In an 18 January 2019 decision, the Supreme Court considered the enforceability of a Californian default judgment in Japan.
In March 2013 Party A filed a lawsuit before a Californian superior court. Party B retained a lawyer, who appeared before the court, but subsequently resigned.
In March 2015 the Californian court rendered a default judgment against Party B. Party A served Party B with a notice of entry of the judgment, which included a copy of the judgment itself. However, Party A served the notice at the wrong address.
The appeal period expired and the judgment became final and legally binding.
Party A applied for enforcement of the Californian judgment with a Japanese lower court.
The lower court decided that because the Californian judgment had been finalised and rendered legally binding without an appropriate copy being served on Party B – thereby depriving Party B of the chance to appeal – this procedure contravened Japanese public policy. Under Article 118(3) of the Code of Civil Procedure, foreign judgments that contravene Japanese public policy cannot be enforced.
The case was appealed to the Supreme Court, which decided differently. The Supreme Court held that if Californian law had not required the judgment to be served on Party B for it to be rendered final and legally binding, such legal procedure would not necessarily conflict with Japanese public policy.
The Supreme Court clarified that public policy had actually required Party B to be:
- informed of the judgment's contents by any means; and
- given the chance to appeal.
It follows that if Party B had not had the opportunity to discover the judgment's contents and had thus not been given the chance to appeal, such procedure would contravene Japanese public policy.
Conversely, the court suggested that if there was a chance that Party B may have known the judgment's contents even without service thereof, it may not have contravened public policy. The court ordered that the case be remanded to the lower court for a review of the facts.
The Supreme Court further explained the difference between service of a complaint and service of a judgment in cases of enforcement of foreign judgments. Service of a complaint is an explicit requirement for the enforcement of the subsequent judgment (Article 118(2) of the Code of Civil Procedure). However, service of a judgment is not explicitly required. Thus, the process in the case at hand would not have contravened Japanese public policy if:
- Californian law had not required Party B to be served with the judgment before it became final and legally binding; and
- Party B had been informed of the judgment's contents by any means (ie, not only by service).
Further, the Japanese government recently gave notice of its declaration of opposition to Articles 8 and 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 in accordance with Article 21.(1) Following this, service of judicial documents from abroad cannot be undertaken by direct service (ie, by postal channels); instead, it can be undertaken only through diplomatic or consular agents, as stipulated in the Convention.(2)
The Supreme Court's decision has clarified that in cases involving the enforcement of a foreign judgment, service of the initial complaint through diplomatic or consular agents is required. However, service of the judgment through diplomatic or consular agents is unnecessary.
For further information on this topic please contact Kei Akagawa at Anderson Mori & Tomotsune by telephone (+81 3 6775 1000) or email ([email protected]). The Anderson Mori & Tomotsune website can be accessed at www.amt-law.com.
Endnotes
(1) Further information is available here.
(2) Further information is available here.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
