This column outlines key legal issues that foreign (non-Japanese) e-commerce businesses should be aware of when selling goods or services online to consumers in Japan.

1. Can a Japanese Consumer File a Lawsuit in Japan?

Under Article 3-4, Paragraph 1 of the Civil Procedure Act (Act No. 109 of 1996, as amended), a Japanese court has jurisdiction over a dispute if the consumer resided in Japan either at the time of contract formation or at the time of filing the lawsuit.

Many international e-commerce businesses include a “jurisdiction” clause in their terms and conditions, designating a specific court—typically in the country where the business is headquartered—as the exclusive forum for resolving disputes. However, under Japanese law, such jurisdiction clauses have limited effect in contracts between businesses and consumers.

Specifically, for a jurisdiction clause to be enforceable in a consumer contract, it must designate a court located in the country where the consumer resided at the time of contract formation (Article 3-7, Paragraph 5 of Civil Procedure Act). Therefore, even if your terms and conditions specify a foreign court, the clause will generally not be enforceable if the consumer was living in Japan when they made the purchase.

If the jurisdiction clause is unenforceable, the Japanese court will accept the lawsuit as long as it has jurisdiction under the Civil Procedure Act. Under Article 3-4 of Japanese Civil Procedure Act, a Japanese court has jurisdiction over a dispute initiated by a consumer against a business if the consumer was residing in Japan either at the time of the contract formation or at the time the lawsuit is filed.

Also note that even if the consumer resided in the country of the designated court at the time of contract formation, they may still file a lawsuit in Japan if they have moved and reside in Japan at the time of filing. This is because the jurisdiction clause in a consumer (B2C) contract is deemed non-exclusive under Japanese law (Article 3-7, Paragraph 5, Item 1 of Civil Procedure Act) and does not prevent the consumer from initiating a lawsuit in Japan.

2. Are Japanese Consumer Protection Laws Applicable?

Assuming a Japanese court has jurisdiction over the dispute, Japan’s conflict-of-law rules will apply. (If the case is filed outside Japan, the conflict-of-law rules of that jurisdiction will apply instead.)

Under Article 7 of Japan’s Act on General Rules for Application of Laws (Act No. 289 of 2006, as amended, “AGRAL”), a choice-of-law clause in a contract is generally valid, even if it is a B2C contract. So, if your terms and conditions specify a foreign law (e.g., California law), that law will govern the contract.

However, Article 11 of AGRAL gives consumers the right to invoke mandatory protections under the law of their habitual residence—Japan, in this case. This means Japanese consumers may claim protection under Japanese consumer protection laws, even if the governing law is foreign.

Examples of mandatory provisions under Japanese law include:
(From the Consumer Contract Act of Japan, Act No. 61 of 2000, as amended)

– Article 4: Right to cancel a contract resulting from improper solicitation (e.g., misleading information).

– Article 8: Invalidation of clauses that excessively limit the business operator’s liability.

– Article 8-2: Invalidation of clauses waiving the consumer’s right to cancel the contract.

– Article 9: Invalidation of excessive liquidated damages or penalties.

– Article 10: Invalidation of “deemed acceptance” clauses or any other terms that are unreasonably unfavorable to the consumer compared to statutory provisions.

In addition, the Act on Specified Commercial Transactions (Act No. 57 of 1976 as amended, “SCTL”) applies to foreign e-commerce businesses that target Japanese consumers. The SCTL:

– Requires specific disclosures (including trade terms, seller information, etc.).

– Prohibits unsolicited advertising emails.

– Grants consumers the right to cancel purchases of goods (excluding services) within 8 days of delivery, unless the business clearly state in a certain way (including the disclosure in the final confirmation screen) that the cooling-off period does not apply.

3. Is Japanese Privacy Law Applicable?

Yes. The Personal Information Protection Act of Japan (PIPA) applies to foreign e-commerce operators that handle the personal data of individuals residing in Japan.

Disclaimer: This column intends to provide a high-level summary of the subject matter, and it does not aim to provide exhaustive information. Also, this column is for informational purposes only and does not constitute legal advice. For specific issues, we recommend consulting an expert. If you have any query, please contact us via inquiry form in this homepage.