Japan's New Product Liability Law: Achieving Modest Success

By Rothenberg, Phil | Law and Policy in International Business, Winter 2000 | Go to article overview

Japan's New Product Liability Law: Achieving Modest Success


Rothenberg, Phil, Law and Policy in International Business


I. INTRODUCTION

On July 1, 1994, the Japanese Diet passed a bill that introduced the concept of strict liability for products produced and sold in Japan.(1) The New Product Liability Law (seizobutsu seikinin ho) (New PL Law) came into effect one year later on July 1, 1995,(2) and has caused a great deal of excitement and anxiety among Japanese manufacturers and consumers alike.(3) Prior to the New PL Law, consumers had to bring product liability claims under either the civil code, which is similar to tort liability, or under a contract liability theory.(4) Under these laws, plaintiffs had to prove negligence on the part of the manufacturer,(5) a difficult task due to the structure and evolution of the Japanese legal system. Masato Ata, deputy manager of the liability insurance section of the non-marine underwriting department of Tokyo-based Mitsui Marine & Fire Insurance Co., Ltd., noted that proving negligence is "a daunting task for consumers because, in most cases, they usually do not have information or knowledge pertinent to prove a manufacturer's negligence in producing goods, as such information is hidden in the corporate archive beyond their reach."(6)

In 1990, the Japanese Ministry of International Trade and Industry (MITI), when considering the introduction of the New PL Law, stated that the increasing number of complicated high-tech products sold in Japan meant it was increasingly hard for consumers to establish that a defect in a product existed and that this defect resulted from intentional or overt manufacturer negligence.(7) Thus, exactly how the introduction of strict liability would affect consumers and producers alike was greatly anticipated.(8)

As part of the U.S. tort system, strict liability was created by Justice Roger Traynor in the famous case of Escola v. Coca Cola Bottling Co.(9) While the majority favored the use of a negligence standard, Justice Traynor wrote in a separate opinion that he preferred to impose "strict liability" on the manufacturer.(10) Traynor saw Coca-Cola as a powerful economic actor in constant pursuit of profit and wealth.(11) Coca Cola's use of advertising and marketing devices such as trademarks, Traynor wrote, expanded the company's obligations to the consuming public.(12) Therefore, manufacturers should seek to avoid harm and pay compensation when harm occurs.(13)

As manufacturers are more likely to anticipate and prevent product hazards than consumers, Traynor believed that imposing "absolute liability" on defective product manufacturers would be the most effective way of reducing such hazards(14) because "[t]he consumer no longer has means or skill enough to investigate for himself the soundness of a product."(15) Today it is even more difficult for consumers to understand the real causes of injuries and to find effective ways to avoid them, especially when complex, technologically advanced devices are involved.(16) Product manufacturers are better positioned to foresee potential risks and prevent possible injuries.(17)

Since its introduction in Japan, the New PL Law has been criticized as not going far enough to provide claimants with adequate remedies for product-related injuries. To truly examine whether the law is effective or not, however, one must understand what the law was trying to achieve. In general, tort law has two goals. First, it seeks to change behavior. Second, it attempts to punish bad behavior. The tort system creates incentives in the form of potential damage awards and other costs associated with tort liability, such as out-of-pocket expenses for lawyers, witnesses, and investigation, in addition to aggravation and possible negative publicity.(18) These incentives encourage potential injurers to curb their dangerous activities.(19)

The purpose of the New PL Law is to "protect the harmed person, and thereby (motte) to contribute to stability and improvement in consumer life (shohi seikatsu) and to the sound development of the national economy. …

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