的機能の否定): It is firmly established that isharyō in Japanese tort law does not serve a punitive function. Its purpose is compensatory, not to punish the tortfeasor or achieve general deterrence; these latter aims are considered the domain of criminal or administrative sanctions. The Supreme Court, in a landmark decision on July 11, 1997 (Minshu 51-6-2573), refused to enforce a U.S. judgment for punitive damages, deeming it contrary to Japanese public policy because the Japanese tort system is geared towards compensating actual losses, not imposing penalties through private litigation.

Method of Payment: Lump Sum vs. Periodic Payments

Japanese law does not explicitly prescribe the method of payment for damages.

  • Lump Sum (一時金 - Ichijikin) is Overwhelmingly Preferred: In practice, plaintiffs almost always request, and courts almost always award, damages as a single lump sum payment.
    • Advantages: Provides finality to the dispute and simplifies enforcement.
    • Disadvantages: Risk of the victim mismanaging a large sum, potential for severe financial strain on the tortfeasor, and inherent difficulty in accurately assessing uncertain future losses (e.g., long-term medical care, lifetime lost earnings) in a single present-day figure.
  • Periodic Payments (定期金 - Teikikin) are Possible if Requested: While less common, courts can order damages to be paid in installments if the plaintiff requests this method.
    • Advantages: Can provide sustained, long-term support for victims or their dependents, and may be less financially burdensome for the tortfeasor.
    • Disadvantages: Carries risks of the tortfeasor's future insolvency, intentional non-payment, or disappearance, often necessitating security arrangements. It also requires mechanisms to adjust payments in response to significant changes in circumstances post-judgment. Article 117 of the Code of Civil Procedure allows for a subsequent lawsuit to modify a judgment for periodic payments if there has been a substantial change in circumstances affecting damages that were determined to have occurred before the conclusion of the original oral arguments.
  • Deduction of Intermediate Interest (中間利息の控除 - Chūkan Risoku no Kōjo) in Lump Sum Awards: When future losses (such as lost future income or future care costs) are compensated with a current lump sum, the victim theoretically receives the money earlier than the losses would have accrued. This allows them to earn interest on that sum, potentially leading to overcompensation. To prevent this, courts deduct an amount equivalent to the anticipated "intermediate interest" that could be earned on the principal until the time the future losses would have actually materialized.
    • The discount rate used for this deduction is the statutory legal interest rate (which was 5% under the older Civil Code, now 3% under the amended Civil Code, subject to periodic review). Courts have held that this fixed statutory rate must be used for consistency and legal stability (Supreme Court, June 14, 2005, Minshu 59-5-983).
    • Commonly used calculation methods include the Hoffmann method (assuming simple interest) and the Leibniz method (assuming compound interest); both are generally considered acceptable by courts, with a trend towards the Leibniz method in traffic accident cases.

Determining the Scope of Compensable Damages: Adequate Causation

Not all losses factually flowing from a tort are recoverable. Japanese law limits compensable damages to those that have an "adequate causal relationship" (相当因果関係 - sōtō inga kankei) with the wrongful act or the infringement of the right.

The prevailing judicial approach is to analogously apply Article 416 of the Civil Code (which primarily governs the scope of damages for breach of contract) to tort cases to determine this "adequacy". This practice was established early on (e.g., Taishin-in, May 22, 1926, Minshu 5-386, the Fukki Maru case) and continues to be followed.
Under this framework:

  • Article 416(1) - Ordinary Damages (通常損害 - Tsūjō Songai): Damages that would "ordinarily" or "normally" arise from such a tort are recoverable. This is seen as embodying the core of adequate causation.
  • Article 416(2) - Special Damages (特別損害 - Tokubetsu Songai): Damages arising from "special circumstances" are recoverable only if the tortfeasor foresaw, or reasonably should have foreseen, those special circumstances. The burden of proving such foreseeability typically rests with the victim.

This application of Article 416 to torts has faced strong academic criticism. Critics argue that Article 416, designed for contractual relationships where parties can often anticipate potential losses, is ill-suited for torts, which frequently arise unexpectedly between strangers and where the foreseeability of specific damages (especially in negligence cases) can be less clear. There are also arguments that Article 416 itself is not rooted in the German-influenced theory of adequate causation but rather in a different Anglo-American principle of limited damages. Alternative theories, such as the "scope of duty" (義務射程説 - gimu shatei setsu), have been proposed to determine the range of compensable harm in negligence cases.

Recoverability of Attorney's Fees

While attorney's fees are not automatically included as part of "court costs" (which are typically borne by the losing party under a separate regime), current Japanese case law permits a successful plaintiff in a tort action to recover a portion of their attorney's fees as part of their tort damages. The amount recoverable is what the court deems "reasonable" considering various factors such as the complexity of the case, the amount claimed, the amount ultimately awarded, and other circumstances (Supreme Court, February 27, 1969, Minshu 23-2-441). In practice, the awarded amount for attorney's fees is often a percentage (e.g., around 10%, though the PDF example of 20-30% might reflect specific or higher-value cases) of the total damages awarded. An agreement between the victim and their attorney to pay fees is sufficient for this claim; actual prior payment is not a prerequisite (Taishin-in, September 30, 1941, Minshu 20-1261).

Accrual of Pre-judgment Interest (Delay Damages)

Damages in tort claims accrue pre-judgment interest, known as "delay damages" (遅延損害金 - chien songaikin). A crucial point is the commencement date for this interest. Tortious obligations to pay damages are considered debts for which no specific performance date is fixed. While general contract law (Article 412(3) of the Civil Code) might suggest interest runs from the time of demand by the creditor, established case law for tort damages holds differently.

Interest on tort damages begins to accrue from the moment the damage occurs – that is, from the time of the tortious act itself – without any need for a prior demand from the victim (Supreme Court, September 4, 1962, Minshu 16-9-1834). This principle applies even to the portion of damages representing recoverable attorney's fees (Supreme Court, September 6, 1983, Minshu 37-7-901). The applicable interest rate is the statutory legal rate.

Settlements and Subsequently Discovered Harm

If parties reach a settlement (示談 - jidan) for tort damages and the victim agrees to waive further claims, they are generally barred from seeking additional compensation later, even if the harm proves to be more severe than initially understood.

However, an important exception exists. If the settlement was concluded under circumstances where the full extent of the harm was difficult to ascertain (e.g., soon after an accident, for a relatively small sum), the waiver of claims may be interpreted by courts as applying only to the damages that were foreseeable at the time of the settlement. If unforeseen complications or a significant worsening of the injury occurs later, which could not have been reasonably anticipated when the settlement was made, the victim may be permitted to pursue additional claims for these new or aggravated damages (Supreme Court, March 15, 1968, Minshu 22-3-587). The court will examine the parties' reasonable intentions at the time of the settlement.

Conclusion

The framework for claiming and calculating damages in Japanese tort law is centered on the "difference theory," aiming to compensate victims for their actual losses. This involves itemizing various types of pecuniary and non-pecuniary damages, with courts employing both concrete and abstract calculation methods to achieve fairness, especially for victims whose future losses are difficult to prove with precision. While isharyō (consolation money) provides redress for mental suffering with considerable judicial discretion, the overall scope of recoverable damages is generally limited by principles of adequate causation, often determined by analogy to contract law rules. Procedural aspects, such as the preference for lump-sum payments, the deduction of intermediate interest, and rules governing pre-judgment interest and the effect of settlements, further shape the final compensation awarded.