Environmental Law 2022 Comparisons

Japan’s environmental laws consist of a law that provides basic principles for environmental protection (the Basic Act on Environment) and specific laws that regulate each activity.

Japan’s development of environmental law closely tracks its history of serious public pollution issues that it faced from the late 1950s to the 1970s, which was during its rapid industrialisation period after the Second World War. During this period, laws to counter air pollution (the Air Pollution Control Act, 1968), noise (the Noise Regulation Act, 1968), and water contamination (the Water Pollution Prevention Act, 1970) were enacted. In 1971, the Environmental Agency, which was the precursor of the Ministry of Environment, was established to counter pollution issues.

The basic law that encompasses all environmental issues (the Basic Act on Environment) was enacted in 1993 to provide for basic principles on environmental protection that need to be followed by individual regulations. This means that the current multi-layered structure of environmental laws and regulations is a comparatively recent development (ie, individual regulations were established before basic laws that provide principles). 

It should be noted that the highest law of Japan, the Japanese Constitution, which was enacted in 1946 when Japan democratised after WWII, does list the right to enjoy a safe environment as one of the basic human rights protected by the Constitution. Attempts were made via various lawsuits to make the courts acknowledge such right as a Constitutional right, but the Supreme Court of Japan has so far denied such an argument. However, the Constitution does protect the right to life, liberty and the pursuit of happiness (Article 13), and if these are threatened by state actions that harm the environment, an individual may seek a remedy through the court.

Basic Law

Basic Act on Environment

This Act provides the three basic principles for environmental protection, which are:

• enjoyment and future succession of a sound environment (Article 3 of the Act);
• creation of a sustainable society with reduced burden on the environment (Article 4 of the Act); and
• active promotion of global environmental protection through international co-operation (Article 5 of the Act).

The Act requires the Japanese government to establish a Basic Environment Plan, a comprehensive plan for the promotion of environmental protection (Article 15 of the Act). The Act further requires the government to establish environmental standards for air, water, soil and noise, and to adopt protective measures when engaging in projects that may impact the environment (Article 16 of the Act). The Act also provides ground for environmental impact assessments (Article 20 of the Act), the adoption of regulatory measures (Article 21 of the Act) and “economic” measures (ie, incentives) to dissuade polluting activities (Article 22 of the Act). 

Individual Laws

Regulation of polluting activities

Examples of laws regulating polluting activities are:

• the Air Pollution Control Act (1968);
• the Noise Regulation Act (1968);
• the Water Pollution Prevention Act (1970);
• the Waste Management and Public Cleansing Act (1970); and
• the Soil Contamination Countermeasures Act (2002).

Regulation of recycling

The laws related to recycling have a multi-layer structure, with a basic law and individual laws. The basic statutes are the Basic Act on Establishing a Sound Material-Cycle Society and the Act on the Promotion of Effective Utilisation of Resources (2000). There are several individual laws, each enacted due to the needs at the time, including:

• the Act on the Promotion of Sorted Collection and Recycling of Containers and Packaging (also known as the Container and Packaging Recycling Act, 1995);
• the Act on Recycling of Specified Kinds of Home Appliances (also known as the Home Appliance Recycling Act, 2001); and
• the Act on Promotion of Recycling and Related Activities for Treatment of Cyclical Food Resources (also known as the Food Recycling Act, 2000).

Conservation

The laws related to conservation also have a multi-layer structure, with the Basic Act on Biodiversity (2008) at the top; as with other environmental laws, individual laws proceeded the basic act. Individual laws include:

• the Act on Conservation of Endangered Species of Wild Plants and Animals (1992);
• the Act on the Protection and Management of Wild Birds and Mammals and the Proper Administration of their Hunting (2002, but as the name suggests, the law derives from an old law that regulated hunting, the Wildlife Protection and Hunting Act of 1918); and
• the Natural Parks Act (1957).

The main governmental body that is responsible for environmental policy is the Ministry of Environment (MoE). In addition to the MoE, each of the ministries or agencies that oversee the various industries in Japan is also responsible for implementing environmental regulations. For example, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is responsible for implementing automobile emission standards; the emissions standard is devised by the MoE pursuant to the Air Pollution Act.

