Payment order (Demand procedure) overview
Payment order (Demand procedure)
- A demand procedure is a simplified litigation procedure for ordering payment without pleading, or a system of judgment in response to a claim made by the creditor (in this case the consumer) in a civil dispute, which calls for payment in cash, other alternative payments of the same kind, or securities (such as checks) to the creditor (Article 462 of the 「Civil Procedure Act」).
· In 2011, a person named “K” who used a smartphone made by company “A” applied for a payment order against the company because “company A’s smartphone stored the user’s location information, causing him to suffer damages from being tracked”. The court ordered for company “A” to pay the amount. The company did not appeal the ruling during the two-week period given for appeals and company “A” paid the compensation to person “K”.
- Payment order (demand procedure) does not summon the parties in the dispute. N o other summoning procedures are in place, and the case is heard through the submitted documents only. Hence, it is more cost effective when compared to regular litigation procedures and there is no restriction on the claimed amount, allowing relatively large amounts to be potentially be charged (Article 467 of the 「Civil Procedure Act」).
· The commission fee that must be paid to the court when applying for a payment order is 1/10th of the stamp fee that must be submitted when filing a lawsuit. The pre-paid transmittal fee covers four transmissions per person, which is less than that for the small claims lawsuit (10 transmissions per person).
Payment order procedure
Application for a payment order
- To request a payment order, the application for the payment order must be completed and submitted to the court that has jurisdiction over the counterpart’s address, office, sales office, place of performance, and place of wrongful behavior (Article 463 of the 「Civil Procedure Act」).
Issuance of a payment order
- The court shall review the payment order without summoning the parties in the dispute (the consumer and the business operator). If the court decides the claim is justified, it will issue the payment order and deliver a legal copy of the payment order to the parties (Articles 467, 468 and 469 of the 「Civil Procedure Act」).
- If the legal copy of the payment order is not delivered to the counterpart, the debtor, because he or she does not reside in the address specified in the payment order application, the court shall request the applicant to correct the address in order for the payment order to be delivered again to the appropriate address. If the address is incorrect or if the delivery has to be made overseas, the court can reassign the case as a litigation (Article 466 of the 「Civil Procedure Act」).
Confirmation of a payment order
- The counterpart, the debtor, can appeal the payment order within a period of two weeks from the day the payment order is received (Articles 468 and 469 of the 「Civil Procedure Act」).
- If the counterpart ① does not request an appeal; ② the appeal is dismissed; or ③ the appeal of the request is withdrawn, the payment order is confirmed and maintains the same effectiveness as a judicial ruling. Therefore, when the payment order is not performed, the applicant can get paid by requesting the court to enforce performance (Article 474 of the 「Civil Procedure Act」).
- On the other hand, if the counterpart appeals, then the payment order loses its effectiveness and the case is changed to a regular civil litigation. The procedures for a litigation commences (Article 472 of the 「Civil Procedure Act」).