Recent Developments in Japanese Consumer Law

Penn State International Law Review Volume 27 Number 3 Penn State International Law Review Article 14 5-1-2009 Recent Developments in Japanese Consumer Law Kunihiro Nakata Follow this and additional works at: http://elibrary.law.psu.edu/psilr Part of the International Law Commons Recommended Citation Nakata, Kunihiro (2009) "Recent Developments in Japanese Consumer Law," Penn State International Law Review: Vol. 27: No. 3, Article 14. Available at: http://elibrary.law.psu.edu/psilr/vol27/iss3/14 This Article is brought to you for free and open access by Penn State Law eLibrary. It has been accepted for inclusion in Penn State International Law Review by an authorized administrator of Penn State Law eLibrary. For more information, please contact . Recent Developments in Japanese Consumer Law Kunihiro Nakata I. INTRODUCTION Japanese consumer law faced an important turning point in 2008. First, a Consumer Agency having general jurisdiction over consumer policies emerged. 1 The government prepared several bills for the fall Diet session enabling the establishment of the Agency in 2009. The decision in favor of the Consumer Agency symbolizes the remarkable shift of the administration from favoring the producer's point of view to that of the consumer. This can be regarded as evidence that consumer protection policy is finally becoming a political issue in Japan. At the same time the movement towards a consumer law reform has surfaced. This paper will introduce the background and the present status of the amendment of three laws: the Consumer Contract Act, the Act on Specified Commercial Transactions ("Specified Transactions Act") and the Installment Sales Act. II. THE INCREASE OF CONSUMER LAW AND ITS BACKGROUND In recent years, consumer-related laws have been enacted or amended in an unprecedented quantity and quality. For example, we have seen the transformation of the Consumer Protection Fundamental Act into the Consumer Basic Act (2004); the enactment of the Consumer Contract Act and its amendment introducing the consumer group action system (2000 and 2006); the Product Liability Act (1994); the 1. The Consumer Agency is part of Prime Minister Yasuo Fukuda's policy. The legal provisions defining its organization and jurisdiction were examined in the Consumer Administration Promotion Conference (Sh6hisha gy6sei suishin kaigi) summoned by the Prime Minister on an ad hoc basis. This Conference published a final report titled Summary of the Consumer Administration Promotion ConferenceChangeover to a consumer and living orientedadministration on June 13, 2008. Based on this report, the Cabinet adopted a "Basic Plan" which is going to be transformed into a bill and presented to the Parliament during the extraordinary session in August. The preparatory works are aimed at establishing the Consumer Agency in April 2009. PENN STATE INTERNATIONAL LAW REVIEW [Vol. 27:3,4 amendment of the Consumer Life Product Safety Act (2006); several amendments of the Specified Transactions Act regulating, for example, door-to-door or mail order sales (2000, 2002, 2004 and 2006); several amendments of the Installment Sales Act including the extension of its scope of application and the effects of the amendment of the Specified Transactions Act (from 2000 to 2006); the far-reaching 2006 reform of the Act Concerning the Regulation of Credit Business, the Act Concerning the Control of Receiving Capital Subscription, Deposits and Interest on Deposits and the Interest Rate Restriction Act in connection with the multiple debts problem; the enactment and amendment of the Act on Sales of Financial Products concerning financial transactions (enacted in 2000, amended every year between 2003 and 2006); the important amendment of the Act on Sales of Financial Products by the securities and exchange law reform (2006); and the Insurance Law (Commercial Law) reform movement which began in 2006. And in June 2008, this series of amendments was joined by the amendment of the Specified Transactions Act and the Installment Sales Act. All of these enactments and amendments have been substantial and have significantly changed the legal provisions regarding consumer-related problems. Japanese consumer law originates from administrative regulations, including state and regional administrative measures against business entities. During the 20th century, private law regulations were added. Therefore, laws such as the Specified Transactions Act, the Installment Sales Act or the Securities and Exchange Act that had originally been enacted as business regulations were supplemented by rules for the benefit of consumers. Such enactments and amendments occurred during the second half of the 1990s until the beginning of the 21 st century, and they contained provisions having civil law consequences on the relationship between business operator and consumer. The Consumer Contract Act (Sections 4, 8-10), the Product Liability Act (Section 3) and the Act on Sales of Financial Products (Sections 5 and 6) are examples of laws created as special acts of the Civil Code aiming at determining the private law rules between business and consumers. Additional interesting developments can be found in the amendments for the prevention of misrepresentation in the contractconcluding phase that affects the consumers' self-determination right. Business regulation laws focused on administrative norms are equipped with provisions carrying civil law consequences such as avoidance (e.g., Specified Transactions Act Sections 9-2, 40-3, 49-2, 58-2). These rules with civil law consequences have actually positively affected the resolution of consumer disputes. 2009] RECENT DEVELOPMENTS IN JAPANESE CONSUMER LAW 805 Reform of the Consumer Life Product Safety Act and the law regulating the money lending business were expressly aimed at protecting consumer interests including their safety and property rather than business interests. Traditionally, the political emphasis in Japan has been prioritized industrial development, but in the past few years there has been a turn towards respecting the consumer. This led to more regulations requiring consumer-oriented administrative measures. This legislation embodies the 21st century consumer policy. It is characterized by the transformation of the Consumer Protection Fundamental Act into the Consumer Basic Act. From a marketadministration point of view, the idea behind this transformation has evolved from consumer protection to consumer independence, and the emphasis has been shifted from ex ante to ex post regulation. Furthermore, the promotion of transparency and compliance management and establishing consumer rights as basic principles have been introduced in the Consumer Basic Act. In this transformation process two tendencies in the consumer law domain have to be pointed out. The first is the increase of substantive law provisions with civil law consequences (private law rules) and the second i (...truncated)