Q3. How to recover money in Japan

A3. In cases such as where a lender seeks repayment of money lent or a seller seeks repayment of the purchase price, the usual first step for the party seeking repayment of money (“Claiming Party”) will be to have a letter of demand sent from a law firm to the other party (“Responding Party”). The letter will demand the payment of the money within a certain period of time (such as within 10 days of receipt of the letter) and will be sent by contents-certified mail.

If the Responding Party does not pay the money in accordance with the letter of demand, the usual next step for the Claiming Party will be to file a lawsuit against the Responding Party. Although arbitration or mediation may be an option, filing a lawsuit is considered to be a more direct and stronger measure for recovering money.

The court of first instance will be the district court if the claim is for more than 1.4 million yen. If the claim is for 1.4 million yen or less, the summary court will be the court of first instance.

The fee payable to the court for commencing a lawsuit depends on the amount of the claim. For example, if the claim is for 50 million yen, the court fee will be 170,000 yen. A small amount of postage fees will also have to be paid by the Claiming Party upon filing of the lawsuit.

Most documents written in a language other than Japanese which are submitted to the court (including those submitted as evidence) must be accompanied by a Japanese translation.

The length of the court proceedings will depend largely on how complex the case becomes. The court will quite often encourage the parties to reach a settlement during the court proceedings.

If the court renders a decision which orders the Responding Party to repay a certain amount of money but the Responding Party still refuses to repay such money, the Claiming Party may enforce the decision by applying to the court to enforce the decision and to attach certain assets of the Claimed Party.

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