In addition, authority is also delegated to local governments (prefectures and municipalities). For example, enforcement of industrial waste regulation is the responsibility of the 47 prefectures in Japan.

The investigative and access powers that the regulatory authorities and bodies have with respect to environmental incidents and breaches of environmental laws/regulations depend on the subject of regulation. While it is the MoE that is in charge of the general affairs concerning the protection of the environment, the MoE is not necessary the regulator in every instance. Rather, in many cases, local governments are responsible for monitoring compliance with environmental laws and regulations and their enforcement. Local governments may also have the power to access and inspect private property with respect to environmental incidents.

In addition, it is the role of law enforcement (ie, the police) to investigate and persecute breaches of environmental regulations that constitute a criminal offence, such as the illegal disposal of industrial wastes. After local law enforcement has investigated a case, it will be handed over to the prosecutor’s office, and the prosecutor will determine whether to prosecute the case in a criminal court.

Requirement for Permits

There is no universal rule for the requirement of environmental permits, and it is necessary to check individual environmental laws and regulations to see if a specific activity requires a permit. Sometimes a permit is needed to engage in a certain business, such as industrial waste disposal. There is also a permit for operating certain facilities, such as power plants, and while such may not be purely an environmental permit, following certain environmental protocols may be one of the factors for obtaining a permit. 

Appeal/Challenge

Generally, if a permit is not granted by the government, the applicant has a right of appeal to either the regulatory body that made the decision, or to challenge the decision in court. Also, a party having “legal interest” may challenge a grant of a permit. A person is deemed to have a “legal interest” if the statute aims to protect the person (for example, a statute may allow the person to challenge the permit) or if there is a threat of harm to the life, health, or property of the person (which is a manifestation of the Constitutional right explained in 1.1 Key Environmental Protection Policies, Principles and Laws). For an example of the latter, a person residing near a nuclear power plant may challenge the permit to construct and/or operate the plant.

The key types of liability are (i) civil liability and (ii) criminal liability. Also, depending on the type of pollution, there may also be (iii) regulatory liability.

Civil Liability

Having a “civil liability” with respect to pollution means that the polluter is liable to pay for damages caused by the pollution. The scope of damages is limited, and the polluter will only be liable for damages with a “causal link”, which is often a high hurdle for those seeking damages, because causation in a pollution case is difficult to prove (for example, it is challenging to tie discharge by a certain factory to a resulting illness, which was the case with the famous Minamata mercury poisoning case). In addition, the polluter needs to have been wilful or negligent, which is another hurdle to overcome, but some laws impose strict liability – for example, the Air Pollution Control Act, Noise Regulation Act and the Water Pollution Prevention Act do not require negligence.

Criminal Liability

A polluter may be criminally liable if the regulatory law provides criminal punishment (fines, imprisonment, etc) for violation of its rules. There are two types of criminal liability:

• a law may provide direct punishment for its rules (“direct punishment”); or
• a law may require that a regulatory authority (typically local government) issue an order to comply, and if the polluter fails to comply then it is punished (“order violation type”).

The police will directly investigate and prosecute direct punishment cases. However, the order violation type is more common because many environmental regulations are drafted in a way that requires local governments to monitor violations and seek to rectify the situation before imposing penalties.

Regulatory Liability

There are several types within this category. A polluter may have its permit revoked for violations of environmental laws and regulations. In other laws, the polluter may be required to clean up the pollution that it has caused – an example of this is the contamination of the water. Another type is a non-criminal penalty, which is typically payment of a non-penal fine.

In Japan, liability for historic environmental incidents of damage only explicitly applies to soil contamination. Under the Soil Contamination Countermeasures Act (2002), the landowner is primarily liable for clean-up, and if the soil contamination was caused by someone else, the landowner is entitled to seek compensation for the clean-up cost to such party. 

