Law

Debt collection practices in Japan

By Seiichi Yoshikawa, Koga & Partners

In Japan, the debt collection process is normally started by an attorney sending an official letter of demand for payment to the debtor. If this letter turns out to be unsuccessful, the creditor commences legal action.

If the creditor has reason to suspect that the debtor may conceal the assets on which a subsequent court judgment can be enforced, it is advisable for the creditor to obtain an order for provisional attachment of the assets. Such an order is normally issued by the court without the knowledge of the debtor upon payment of a security deposit (usually one third of the claim, but can vary depending on the weight of evidence to support the validity of the claim) by the creditor, whose deposit will be refunded if the creditor wins the subsequent main suit. Japanese lawyers normally undertake a debt collection case if a retainer fee and a success fee are arranged. The former is charged up front and the latter upon recovery of the claim. Both are calculated on the basis of the amount involved. These fees are decided by the parties' agreement on a successive diminution basis, and are typically 5% (retainer) and 10% (success fee) if the amount involved is around US$100,000. A foreign judgment can be enforced in Japan by obtaining an enforcement judgment.


Seiichi Yoshikawa, Senior Partner
Koga & Partners, Tokyo, Japan
T: +81 33 578 86 81
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Mr. Seiichi Yoshikawa is a senior partner of Koga & Partners and has handled many international litigations and arbitrations, including debt collection cases. He has served as Vice President of Japan Federal of Bar Associations and Councillor of the International Bar Association.

Koga & Partners is based in Tokyo, Japan. Its practice areas include international litigation and arbitration, finance, competition law, mergers and acquisitions, media law and general corporate matters

 

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