Risk Management and Governance for PFI Project ... - Title Page - MIT

Appendix 1: Japanese-Style Governance System for
Public Projects
This appendix considers the general problems separate from the specific problems in a PFI.
Looking at the traditional “Japanese-style” governance system in public projects, you can see that it
is quite different from those of other developed countries and has some general issues in social
structures.
As stated in this paper, a PFI is based on contractual governance, where the contract defines the
detailed risk allocation and specifies the responsibility sharing. The PFI project can be delivered
only when the contract can properly function. However, the Japanese legal system is quite different
from those of other countries. The Japanese institution of public purchase is also distinct compared
to them. This appendix explores the mechanism of Japanese contractual governance and mentions
the existing problems in the recent global movement.
Legal System
To begin, this section considers the legal environment in Japan. Table 13 shows that the number of
legal professionals and civil suits in Japan are much smaller than from other countries, including the
US and EU countries.
Table 13: International Comparison of the �umber of Legal Professionals and Civil Suits
Legal professionals
(judges, prosecutors)
[in 1997/1998]
Japan US UK Germany France
Total number 20,000 941,000 83,000 111,000 36,000
Per 10,000 people 1.59 34.48 14.08 13.51 6.1
New qualified 1,000 57,000 4,900 9,800 2,400
Number of civil suits (ten thousand) [in 1997] 42 1800 233 210 111
Source: Yamada (2002) "Law School" Heibonsha Ltd., Publishers; Murayama, et al. (2003) "Sociology of
Law", Yuhikaku Publishing
It has been said that the Japanese tend to avoid contention, value a spirit of harmony and try to
negotiate a solution as much as possible even if there is a conflicting opinion. For example, Prof.
Takeyoshi Kawashima, the authority of the sociology of law, stated that in the traditional Japanese
legal consciousness, the rights and obligations are intentionally ambiguous, and it is preferential
that they not be conclusive and clarified. He also stated that in Japan, those who bring a lawsuit tend
to be branded with the words of "crazy lawsuit" and "belligerent". This cultural background has
prevented the legal system from developing compared to other countries. (Kawashima, 1967)
83