For soil contamination, the landowner is responsible for conducting a clean-up of the contaminated land under the Soil Contamination Countermeasures Act (2002) if ordered by the local government. The level of clean-up differs depending on the purpose of use of the land and what the contaminants are. For example, if the contaminated soil is in a residential area, the required clean-up is to remove the soil and replace it with non-contaminated soil. For industrial areas, containment may be enough for non-volatile contaminants. The liability imposed for clean-up is strict liability, meaning that lack of negligence cannot be a defence. Also, it is a criminal offence for a landowner to refuse to follow a clean-up order.

For other environmental incidents, tort law (which is provided in the Civil Code, which is a general applying to contracts and other issues among private parties) will apply. This means that for the polluter to be held liable for an environmental incident, the claimant needs to prove the polluter's negligence. However, as noted at 4.1 Key Types of Liability, for water and air pollution, the statutes impose strict liability on the polluter for harm caused to human life and health. However, the plaintiff still needs to prove causation between the polluting activity and damage, which is often challenging.

Civil Liability

There are no particular rules concerning the liability of a corporate entity for environmental damage or breaches of environmental law.

Criminal Liability

In principle, only individuals (ie, natural persons) that are members of a corporate entity bear criminal liability, not the corporate entity itself. However, some laws, such as the Waste Management and Public Cleansing Act, specifically provide that the corporation is also subject to punishment in addition to its member individuals – ie, “dual (criminal) liability”. Because corporations cannot be imprisoned, the penalty imposed on the corporation is a fine.

Shareholders – which includes a parent company – have “limited liability” under the Companies Act of Japan, meaning that shareholders are only liable for the investment they have promised to make in the company and not for any other liability of the company unless for a very exceptional case when the corporate veil is pierced. Also, unlike some common law jurisdictions, Japanese law does not recognise “fiduciary duty” of shareholders.

Japanese law distinguishes directors and employees, and different rules apply. An “officer” may mean a director or an employee, and it is important to make the distinction.

Directors

A director is a person appointed by the shareholders to manage the company, and the relationship between and director and the company is governed by the Companies Act of Japan. The Companies Act is designed to protect the company and its shareholders. Under the Companies Act, a director bears the duty of good care and management towards the company, which is similar to a “fiduciary duty” in common law jurisdictions. Also, under the Companies Act, a director bears liability for damage caused to third parties if the director intentionally, or by gross negligence, failed to perform their duties towards the company. This law also applies to environmental damages. There are no laws that specifically impose personal liability on directors for environmental damages or breaches of environmental law. 

Employees

As noted above, an “officer” may mean a director or an employee. A corporation is liable for damages caused by its employees who acted on behalf of the corporation (ie, vicarious liability). In theory, the victim may also seek compensation from the employee who caused the damage, but it is not typical to only sue the employee because the victim may seek full compensation from the corporation, which has a better ability to pay. The corporation may seek compensation from the employee for damages it has paid to the victim, but courts in Japan tend to restrict/limit this.

It is typical for a listed company to purchase insurance for directors to cover personal liability because directors bear a significant risk of being sued by the company’s constituents, usually shareholders. It is not typical for the company to do the same for its employees because no such risks apply.

Under Japanese law, there is no concept of lender liability. Therefore, a financial institution is not liable for environmental damages of breaches of environmental law caused by a company or person to which it has extended a loan.

There is no lender liability under Japanese law, and the issue of lender protection is not applicable in Japan.

Damage Claims

To claim compensation for environmental damages, the basic rule that is applicable to any claims of damages also applies – in other words, the claimant needs to prove (i) wrongful act, (ii) damage, and (iii) causation. 

For an act to be wrongful, in principle, it needs to have been wilful or negligent. However, there are statutes that impose strict liability upon the polluter (meaning negligence is not a requirement for an act to be wrongful), such as for water contamination and air pollution. Also, the “legal right” of the claimant needs to have been violated. This typically applies when assets, health and life are damaged, but for pollution caused by nuisances such as noise, foul odour and lack of sunlight, the court will decide if the nuisance was “beyond what was reasonably acceptable” (“junin-gendo”).

For the calculation of damages, the courts in Japan basically follow the “amount difference theory”, where compensation is calculated based on the actual loss caused by the wrongful act. For example, if the value of an asset was “A” before the environmental incident and the environmental incident caused the claimant’s assets to be worth “B”, the damages awarded will be A minus B.

