There almost always comes time to collect your monetary claim when you do business. It is still the case in Japan. You may consider several legal measures in such a situation. In this article, we explain the general debt collection workflow widely used in Japan.
Sending a Formal Demanding Letter in the Name of a Japanese Attorney (bengoshi)
It is a good idea to start the process by sending a demanding letter in the name of a Japanese lawyer (bengoshi). This letter has no legally binding effect, though. It serves to warn the Japanese debtors that legal action may take place if they don’t pay the debts voluntarily.
Based on our experiences, however, this works relatively in high success rates, particularly in Japan. That is because Japanese people highly value social reputation.
Also, this is effective especially for the companies that have not set an office in Japan. Sometimes the Japanese debtors misconceive that foreigners cannot find a way to collect the money far away from Japan. A formal demand letter from a Japanese lawyer calls their attention that they can be held accountable by the subsequent legal actions from the creditor’s Japanese attorneys.
Getting a Payment Order from Japanese court
This is also optional. A payment order application is a summary procedure whereby you can get the court order in a more convenient, inexpensive, and prompt way compared to a formal lawsuit.
The Japanese court issues a payment order by only reviewing the underlying documents and evidence presented by the applicant. The debtor is not summoned nor questioned. If no objection is raised by the debtor within 2 weeks after the debtor received the order by mail, you can get a preliminary enforcement order from the court by filing an application within 30 days.
With this preliminary order, you can seize the debtor’s assets located within Japan. If the debtor files an objection, the court regards your request for a payment order as a filing of a lawsuit and the formal trial against the debtor begins at the court.
Filing a Lawsuit
If the debtor refuses to follow the formal demanding letter, you will need to consider filing a lawsuit with the Japanese court or an application for a payment order.
It is very important, before filing a court action, to check whether the debtors have sufficient assets in Japan. Also if they have, it is a good idea to put a preliminary attachment against the debtors’ assets before filing the suit.
Alternatively, you may choose to apply for mediation with the Japanese court.
Filing a Compulsory Execution
This would be the final legal resort to claim your monetary claim in Japan. But, if the debtors have no assets in Japan, this will help you nothing. Therefore, it is very important to monitor the Japanese debtor’s financial condition periodically. Japanese attorneys can locate the debtor’s assets in Japan to a certain degree.
Also filing a criminal complaint would be considered. In Japan, although it is not widely accepted, business money trouble could result in a criminal accusation and punishment depending on the case. Thus, consulting a Japanese lawyer would be advisable.
For further information on debt collection in Japan, please reach out to us by clicking here. Our Japanese lawyers in Tokyo and Osaka offices have been serving foreign clients to secure their rights and collect unpaid claims in Japan.
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