Insights from a Japanese Lawyer on Choosing the Right Language for Contracts under Japanese Law
Setting the Scene: Contracting Under Japanese Law
When two parties—whether companies or individuals—decide to enter into a contract governed by Japanese law, it’s common (and strongly recommended) to include a governing law clause specifying that Japanese law applies. It is equally important to designate exclusive jurisdiction, typically by agreeing that disputes shall be resolved in Japanese courts.
This article addresses a question that often arises in such situations, especially for international parties:
What language should we use to draft the contract? English, Japanese, or both?
While English may feel like the “neutral” or “international” choice, this post explains why—if Japanese law governs and disputes are to be resolved in Japanese courts—drafting the contract in Japanese (and only in Japanese) is not just safer but practically essential.
As a Japanese lawyer, I have seen firsthand how language choices impact not just interpretation, but the likelihood of disputes. Taking care at the drafting stage—especially with language—can save years of conflict and significant legal costs later on.
Mutual Benefit of Using Japanese as the Sole Contract Language
If your contract is governed by Japanese law and subject to Japanese courts, it should be drafted entirely in Japanese. Not just any Japanese, but legally precise Japanese that reflects statutory definitions and judicial interpretations recognized under Japanese law.
Why? Because the primary function of a contract is not just to record agreement, but to provide clarity and predictability in the event of a dispute. And predictability is only possible if the court—and both parties—interpret the contract in the same way.
1. The Purpose of a Contract Is Predictability, Not Just Agreement
Contracts are often seen as tools for formalizing mutual agreement. But in legal practice, their deeper purpose lies elsewhere: to enable both parties to foresee how a court will interpret their rights and obligations if a dispute arises.
If each party has a different understanding of what the contract means—due to ambiguity, conflicting translations, or differing legal assumptions—then early resolution becomes difficult, and litigation becomes more likely.
Worse still, the contract fails in its most vital role: giving both sides a shared and stable reference point.
2. Bilingual Contracts Introduce Legal Uncertainty
Including both English and Japanese in a contract may seem like a diplomatic compromise. However, in practice, it introduces several risks:
- Each party may favor the language that supports their position.
- Disputes can arise over which version takes precedence if no clear “prevailing language” clause is included.
- Japanese courts may be forced to choose between conflicting interpretations, adding to uncertainty.
This uncertainty undermines the contract’s role in dispute prevention. The very act of including two languages can turn into a legal battleground.
3. English-Language Contracts Must Be Translated in Japanese Courts
Under Japanese civil procedure rules, all evidence submitted to the court must be in Japanese.(Article 74, Courts Act Act No. 59 of April 16, 1947 ) This means that English-language contracts must be accompanied by translations, which introduces additional complications:
- Translations can vary significantly in nuance and meaning.
- Each party may submit a different translation aligned with their interests.
- Courts may be faced with competing versions of “what the contract really says,” even if both derive from the same English text.
This situation not only causes confusion in court, but may lead to unpredictable and inconsistent judgments—defeating the core purpose of having a contract in the first place.
4. Even a Japanese-Language Contract Must Use Legal Japanese Thoughtfully
One important caveat: merely writing the contract in Japanese is not enough.
Even a Japanese-language contract can cause interpretative problems if it doesn’t align with statutory definitions or established judicial interpretations under Japanese law. If legal terms are used loosely or colloquially, or if definitions diverge from those recognized by the courts, room for disagreement remains.
Therefore, when drafting a Japanese-language contract, it’s critical to:
- Use terms that correspond to legal definitions under Japanese statutes.
- Be aware of how the Supreme Court and other judicial bodies have interpreted those terms.
- Avoid ambiguous or overly broad phrasing, even in Japanese.
Key Takeaways for International Parties
If you are contracting under Japanese law and submitting to Japanese court jurisdiction:
- Use Japanese as the only contract language to avoid interpretation disputes.
- Avoid bilingual drafting, unless absolutely necessary and with a clear prevailing language clause (though still not recommended).
- Ensure the Japanese is legally accurate, using established legal terms and interpretations.
- Work with a lawyer familiar with Japanese contract law to ensure predictability and minimize litigation risk.
Contracts are not written just for the moment of signing—they are written for the worst-case scenario: when things go wrong. If a Japanese court will ultimately decide your rights and obligations, then your contract should speak clearly in the language the court uses—not just linguistically, but legally.
A Helpful Tip for Those Worried About Using Japanese as the Sole Language
I understand you might feel uneasy—perhaps you’re thinking:
“If the contract is written only in Japanese, how can I be sure nothing unfavorable is being imposed on me?”
That’s a very natural and understandable concern. Fortunately, there are several ways to alleviate your worry and ensure the fairness of the process:
- Provide a High-Quality Translation
Even though the Japanese text will be the official version, you can request a professional English translation from the start. This translation will help you fully understand the content, ensuring you don’t miss any details.
. - Clearly Explain Why Japanese Benefits Both Parties
Share this article with your contracting partner. Make sure they understand that using Japanese as the contract language is not about gaining a hidden advantage, but about creating legal certainty, clarity, and predictability. Emphasize your shared goals: avoiding disputes and ensuring a stable business relationship.
. - Engage in Transparent Discussions
Don’t hesitate to openly discuss your concerns. A good-faith negotiation includes addressing language and interpretation openly. Expressing your worries directly often leads to greater trust and improved contract terms for everyone involved.
. - Confirm the Common Goal of Contractual Stability
Remind all parties that the ultimate aim is the same: a stable and predictable legal framework. Contracts exist to clarify, not confuse. Both parties benefit equally from avoiding costly misunderstandings or litigation.
. - Understand the Structure of Japanese Law
Japanese law differs significantly from Anglo-American legal systems. Japan uses a civil law system, where courts interpret contracts based on written statutes enacted by the legislature. Judges are full-time professionals, not lay jurors, and there is no jury system in civil trials. This means that legal interpretations are generally consistent and stable, especially when the wording of the contract aligns with legal terminology and established statutory usage.
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Unlike in common law systems, where past judicial decisions (case law) and unpredictable jury outcomes can complicate matters, Japanese courts offer a high degree of predictability—provided the contract is drafted carefully and in accordance with Japanese legal concepts.
So while in common law jurisdictions, contracts often aim to “lock everything down” to avoid interpretative flexibility, under Japanese law, you can actually achieve considerable legal certainty through well-crafted Japanese wording that mirrors how Japanese courts apply the law.