This may seem reasonable at first, but assets often depreciate and may be worth very little even if they were of value to the claimant, and some question the fairness of this theory. Also, value “B” may be difficult to calculate in an environmental disaster that was caused by a combination of a large-scale natural disaster and the pollution caused by an operator (for example, in the Fukushima nuclear accident, the nuclear fallout could have been caused by – noting that this is contested in pending lawsuits – an earthquake and subsequent tsumani that hit the plant that may or may not have been enhanced by negligence of the nuclear plant operator). Further, it may be difficult to prove that the revenue loss of a business was caused “only” by an environmental fallout and not also by the economic downturn caused by the preceding natural disaster (again, the Fukushima accident would be such an example). In addition, some businesses may actually do better after an environmental incident because of their corporate efforts, which would cause value “B” to be more than value A, and therefore, under the “difference theory”, there would be no damages. This conclusion will penalise those who made efforts, and is therefore unlikely to be a fair conclusion. 

For causation, the claimant needs to prove “causal link”, which may be challenging for incidents where the link between pollution and illness is yet to be scientifically established, as was the case for the famous mercury poisoning at Minamata (as noted at 4.1 Key Types of Liability), or was caused by multiple polluters. Through many difficult environmental lawsuits, legal practice in Japan has established legal tools that deal with such issues, which are similar to the concept of “proximate cause” in common law.

Injunction

In addition to damage claims, which only provide a compensatory remedy, it is also possible to seek to stop the destruction of the environment by applying for an injunction. For this, the plaintiff needs to prove that the activity will cause illegal damage to assets, health and/or life (as noted, this derives from a Constitutional right), which often means that the environmental destruction will cause suffering that is beyond what is reasonably acceptable. If the issue is urgent, it is possible to also seek a preliminary injunction, but if a preliminary injunction is ordered then it will be reviewed in a normal court proceeding, and if the injunction is overturned by the court then the plaintiff may need to compensate for the damage caused to the defendant while its act was enjoined. 

There are no exemplary or punitive damages under Japanese law for environmental damages, meaning a wrongdoer is only liable for direct damages – ie, damages which would ordinarily arise from the wrongful act except for damages which arise from any special circumstances if the party did foresee, or should have foreseen, such circumstances. This rule derives from English law (namely, the Hadley v Baxendale case of 1854). There are some statutes that provide something similar to punitive damages. For example, under the Labour Standards Act, the court may order an employer who failed to pay overtime to employees to pay double the amount due, but no such rule exists for environmental regulations in Japan. 

There are no class actions under Japanese law. A group action is possible as a co-plaintiff where each plaintiff has independent claims against a defendant, and there are commonalities among these independent claims, such as being caused by the same polluting activity.

Four Major Pollution Cases

In the 1960s and the 1970s, factory-caused pollution in Minamata (mercury poisoning), Niigata (mercury poisoning), Toyama (cadmium poisoning) and Yotsukaichi (air pollution) were litigated in court, and courts accepted the liability of the operators. These court cases are referred to in Japan as the “Yon-dai Kogai Saiban” – meaning “Four Major Pollution Cases”. The court cases led to acceptance by the courts of new theories regarding the issue of causation. These four major pollution cases also resulted in the enactment of the Basic Act on the Control of Pollution, which designated the “seven typical types of pollution” (air pollution, water contamination, soil contamination, noise pollution, vibration, ground subsidence and foul odour) that need to be controlled.

Osaka Airport Case (1981)

This is the first case in which the Supreme Court of Japan recognised that activity would be wrongful if it causes suffering that is beyond what is “reasonably acceptable” ("junin-gendo"). The plaintiffs were residents near Osaka International Airport and sought to stop night-time operations (by an injunction) and claimed payment of damages. The Supreme Court denied the injunction but acknowledged that the noise caused by the airport was “beyond what was reasonably acceptable” and awarded damages (ie, establishment of the “reasonably beyond” standard for environmental claims).

