Product Liability 2009 - Arnold & Porter LLP

Chapter 27
Japan
White & Case LLP
1 Liability Systems
1.1 What systems of product liability are available (i.e. liability
in respect of damage to persons or property resulting from
the supply of products found to be defective or faulty)? Is
liability fault based, or strict, or both? Does contractual
liability play any role? Can liability be imposed for breach
of statutory obligations e.g. consumer fraud statutes?
Persons and legal entities (hereinafter “Claimant(s)”) may seek
compensation for having been injured by a “defective” product
through one of several legal avenues. Traditionally, such claims
were brought as tort claims under the Civil Code of Japan (the
“CCJ”), but since 1996, claims have also been able to be brought
under the Product Liability Law (Law No. 85 of 1994, the “JPLL”).
Claims may also be brought under breach of contract theories and,
depending on the nature of the product involved, there may exist
publicly or privately funded insurance schemes.
Under the JPLL, a Claimant may seek compensation for damages
caused by a “defective” product. The JPLL, like its counterparts
around the world, alleviated the evidentiary burdens that were
placed on Claimants who were forced to bring tort claims for
damages against manufacturers and importers of defective
products. Under the JPLL, a Claimant is relieved of the burden of
proving that the manufacturer or importer owed a duty to the
Claimant and negligently or intentionally injured the Claimant.
Instead, under the JPLL, the Claimant need only prove that the
product was defective and that the defect was the cause of the
injuries suffered.
Simply stated, the JPLL imposes liability on a “Manufacturer”
(defined in question 1.3 below) of a “Product” for personal injury
or property damage caused by a “Defect” existing in the “Product”,
regardless of whether it was domestically produced or imported by
the Manufacturer (JPLL § 1). A “Product” is defined to include any
“movable property manufactured or processed” (JPLL § 2(1)) so
the scope of the JPLL excludes non-movables such as real estate,
energy or unprocessed and unharvested agricultural products.
The JPLL defines a “Defect” as a lack of safety which ordinarily a
Product should possess, taking into consideration: (i) the
characteristics and nature of the Product; (ii) the ordinarily
foreseeable uses of the Product; (iii) the state of knowledge and
technology at the time of manufacture and/or delivery; and (iv) any
other relevant circumstances relating to the Product. Defects can be
broadly categorised into three groups. A design Defect arises when
the design of the Product does not sufficiently consider safety issues
relating to use, handling or storage of the Product. A warning
Defect arises when the Manufacturer does not properly warn
ICLG TO: PRODUCT LIABILITY 2009
© Published and reproduced with kind permission by Global Legal Group Ltd, London
Yuji Ogiwara
David E. Case
consumers of the not readily apparent dangers associated with use
of the Product and does not properly instruct the consumer on how
to use, handle or store the product to avoid such dangers and risks.
A manufacturing Defect arises when a Product is improperly
manufactured. Whether a Product is defective is determined on a
case-by-case basis and is fact specific to the Claimant’s own
handling, use and storage of the Product.
Liability of the Manufacturer is strict once it is found that they sold
a defective Product, but the amount of damages ordered to be paid
may be reduced if the court finds that the injured Claimant’s own
negligence or misconduct played a part in the amount of damage
suffered.
In addition to the JPLL, a Claimant may also bring breach of
contract or tort claims under the CCJ. Provided a direct contractual
relationship exists between the injured party and the seller of the
defective product, breach of contract claims or implied statutory
warranties may be brought under CCJ Article 415 (Liability for
Incomplete Performance of Obligation) and CCJ Article 570
(Warranty against Latent Defect). In most modern consumer
transactions, the consumer does not typically have a contractual
relationship with the manufacturer so the foregoing causes of action
by a consumer against a manufacturer are not typically possible in
today’s world of e-commerce, having a direct contractual
relationship with the importer and seller of a product has become
more common.
If no contractual relationship exists and if a claim brought under the
JPLL is unsuccessful, an injured party may bring a tort claim under
CCJ Article 709. CCJ Article 709 allows Claimants to claim that a
third party has infringed upon or violated their “right” or “legally
protected interest”. A suit brought under this article is akin to a
traditional tort action in common law jurisdictions. CCJ Article 709
provides that “[a] person who violates intentionally or negligently
the right of another is bound to make compensation for damage
arising there from”. But while this general right of remedy is
available to any person injured by a person or thing, the burdens of
proof placed on Claimants are high in the case of a product liability
suit, making the chance for success in a product liability context
low. As such, Article 709 is viewed as a last resort for persons
injured by a defective product.
Finally, the Consumer Contract Law (Law No. 61 of 2000 as
amended, the “CCL”) protects consumers in their dealings with
merchants. However, while this law limits the extent to which a
seller of a product may disclaim warranties relating to a product or
restrict the remedies available to a purchaser injured by a product
sold by the seller, this law does not offer a cause of action for
damages caused by defective products.
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