Who Can Actually Be a Party in a Japanese Lawsuit? Understanding "Capacity to Be a Party"

When a dispute arises and litigation in Japan is contemplated, a fundamental preliminary question must be addressed: who, or what, can actually participate as a plaintiff or a defendant in a Japanese court? This basic legal qualification is known as "Capacity to Be a Party," or Tōjisha nōryoku (当事者能力). It is a critical procedural requirement that determines whether an individual or entity is recognized by the legal system as capable of being a subject of rights and duties within a lawsuit. Without this capacity, an attempt to sue or be sued may be dismissed before the merits of the case are ever considered.

I. Understanding "Capacity to Be a Party" (Tōjisha nōryoku) in Japanese Litigation

A. Definition and Significance

Tōjisha nōryoku refers to the general legal competence of a person or entity to be a party in civil litigation – that is, to be a plaintiff (the one suing) or a defendant (the one being sued). It is one of the core "procedural requirements" (soshō yōken 訴訟要件) that must be satisfied for a lawsuit to proceed validly. Think of it as the basic legal "passport" needed to enter the litigation arena.

The significance of Tōjisha nōryoku lies in its role as a gatekeeper:

• It ensures that lawsuits involve entities that the law recognizes as capable of holding rights and bearing obligations.
• It protects the integrity of the judicial process by preventing litigation by or against entities that lack a recognized legal existence for procedural purposes.
• It forms the basis upon which other capacities, like the capacity to litigate (to perform procedural acts), are built.

B. Distinction from Other Key Concepts

It's important to distinguish Tōjisha nōryoku from other related but distinct legal concepts:

1. Substantive Legal Capacity (Kenri nōryoku 権利能力):
   • This is the capacity to be a subject of rights and duties under substantive law (e.g., to own property, enter into contracts). In principle, an entity that has Kenri nōryoku under substantive law also possesses Tōjisha nōryoku in procedural law. For natural persons, Kenri nōryoku begins at birth. For corporations, it generally begins upon registration.
2. Capacity to Litigate (Soshō nōryoku 訴訟能力):
   • This refers to the ability of a party (who already has Tōjisha nōryoku) to validly perform procedural acts in a lawsuit independently, such as filing a complaint, making arguments, or appointing a lawyer. A minor child has Tōjisha nōryoku (they can be a party to a suit) but generally lacks Soshō nōryoku and needs a legal representative (like a parent) to act on their behalf. This will be explored in a future article.
3. Standing to Sue/Be Sued (Tōjisha tekikaku 当事者適格):
   • This concerns whether the specific plaintiff is the proper party to bring the particular claim asserted, and whether the specific defendant is the proper party to be sued on that claim. An entity might have both Tōjisha nōryoku and Soshō nōryoku but lack Tōjisha tekikaku if, for example, they are trying to enforce a contract to which they were not a party. This too will be a subject of a separate discussion.

C. Consequences of Lacking Tōjisha nōryoku
If a named plaintiff or defendant is found to lack Tōjisha nōryoku, the lawsuit is deemed procedurally defective. The court, typically upon its own initiative (ex officio) as it's a matter of public order, or upon a plea by the opposing party, will issue a judgment dismissing the action (uttae kyakka 訴え却下) without ruling on its merits.

II. Who Possesses Capacity to Be a Party in Japan?

The Japanese Code of Civil Procedure (Minji Soshō Hō 民事訴訟法) and related laws determine who has Tōjisha nōryoku.

A. Natural Persons (Shizenjin 自然人)
All living human beings inherently possess Tōjisha nōryoku from birth until death, as they are subjects of rights and duties under the Civil Code. This is generally straightforward.

• An interesting side note is the case of an unborn child (taiji 胎児). For certain specific claims, such as for damages arising from a tort committed against them in utero or for inheritance, an unborn child is treated as if already born (Civil Code, Arts. 721, 886). In such limited instances, questions about their ability to be represented in a lawsuit (and thus have a form of Tōjisha nōryoku) can arise, typically through a legal representative. However, this is a specialized area and less common in general business litigation.

B. Corporations (Hōjin 法人) (Code of Civil Procedure, Art. 28)
Article 28 of the Code of Civil Procedure states that corporations have Tōjisha nōryoku in accordance with the provisions of the Civil Code and other laws.

1. Domestic Corporations (Naikoku hōjin 内国法人):
   Corporations established under Japanese law (e.g., kabushiki kaisha 株式会社 - joint-stock company, gōdō kaisha 合同会社 - limited liability company) acquire legal personality (hōjin-kaku 法人格) and thus Tōjisha nōryoku upon their valid incorporation and registration in Japan.
2. Foreign Corporations (Gaikoku hōjin 外国法人):
   The Tōjisha nōryoku of foreign corporations is a key concern for international businesses.
   • Recognized Foreign Corporations: A foreign corporation "recognized" under Japanese law generally possesses Tōjisha nōryoku. Recognition can occur through:
     • Treaties.
     • Specific Japanese statutes recognizing certain types of foreign entities.
     • Registration in Japan: Under the Companies Act, a foreign company that intends to engage in transactions on a continuous basis in Japan must appoint a representative in Japan and complete foreign company registration (Companies Act, Art. 817, 818). Such registered foreign companies are generally treated as having Tōjisha nōryoku.
     • Civil Code Article 35, Paragraph 1 states that foreign corporations, with the exception of States, administrative divisions of States and trading companies, may not be established unless in compliance with an Act or treaty. However, it also states that foreign corporations thus established shall be deemed to be the same kind of corporations as those which exist in Japan (excluding those which cannot be established in Japan or those which have illicit purposes). This provision, coupled with procedural rules, generally leads to recognized foreign corporations having party capacity.
   • Unrecognized Foreign Corporations: What if a foreign corporation is not formally "recognized" or registered in Japan but is involved in a dispute with a Japanese connection? The situation can be more nuanced. While Article 28 of the Code of Civil Procedure refers to corporations established "pursuant to laws and regulations," case law and scholarly opinion have grappled with the capacity of unregistered foreign entities. Generally, if a foreign entity has a distinct legal personality under its own law and is not contrary to Japanese public policy, there's a strong tendency to grant it Tōjisha nōryoku, especially if it has conducted business or has an office in Japan and the dispute relates to such activities. The aim is often to ensure access to justice and allow for accountability. For instance, Article 4, Paragraph 5 of the Code of Civil Procedure provides for jurisdiction over a foreign company having an office or place of business in Japan, which implicitly suggests such an entity can be a party.