Ikata Nuclear Power Plant Case (1992)

In this case, residents near the planned Ikata Nuclear Power Plant challenged the government operations permit that was awarded to a power company to construct the plant. The residents argued that the nuclear power plant was unsafe and posed a threat to their assets, health and lives. The government counter-argued that, based on the most recent science, the nuclear power plant was safe. One of the main issues was whether the court had the authority to verify such scientific or highly technical issues, as the issues were of a scientific and technical nature, and the court may have lacked the expertise to make a decision on them. The Supreme Court judged that the permit for the nuclear power plant was legal, but, on the other hand, recognised the Court’s authority to adjudicate such issues and set out the evaluation criteria for such. According to the Court, while it would not determine whether any particular scientific or technical issue was correct or not, it would review the process of how a governmental decision was made, and if the decision process was obviously flawed, then the court would judge such decision to have been unlawful and voidable.

Under Japanese law, the parties may agree to transfer or apportion liability for environmental damages, but this is uncommon in practice. There are no regulations in Japan that restrict such transfer or apportion between private parties.

It is common, however, for a seller and buyer to agree on restricting and waiving any claims after a certain period of time following the transaction. For environmental claims, these cut-off periods tend to be set longer than other claims, such as over five years, which is beyond the usual period for the statute of limitation, or even indefinite.

Environmental insurance is available in Japan, covering damages caused by environmental accidents such as accidentally releasing hazardous substances into the water system or the soil. This is a type of liability insurance and is provided by some, although not many, insurance companies in Japan. The target customers are companies that bear environmental risks, typically companies that operate plants/factories or handle hazardous substances. There is no law or regulation in Japan that requires businesses to purchase such insurance, and it is up to businesses to assess their own environmental risk and seek appropriate insurance.

In Japan, the Soil Contamination Countermeasures Act was enacted in 2002 to regulate soil contamination. The general approach is to require a landowner to survey contamination of the soil when: (i) it terminates operation of a facility (typically a plant/factory) that generates certain hazardous substances; or (ii) when the local government (the prefecture) determines that there are health hazards due to soil contamination. If soil contamination is discovered as a result of the survey, the landowner will be required to take appropriate measures, which are either containing the contamination or removing it.

One notable feature of the Soil Contamination Countermeasures Act is that the landowner will not be required to take any remedial actions unless it terminates the operation of its facility, except when the local government determines such to be necessary in order to prevent health hazards. This means that in a transaction involving the sales of a plant/factory, remedial actions for soil contamination will not be needed if the buyer intends to maintain the operation of the purchased plant/factory. On the other hand, the landowner is prohibited from making changes to the land while it operates facilities.

Another notable feature of the Soil Contamination Countermeasures Act is that the landowner is liable for remedial actions, not the person who caused the soil contamination. The landowner may seek compensation for the costs of remedial actions against the party who caused the soil contamination.

In Japan, the Act on Promotion of Global Warming Countermeasures was enacted in 1998 to deal with concerns about climate change. The key feature of this Act is that it only encourages businesses to reduce greenhouse gas emissions and does not regulate them. Thus, the Act is technically not a regulation to curb greenhouse gas emissions. The Act requests each business to calculate its greenhouse gas emission and report it to the ministry or agency which oversees the business. The ministry or agency will then report the data to the MoE and MITI, and these two ministries will compile a report of greenhouse gas emissions per establishment, per industry, and per Japan as a whole, which is then disclosed to the public; however, information per establishment is only disclosed on-demand. Currently, this report covers 50% of all greenhouse gas emissions in Japan.

Based on the Paris Accord which was adopted in 2015, and also the Intended Nationally Determined Contributions that the Japanese government submitted to the United Nations in the same year, the Japanese government has established a Global Warming Countermeasures Plan in which the government aims to cut 26% of the 2013-level greenhouse gas emissions as an intermediate goal and, as a long term goal, to cut 80% of emissions by 2050.

This was somewhat advanced in COP26, where Prime Minister Kishida announced that Japan will aim to cut 46% of its 2013-level greenhouse gas emissions by 2030, and will continue “strenuous efforts” to cut greenhouse gas emissions by 50% (but with no deadline indicated).

