Ihave a question I wonder if someone could answer. It seems to me that if Japan is to develop a predictible base of law to govern the ticklish issues that arise on boards in cases such as TOBs and MBOs,that basewill have toevolve via case law.
But I understand that most civil law nations do not observe the legal principle of stare decisis. What is thesituation in Japan? If not stare decisis, what principles are (or are not) observed in Japan, and how much faith can we have that Japan will be able to develop well-crafted judicial precidents that will give boards useful rules of thumb for best practice?
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Unlike US courts, Japanese courts almost never cite, describe, distinguish, etc. other cases. In the US you expect a court facing a case where the precedents don’t give a clear answer to go through the precedents, describe what was at stake, summarize the reasons the earlier courts gave, etc. This is the methodology of the common law. Japanese courts do consult precedents but they don’t tell the reader which ones they consulted, what the cases said or how the cases logically or otherwise affected the reasoning and outcome of the case at hand.
The fact that Japanese courts don’t have to put their cards on the table by citing specific precedent means that in practice they are free to ignore precedent and frequently do. The line of cases on the so-called “Japanese poison pill” culminating in the Bulldog Sauce case are illustrative. Prior to 2005 Japanese case law held consistently that a company could not issue stock or stock rights if the “primary purpose” was to thwart a takeover. This case law stood in the way of the poison pill. In 2005 Livedoor made a hostile bid for Nippon Broadcasting Service (NBS). To block the bid, NBS issued a slug of warrants to its affiliate, Fuji Television. The Tokyo High Court ruled that the issuance of warrants was invalid because its “primary purpose” was to block a hostile bid, but then went on to add detailed (and gratuitous) dicta that established four new detailed categories of “abusive acquirers” which it would be OK to try to block using warrants. Where these four new categories came from, or what they had to do with the disposition of the case, were never explained. Then, in 2007, Bulldog Sauce shareholders voted to cause the company to issue warrants, the effect of which was coercively to cash out Steel partners as a shareholder. The Tokyo District Court, ignoring both the old “primary purpose” cases as well as the Livedoor-NBS “abusive acquirer” categories, created yet another rule, to the effect that if a large number of shareholders approve an issuance of warrants against a specific bidder, the approval is presumptive evidence that the bidder was somehow “abusive” and deserved to have his bid blocked. The Tokyo High Court, on appeal, then went in a completely different direction and redefined “abusive acquirer” to mean any profit-motivated financial investor that was not in the same business as the target company. The Supreme Court ended up with a position that was similar to, but again somewhat distinct from, the District Court. In none of the cases is there a specific discussion of what the relevant precedents or lower courts actually say. The whole process is a kind of legal shadow boxing that leads to results that are pulled out of a black box.
First, the "predictable base of law" does not necessarily have to develop through case law. Some Ministry developing detailed guidelines or regulations for board behavior would be another option and is certainly the way a lot of law is developed in Japan in other areas.
That said, a lot of corporate law in Japan is understood, studied and analyzed through the lense of court cases. However that is not the same as "case law." Japanese court cases are perhaps better thought of as examples of "case logic" and possibly court policy.
Also, remember that litigation in Japan tends to be the exception rather than the rule, so such precedents that do make it onto the books are likely to be exceptional cases which may not provide as much guidance as in an Anglo-American system. Furthermore, while lower court judges are likely to be under pressure to follow Supreme Court Precedents, the Supreme Court itself may not be as reluctant to depart from its past decisions as the U.S. Supreme Court.
Thus, cases will provide some of the predictability you consider necessary, but probably never to the same degree as in some other systems. In any case, the avoidance of rules that are too predictable in terms of binding courts and other authority figures is a recurring theme in Japanese law so I do not know how much can be expected here.