C. Unincorporated Associations or Foundations (Hōjin de nai shadan matawa zaidan 法人でない社団又は財団) (Code of Civil Procedure, Art. 29)
Article 29 of the Code of Civil Procedure is a significant provision that grants Tōjisha nōryoku to certain entities that lack formal corporate status:
"An association or foundation which is not a juridical person but has a designated representative or administrator may sue or be sued in its own name."

1. Requirements for Tōjisha nōryoku under Article 29:
   • Existence of an Association (shadan 社団) or Foundation (zaidan 財団): The entity must have characteristics of an organization with a collective purpose.
   • Designated Representative or Administrator (daihyōsha matawa kanrinin no sadame ga aru mono 代表者又は管理人の定めのあるもの): There must be a clearly identifiable person(s) authorized to act on behalf of the entity and manage its affairs.
   • Organizational Structure and Activity: Courts will look for indicia of a distinct organization, such as:
     • A collective body of members (for an association) or dedicated property (for a foundation).
     • Established rules or bylaws governing its operation and decision-making.
     • Independent assets and financial management distinct from its members.
     • Engagement in activities as a collective unit.
2. Examples in a Business Context:
   This provision can be relevant for various business structures that may not have full corporate personality under Japanese law:
   • Certain types of partnerships (though many partnerships like nin'i kumiai 任意組合 (voluntary partnerships under the Civil Code) traditionally see litigation brought by or against individual partners regarding partnership affairs, Article 29 provides a potential avenue for the partnership entity itself if structured appropriately).
   • Investment funds structured as associations without separate legal personality.
   • Trade associations or industry groups that are unincorporated.
   • Unincorporated joint ventures, if they meet the criteria of an association with a designated representative.
3. Scope of Litigation:
   When an unincorporated association sues or is sued under Article 29, the litigation typically pertains to the rights, obligations, and property belonging to the association or foundation as a collective entity, rather than the purely personal affairs of its individual members.

III. Determining and Challenging Capacity to Be a Party

• Court's Ex Officio Investigation: As a fundamental procedural requirement, the court has the power and duty to examine Tōjisha nōryoku on its own initiative, even if not raised by the parties.
• Raising the Issue: An opposing party can also file a plea challenging the Tōjisha nōryoku of a plaintiff or co-defendant.
• Burden of Proof: If an entity's Tōjisha nōryoku is questioned (e.g., a foreign corporation's status or an unincorporated group's qualification under Article 29), the burden may fall on that entity (or the party asserting its capacity) to provide evidence establishing its capacity to be a party. This might involve submitting articles of association, registration documents from its home jurisdiction, evidence of its organizational structure and representation, etc.

IV. Practical Implications for Businesses

• Accurate Identification of Legal Entities: It is absolutely crucial to correctly identify the legal entity that possesses the relevant rights or obligations. Suing a mere trade name, a dissolved entity, or the wrong corporate affiliate will likely lead to dismissal for lack of Tōjisha nōryoku or Tōjisha tekikaku.
• Foreign Companies Litigating in Japan:
  • As Plaintiffs: Foreign companies intending to sue in Japan should be prepared to demonstrate their proper legal existence and capacity under their home law, and their recognition or standing in Japan.
  • As Defendants: If a foreign company is sued in Japan, one of the preliminary checks is whether it has been properly identified and whether Japanese courts recognize its capacity to be sued.
  • Proper registration in Japan (if conducting continuous business) can simplify matters regarding Tōjisha nōryoku.
• Dealing with Unincorporated Entities: When contracting with or facing potential disputes involving unincorporated associations or similar groups, businesses should assess whether these entities meet the criteria under Article 29 to have Tōjisha nōryoku. This can affect how contracts are drafted and how litigation might proceed.
• Distinguish from Agent or Branch: Litigation should generally be against the legal entity itself, not merely its local branch office or an individual agent, unless that agent is being sued in their personal capacity or specific rules apply.

Conclusion

Capacity to be a party, Tōjisha nōryoku, is a foundational concept in Japanese civil procedure. It dictates who can legitimately appear before a Japanese court as a plaintiff or defendant. For businesses, especially those engaged in international activities or dealing with various organizational structures, a clear understanding of how Japanese law determines this capacity for natural persons, domestic and foreign corporations, and unincorporated entities is essential. Ensuring that all parties to a potential lawsuit possess the requisite Tōjisha nōryoku is a critical step in avoiding procedural dismissals and ensuring that substantive legal rights can be effectively adjudicated in the Japanese justice system.