## Facts

- Northcon I, an Oregon partnership, helped develop and construct a facility for Maruman Integrated Circuits, Inc., a California corporation owned by Mansei Kōgyō K.K., a Japanese parent company.
- A dispute arose from the development project, leading Maruman to sue Northcon in California state court.
- Northcon asserted cross-claims against Maruman, Mansei, and certain Mansei officers.
- A California court entered a money judgment for Northcon that included approximately US$425,251 in compensatory damages and approximately US$1,250,000 in punitive damages, plus costs.
- The judgment was affirmed on appeal in California.
- Northcon sought recognition and enforcement of the California judgment in Japan against Mansei and certain officers to collect from assets located in Japan.
- Japanese lower courts enforced only the compensatory portion and refused enforcement of the punitive portion as contrary to Japanese public policy.
- Northcon appealed to the Supreme Court of Japan seeking enforcement of the punitive-damages component.

## Issues

1. Whether a foreign civil judgment’s punitive-damages component may be recognized and enforced in Japan under the public policy exception to recognition of foreign judgments.
2. Whether a foreign judgment containing both compensatory and punitive awards may be partially recognized and enforced by severing the punitive component.

## Decision

- The Supreme Court of Japan affirmed.
- The compensatory portion of the California judgment was recognized and enforceable in Japan.
- The punitive-damages portion was not recognizable or enforceable because it was contrary to Japanese public order and good morals.
- The Court permitted partial recognition by severing and excluding the punitive component while enforcing the compensatory component.

## Legal Principles

- A foreign judgment is not recognizable or enforceable in Japan to the extent its content or effects are contrary to Japan’s public order or good morals (public policy exception).
- Japanese civil damages are understood as compensatory; punishment and deterrence are primarily matters for criminal sanctions rather than private-law monetary awards.
- Punitive damages are treated as incompatible with fundamental features of Japanese private law and thus barred from enforcement on public policy grounds.
- When a foreign judgment contains separable compensatory and punitive components, Japanese courts may enforce the compensatory component and deny enforcement of the punitive component.

## Conclusion

The Supreme Court of Japan held that a foreign judgment may be enforced in Japan only to the extent it provides compensation for loss; a punitive-damages component is severed and denied enforcement because it conflicts with Japanese public policy.


Northcon I v. Mansei Kōgyō K.K., 51 Minshū 2573 (Sup. Ct. Japan 1997)