International Dimensions of Japanese Insolvency Law

This paper offers an introduction and overview of the international aspects of Japanese insolvency law. There are three international dimensions to Japan's insolvency law: jurisdiction of Japanese courts; the status of foreign claimants; and recognition and enforcement of foreign proceedings. These dimensions are characterized by a distinctly territorial approach. This inward-looking way of handling insolvency cases is incongruous with developments in the comparative and international law context. It is also at odds with broader globalization trends, some of which are evident in Japan's economic crisis. Analogies to international trade law are useful: the post-Uruguay Round dispute resolution mechanism has insights for the problem of jurisdiction; the famous national treatment principle is a basis for critiquing the status foreign claimants have in Japanese insolvency proceedings; and trade negotiations might be a model for expanding recognition and enforcement of foreign proceedings. As a corollary, the relationship between the extant insolvency regime and Japanese banks?many of which are internationally active?is explored. Problem banks are at the heart of the economic crisis. Yet, the insolvency law regime has not been applied to failed or failing banks, partly on grounds of the systemic risk that would be triggered by a stay of creditor proceedings. The reluctance to use the regime in bank cases is open to question on a number of grounds. Similarly, the failure to develop a harmonized set of international bank bankruptcy rules to avoid BCCI-type liquidation problems is addressed, and a proposal for proceeding in this direction is offered.