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OF YOKOHAMA, JAPAN.
It is indeed a great pleasure to me to have had the opportunity to be present as an invited delegate from the Bar Association of Japan.
It has been frequently stated during the past few years, and the business experience of the commercial world has conclusively proven the truth of such statement, that the business of the industrial nations of the world has so developed that the financial prosperity of each industrial nation depends upon the prosperity of every other industrial nation.
As a result of the recognition of this idea, individuals and companies from all industrial nations are now sending representatives abroad to engage in business. Americans in large numbers have come to Japan and to the Far East and have established offices there. I feel therefore that it might be of interest to the members of this Association to discuss briefly the legal position of foreigners in Japan, and more particularly that of American companies and American citizens and to touch briefly upon a few legal problems that have resulted from the large volume of trade that has grown up between Japan and America within recent years.
The Japanese Commercial Code contemplates that individuals or groups of individuals may do business in the same way that individuals or groups of individuals are authorized to do business under American law. That is to say, an individual can do business in Japan either alone in his own name or under a trade name, or the individual may associate with others and conduct business as a partnership or in corporate form. Americans may either associate in partnership form or in corporate form under the laws of some particular state and thereafter engage in business in Japan under such organization, or they may form such an organization under Japanese law.
If the partnership or corporation is organized under the laws of one of the states of the United States, Japanese law requires that its existence as such an organization under the laws of the state under which it is organized, be proven to a Court of Registration and the fact of its existence as such be registered in that court. The law provides that unless such registration is made, the existence of the Company's branch nobody is bound to recognize in Japan. After an American company or partnership is properly registered in Japan, it acquires the legal status of a foreign company engaged in business in Japan.
In registering a foreign partnership or corporation in Japan, Japanese law requires that a representative for the company in Japan be also registered. Such representative is generally empowered to act as such, by a Power of Attorney from the main office of the company. This Power of Attorney is not registered by the Registration Court in Japan, but is simply filed in that court to prove that such representative was duly authorized by the foreign company in question.
After such representative is registered, Japanese law regards him as having powers that are equal to the authority or powers conferred upon a partner or an executive official of a corporation by American law. Any limitations upon the powers of such representative to act for the company which are expressed in his power of attorney will not be effective as against third persons dealing with each representative in ignorance of such limitations. Furthermore the powers conferred upon such representative continue to operate even after his discharge or removal from office, and the only way to effectively revoke his authorization is to cancel his registration as representative.
Where American citizens form either a partnership or corporation under Japanese law such company when organized and registered acquires the legal status of a Japanese company and such companies have in general all the rights of Japanese subjects even though all of the shareholders in such company may be American citizens, including the right to own land in Japan, which right is, as you know, denied to foreign companies and citizens.
The individual representing foreign companies or the individual American resident in Japan for commercial or other pur
poses is subject to all laws of Japan. In administering the laws of Japan where the rights of foreigners, that is, persons other than Japanese subjects, have been involved, some rather interesting problems have arisen particularly with reference to marriage and divorce.
The Japanese Civil Code contemplates that a marriage may be consummated by agreement, that is to say no formal religious ceremony is required. Persons may consummate a marriage by simply signing an agreement of marriage. The law, however, requires that such agreement be registered with the proper officials and thereafter the parties to such agreement are man and wife.
It was by this means that the so-called “ Picture Bride” marriages were consummated between Japanese subjects resident in America and residents of Japan. It is generally known that as result of protests from the American Government, the Japanese Government has agreed not to give passports to the “ Picture Brides ” who intend to come to America in order to join their unacquainted husbands, so the practice of marrying by picture came to an end.
It is equally easy to obtain a divorce under Japanese law, as a divorce by mutual consent is one of the ways provided for by law. In such a case the husband and wife need only sign an agreement signifying their consent to such divorce and thereafter register such agreement with the proper authorities.
