Published on July 3, 2023
Job titles and other details are as of the time of publication.
(The interview was conducted in Japanese and was thereafter translated into English.)

Japan's contract law is not an adequate lubricant to encourage smooth economic activities

I conduct research on commercial transactions, international business law, and corporate law. My research focuses particularly on international comparisons of contract law as well as business law with a view to possible digital transformation (DX) of contract practices.

In Europe and the United States, contract law is the single most important area of international commercial law. International contracts and contractual negotiations serve as the basis for corporate legal staff and international lawyers to engage in their work, which is closely related to the history of the development of contract law. In American contract law, for example, a theory was developed that defines contracts in terms of economics based on the idea of devising rigid rules from the perspective of creating optimal investments in society. This is also true for European contract law. Therefore, we can assume that contract law in Europe and the United States serves as a lubricant for commercial transactions and the overall economy.

On the other hand, Japanese contract law is unique and deviates from Western standards. This is particularly evident in court cases when the issue is whether a contract has been concluded. When the conclusion of a contract is in dispute, Western courts typically look at the communication between the parties during contract negotiations in order to identify precisely which words and deeds constitute an “offer” and which ones constitute “acceptance.” As a rule, a degree of rationality is presumed to be found in the words and deeds of the “offer” and “acceptance” as an economic activity. However, this approach is not applied in Japan, and cases are judged more often based on the ambiguous feelings shared by the parties. Of course, this style was developed in accordance with the Japanese way of thinking, but in my opinion, it has fatally narrowed down the role of contracts as a lubricant for economic activities. Why has this happened and what should we do about it in the future? I would like to disseminate my questions and suggestions while bridging the gap between academia and businesses that use commercial transaction laws.

In addition, contract-related practices are expected to undergo significant transformation alongside innovation. I would like to disseminate information on how corporate law should evolve while incorporating tools such as legal tech.

As a student I failed to see how the provisions of law and judicial precedents could help us

I entered the University of Tokyo’s Faculty of Law with no strong motivation to study law, and sitting in my commercial law and civil law classes, I had no idea how the provisions of law and judicial precedents could help us. I often wondered why I was studying law.

I also felt a sense of distance from the bar examination. At the time, there were only about 500 successful applicants for the bar exam each year, and I did not think that I could simply devote four years in university just studying for this exam.

I spent my time enjoying university life in general, such as managing the tennis club, and living such a life, I gradually came to believe that I should pursue a career with a global perspective. I wanted to find a job in international trade, though I was not a fluent speaker of English. So I focused my job search on trading companies and decided to work for Mitsubishi Corporation (MC).

At work I was struck to find how little I actually knew about legal matters

In my second year with MC I was stationed in the Philippines for a year. My role was to manage projects as an administrator of a local power plant construction project. During that year, a thought lingered in my mind, and after I returned to Japan in my third year, I finally realized how little I actually know about the laws related to business deals.

I admit that I did not even think about taking the bar exam, but I did study law in university. Nevertheless, I realized how little I knew about the law. At the same time, I felt that having a core was essential to build my career in the business world, and I began to think that this core should be the law. Around that time, I happened to make a connection with the head of the legal department, who asked me to join his team. I was transferred to the legal department in the fall of my fifth year.

I was transferred to the legal department and studied abroad to find the connection between law and practice.

I came to realize two things after I joined the legal department. One is that the law I had learned as a student (what is written in books) and the law in practice (what is happening in reality) was closer than I had realized. In carrying out tasks I often thought, “This is what the teacher was talking about in class!”

The other is the importance of academia. Academic theories and ideas overtly and covertly influence corporate legal practice. In some cases, we unconsciously incorporate them in legal practice, while in other cases we resist them. It seems that you can see the connection between business and academia more easily when you work in a corporate legal department.

Then in 2002, MC dispatched me to Columbia University Law School. As I mentioned earlier, my research theme was contract law, which is the core of contract practice in Europe and the United States. I received guidance from professors at the university, participated in seminars, sometimes visited their offices to discuss and refine my ideas, and compiled these ideas in my master's thesis. Immersed in the law school environment, I began to enjoy conducting research.

I returned to Japan in 2004, and I began to write papers around that time. I continued to research in my spare time while working at MC, and I published a paper on contract practice in 2010, supported by a professor at the University of Tokyo, after returning from my stay in London. Thanks to the professor, I was able to build connections with academic societies and researchers and to accumulate experiences as a part-time assistant professor at the University of Tokyo Law School. In this way, I established my new lifestyle. I remain grateful to MC for understanding my activities during that time.

Building a bridge between academia and practice as well as companies and students

I ended up leaving MC to pursue a career in academia and have engaged in research and education at Hitotsubashi University since 2022. Here I do not want to focus exclusively on academic work but also build a bridge between academia and practice.

One of the roles I could play as a bridge is to disseminate information on how to transform Japanese contract law and contract practice, which, as mentioned earlier, are different from Western ones and do not fully serve as a lubricant for economic activities. Why is this happening and what do Japanese contract law and practice lack? I focus on these points and explore them as research themes. As someone with practical experience working in a legal department, I believe I should take on this mission.

In terms of building a bridge, I would also like to connect companies with students. When I talk with students, I find them far more interested in the ongoing practical works in society than I had imagined. However, they do not have sufficient contacts with society. I would like to use my personal connections to provide them with opportunities to make these contacts with society and help them choose their career paths.

In addition, companies have recently been undergoing digital transformation (DX). In terms of business law, they are now using artificial intelligence (AI) for automatic drafting and reviewing of contracts. This is called legal tech. Moreover, the emergence of generative AI such as ChatGPT is having a powerful impact that will fundamentally change the business law practice. Various global players are exploring business opportunities through the process of trial and error to understand how to make effective use of these new technologies. I would like to actively disseminate information on how Japan can accomplish legal DX that will help the country become globally competitive in the field of business law. For students, I plan to collaborate with companies that offer legal information services to provide them with opportunities to learn how to use databases and to create contracts using AI.

Aiming to nurture students capable of developing an omnidirectional perspective as future managers

In building up knowledge in legal tech and other areas, I will tell students what roles business law should play and how important commercial transaction law can be as a lubricant for economic activities.

In Japan, legal risk management is considered to be the responsibility of the legal department, but enterprise risk management, which is crucial for a company’s survival, needs to employ an omnidirectional perspective covering all issues that impact management. It is important to always consider business law issues and legal risk management from a manager’s perspective.

In other words, if students can develop such a broad perspective while studying at university, it will greatly help them when entering the workforce. That is why we must make sure to provide students with information on the reality of facing legal risks. This is where I find value as a researcher serving as a bridge between academia and practice as well as companies and students.