Asbestos is regulated by the Air Pollution Control Act. The Act regulates the disassembly, remodelling and repair of asbestos-containing buildings or structures. A person needs to file with the local government (ie, prefecture) before conducting such work; when conducting the work, the operator needs to abide by “work standards”, which requires the operator to take certain measures to prevent the dispersal of asbestos into the immediate environment.

Waste disposal is regulated by the Waste Management and Public Cleansing Act (1970). The Act distinguishes industrial waste and non-industrial (ie, household) waste. For industrial waste, the person generating the waste has the primary responsibility for its disposal; in consigning the process and disposal of waste to a third party, the generator needs to follow certain protocol (called “Consignment Standards”), such as retaining someone with a permit for industrial waste processing and disposal, entering into a contract that includes certain terms and conditions as required by the Act, and issuing a “manifest”, which is a document for tracking the waste.

Collection and disposal of non-industrial/household waste is the responsibility of the local government (not the prefectures, but local cities and towns) and is a public service.

A producer or consigner of waste may be ordered by the local government to remedy the situation even after it was disposed of by a third-party vendor in the following circumstances:

• if the consignment did not follow the “Consignment Standards”, a set of rules that the parties need to follow under the Act;
• if the consigner did not deliver a manifest to the vendor or if the manifest contained misrepresentations; or
• if the consigner knew that the vendor was illegally disposing of the waste or did not pay appropriate compensation, and the vendor became bankrupt. 

Currently, there are two regimes for this in Japan.

With respect to glass bottles, polyethylene terephthalate (PET) bottles, plastic bags and other recyclable package containers, the Container and Packaging Recycling Act of1995 requires producers to recycle the containers. However, the collection of the containers is the role of local governments (cities and towns). Consumers are also required to follow the rules regarding disposal, such as sorting various recyclable waste.

With respect to household electric equipment (eg, refrigerators, televisions, desktop and laptop computers), the Home Appliance Recycling Act of 2001 requires the producer to collect used goods for recycling.

Some laws in Japan require the operator to report environmental incidents that have occurred in or from its facilities, such as incidents of water contamination and air pollution due to certain hazardous substances. 

Certain operators of facilities that generate certain hazardous substances (ie, pollutants) are required to provide information on the release of pollutants (pursuant to the Act on the Assessment of Releases of Specified Chemical Substances in the Environment and the Promotion of Management Improvement of 1999, the “PRTR Act” in short) to the government. A summary of the collected information is disclosed to the public. A person may also obtain information on release by individual establishments on demand. However, in practice, such information is disclosed to the public without individual demand. 

With respect to greenhouse gas emissions, as noted, the government compiles a report of greenhouse gas emissions per establishment, per industry and per Japan as a whole, which is then disclosed to the public (the most recent disclosure in English can be found at www.env.go.jp/en/), but information per establishment is only disclosed on-demand.

Currently, there is no requirement for corporations to disclose environmental information in their annual reports or otherwise; however, from 2021, first-tier companies listed on the Tokyo Stock Exchange (TSE) are required to report on their efforts to reduce greenhouse gas emissions (according to the TSE’s amended Corporate Governance Code).

Environmental due diligence is conducted for property transactions in Japan if the transaction involves property that is susceptible to environmental issues. A typical subject of environmental due diligence is soil contamination, because the buyer will be primarily liable for remedial actions as the landowner. However, as noted at 11.1 Key Laws Governing Contaminated Land, the buyer will not be required to conduct remedial measures unless it terminates use of the land for contaminant-producing facilities (eg, plants and factories) or is ordered by the local government to do so. 

For the purchase of companies with plants or factories, the buyer may also conduct due diligence on whether the facility of the seller meets various emissions or discharge standards.

Disclosure of environmental information is a typical issue for land transactions involving soil contamination. The Soil Contamination Countermeasures Act does not regulate private transactions, and a seller is not required to disclose any environmental information (ie, information regarding soil contamination) to a purchaser in a transaction under the Act. Instead, such information is a subject of due diligence. Also, if the seller entity operates a factory, it is typical to request disclosure of emissions, discharge, etc, to assess if environmental standards are met.

From 2012, Japan has imposed a special tax for countering global warming on fossil fuels. There are proposals to introduce a more general tax for environment protection – a green tax – but this has yet to receive general support from the public.