Published on February 3, 2020.
This article discusses an essay by Uemura Tatsuo, professor emeritus at Waseda University, published in the Sankei Shimbun, examining the pride and deterioration of Japan’s legal system as revealed by the Carlos Ghosn case.
It highlights Japan’s Meiji-era achievement of absorbing Western law through the Japanese language, its major influence on Chinese and Korean legal terminology, the problems of securities markets, corporate law, and governance systems, and the danger that modern Japan has become, in the eyes of foreign experts, “a plump and tasty prey naive about law.”

2020-02-03
Most of the legal terms currently used in Chinese and Korean were created in the early Meiji period by Japanese people who made full use of the strengths of Japanese, a language with native readings.
Japan is the only country that was able to construct and operate Western-style legal scholarship in its own language.
The following is from an essay by Uemura Tatsuo, professor emeritus at Waseda University, published in today’s Sankei Shimbun under the title “The Pride and Deterioration of Law Seen in the Ghosn Case.”
Emphasis in the text, apart from the headings, is mine.
The remarks made by Ghosn, former chairman of Nissan Motor Co., after fleeing abroad, are nothing more than the unsightly self-justification of an escaped criminal.
For the head of a Japanese company to say that he will not obey Japanese law amounts to a total denial of Japan as a nation governed by the rule of law, yet both inside and outside Japan there is somehow an atmosphere of people cheering him on.
While this makes one feel pride in the Japanese law that has been formed since the Meiji era, it also inevitably makes one think of the remarkable deterioration of Japan’s legal situation in recent years.
If “Law” Is Immature, a Country Becomes a Target of Exploitation
For non-Western countries, “law” and “norms” are a great wall that is difficult to overcome.
Even if they somehow manage to achieve military and economic power, the wall of “law,” where long experience of failure matters, is thick, and naive late-developing countries become targets of exploitation by advanced countries that are well versed in this problem.
Under the external pressure of abolishing the unequal treaties in the Meiji period, Japan translated legal terminology from English, German, and French into Japanese in a short period of time, carried out the work of compiling legal codes, enacted the Six Codes, and established the basic principles of civil law, including the judicial and prosecutorial systems.
Most of the legal terms currently used in Chinese and Korean were created in the early Meiji period by Japanese people who made full use of the strengths of Japanese, a language with native readings.
Japan is the only country that was able to construct and operate Western-style legal scholarship in its own language.
Neither the United States nor France studies foreign law to any significant degree.
Many Japanese universities with a history of about 130 years were founded as law schools.
Even while Japan still has many weaknesses, I have felt strong pride in the speed with which Japan developed its legal system since the Meiji era and in the high level of its understanding of Western law.
Every country has inevitably failed in the securities market when it comes to the joint-stock company, a corporate system that makes full use of the securities market.
The proper joint-stock company system should have been a legal system integrated with a mechanism to ensure the fairness of stock prices, but especially after the collapse of the bubble economy, Japan failed to understand that the path of deregulation as a remedy for the sick meant cheap construction.
If Japan were to choose the European path, it should have aimed to restore a system of prior regulation and create a mechanism in which gentlemen’s rules, self-regulation, principles, and various codes could be treated on a level equivalent to statutory law.
Japan Imitated Deregulation but Not Discipline
If Japan was to pursue the maximum freedom of the American model, it could not be sustained without mechanisms indispensable for continuously processing large amounts of misconduct that arise continuously, such as sting operations, wiretapping, undercover investigations, plea bargaining, the transformation of administrative agencies into quasi-judicial bodies, orders to disgorge illicit gains, civil sanctions, and bounty systems for informants.
Yet Japan imitated deregulation but did not imitate discipline.
In today’s Japan, we are forced to see many people who, if Japan had systems comparable to those of the United States, would long ago have been permanently expelled from the industry and stripped of several times the profits they gained, using the funds they were allowed to preserve, being called activist shareholders, and lecturing young people on lessons.
If freedom overflows and there is no mechanism to process large amounts of misconduct from moment to moment, there is no choice but to rely on one-shot-style crackdowns by prosecutors who are unsuited to market crimes.
Prosecutors, who from the outset have a strong attitude that they must always win, tend to turn even complex cases into formal offenses that are easy to prove, such as violations of the Foreign Exchange and Foreign Trade Act, tax laws, or false statements in securities reports, and to that extent the true nature of the misconduct becomes invisible.
In the case of the crime of special breach of trust under the Companies Act, which is a substantive offense, the scarcity of precedents and the difficulty of proving it may be said to be partly a self-inflicted result.
Recently in Japan, legislation and debate concerning the Companies Act have become less prominent, and the discussion is almost entirely about governance codes.
Because violations of these codes lead to no real consequence, people without specialized knowledge of corporate law are passing themselves off as governance experts.
The failure of the law school concept has led to the neglect of faculties of law and the decline of training for legal scholars, and together with the neglect of the Legislative Council and the Cabinet Legislation Bureau, the pride of Japanese legal scholarship since the Meiji era is disappearing day by day.
Japan Is a Plump and Tasty Prey
From the perspective of foreign experts who know this world thoroughly, Japan is a plump and tasty prey naive about law.
Unlike Britain, Japan does not even have a right to request information on the attributes and identities of shareholders, and yet shareholder value maximization is emphasized.
It is an overly good-natured country that does not question dialogue with people whose “qualification to speak” is dubious, or their exercise of voting rights.
The reality of this escape drama is probably that Ghosn had been inwardly laughing at the level of Japanese law, only to find that the sudden implementation of plea bargaining was not what he had expected.
There seem to be many people who assume that he was a great manager who improved Nissan’s management, but that view is based on the mistaken idea that it is justice to dismiss large numbers of workers and close large factories in order to raise the stock price.
Today, when, following Europe, even the United States is trying to abandon shareholder-first capitalism, the argument “Avoid easy imitation” was prominently featured in the Nikkei Shimbun’s “Economic Classroom” on December 18 of last year.
The problem lies in the following statement made by the person advancing that argument in his main work: “A desirable company law is efficient in the sense that the net benefit, obtained by subtracting costs from benefits, becomes as large as possible.”
The very idea of measuring the diverse values of human beings only by economic value was mistaken from the beginning.