Japan: The introduction of a privilege-style system

Author: | Published: 23 Sep 2019
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Nagashima Ohno & Tsunematsu

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On March 12 2019, the Japan Fair Trade Commission (JFTC) announced that it would establish guidelines and rules under Article 76 of the Anti-monopoly Act (AMA) in relation to the treatment of confidential communication between an enterprise and its attorneys. The purpose of establishing a 'privilege-style system' is to make the revised leniency programme effective and ensure the appropriateness of administrative investigation procedures.

The privilege-style system would apply to documents that contained confidential communications between an enterprise and an attorney regarding legal advice concerning the issue of the unreasonable restraint of trade (cartels, bid-rigging, and so on) in administrative investigation procedures by the JFTC. The privilege-style system does not apply in the context of any other relevant legislation, such as the Code of Civil Procedure or the Code of Criminal Procedure.

General requirements for protection under the privilege-style system are set forth below with further detailed rules to be announced in due course:

  • The enterprise must request protection under the privilege-style system at the time the JFTC issues an order for document submission.
  • Documents to which protection under the privilege-style system is sought must be properly stored, including with respect to the title of the document, place of storage, and maintenance of confidentiality.
  • The enterprise must submit a document list within a specified period of time. The list should include the date and time each document was prepared, the name of the person who prepared the document, a summary and so on, for each document for which privilege-style treatment is sought.
  • If documents that do not satisfy the requirements are included, the enterprise must submit a copy of such document or report its contents to the JFTC.
  • Documents for which protection is sought must not have illegal purposes.

In order to avoid decreasing the incentive to cooperate with the JFTC's investigations, the use or non-use of this system will not be taken into account when evaluating the relevant enterprise's level of cooperation with a JFTC investigation.

With regard to the procedure for determining whether privilege-style protection will be granted, a screening officer of the secretariat of the JFTC (which is different from the Investigation Bureau of the JFTC) will review the documents and determine whether they satisfy the above requirements.

For enterprises doing business in Japan that are exposed to a globalising and complex business environment, privilege-style protection is essential for obtaining legal services based on unrestricted information. However, the government has thus far refused to introduce privilege-style protection generally out of concern that it could limit the broad investigative powers of the Japanese regulators or adversely affect the Japanese regulatory environment. The privilege-style system discussed here has been designed in a limited manner so that it would not affect the laws or other regulations in Japan. The introduction of this system is an important step forward despite its limited scope, as it could be a touchstone of attorney-client privilege in Japan. The implementation and operation of the system should be carefully monitored.

Nobuyuki Katsu