Whether Americans in Japan can obtain a divorce in this same manner depends upon whether they are resident or domiciled in Japan. Japanese law provides that a foreigner can obtain a divorce if by the law of the husband's country a given statement of facts alleged to be the cause was recognized as a lawful ground for divorce, and provided further that such facts are a cause or ground for divorce under Japanese law.
There is one feature in the legal relations between Japan and America, in which I feel that a reform should be instituted, and as it is purely a legal matter, I am of the opinion that such reform would probably have to be initiated by these Associations although its actual consummation would have to be effected by our respective governments.
I refer to the present law in Japan and America as to the enforcibility of judgments in either country which have been obtained in the other country and the possibility of changing this law.
Japanese law adopts the principle that it will not enforce a judgment of a foreign tribunal unless there is a reciprocal treaty to that effect. In the absence of such a treaty Japanese law regards a judgment of a foreign tribunal at most as mere prima facie evidence of the merits of such claim.
I am not fully advised upon the law in all American jurisdictions upon this subject but am informed that in some of the jurisdictions of the United States, the recognition of a foreign judgment depends upon reciprocity. In such jurisdictions a Japanese judgment would therefore not be recognized as such.
Under the present state of law an American commercial company with a very meritorious claim against a Japanese company with a branch office in America may, after reducing such claim to judgment in America find that the Japanese company has little, if
any property remaining in America at the conclusion of its suit from which to satisfy its judgment. Such company on the other hand may have ample resources in Japan from which such judgment could be satisfied. Proceedings would have to be initiated anew in Japan, however, in order to satisfy said claim.
It seems to me that this is not only a most unsatisfactory situation, but one which is not conducive to the free, and full expansion of commercial relations between the two countries. I feel therefore that it is proper for the Bar Associations of America and Japan to take some action looking to a conclusion of treaties between their respective countries to remedy this condition.
One of the most important legal questions involved in International trade is the question of the correct legal interpretation of the various forms of commercial letters of credit which came into use during the war. These instruments as a means of carrying on trade between individuals of companies in different countries are, so far as Japan is concerned, an outgrowth of the war, and as result there is no legal precedent in Japan deciding what their legal effect is. My investigation of the question has led me to believe that the law in the United States governing these commercial letters of credit is also in the making.
The importance of a correct and if possible a uniform interpretation by courts of law of all countries of these commercial letters of credit cannot be overestimated in the opinion of the commercial world. The commercial world has, from my observation, recognized two broad classifications of these kinds of commercial letters of credit:
1. The ordinary commercial letter of credit which is regarded by the business world, as subject to cancellation prior to payment thereunder; and
2. The confirmed or irrevocable letter of credit which the business world regards as not being subject to cancellation,
Shortly after the beginning of the world wide business depression, about a year ago, efforts were made by banks and buyers throughout the business world to cancel confirmed or irrevocable letters of credit. Litigation is now pending in Japan involving the right to cancel such letters of credit and I know of similiar litigation which is also pending in the United States. The commercial world is awaiting the outcome of this litigation with great interest. I feel that a satisfactory legal solution of this question is necessary to the proper conduct of trade between industrial nations.
In Japan the contention is now being made in litigation pending there that an ordinary letter of credit is a form of mandate, that is to say that a letter of credit evidences the authority of the holder to receive payment thereunder, but not the right to demand the payment. The addressee under such a letter of credit such as a branch or the correspondent of the issuing bank, acquires authority to pay the holder, but is under no legal liability to do so. Such a letter of credit is therefore revocable at any time prior to a payment thereunder. The term mandate as used in this sense is the same as a mandate is defined in Articles 603 and 651 of the Civil Code of Japan.
On the other hand in the case of a confirmed or irrevocable letter of credit the issuing bank is under an obligation to pay and in addition thereto it owes a legal duty to give the mandate of payment to the addressee. Therefore such a letter of credit evidences the authority of the holder not only to receive payment but the right to demand payment thereunder. It is still questionable what the nature of the obligation of the issuing bank or its