On Japan's Electronically Recorded Monetary Claims Act

With changes of society morphology, property types and status of property rights have undergone profound changes, social-economic formation has changed from relative rest to active transaction, claims has been independence of real right and occupied an important position of property rights. The creditor can reduce risk and finance by claims transfer. Property including claims only in the high-speed transfer can be achieved and increase the economic value. Claims assignment of Contract Law in China can not meet the needs of high-speed transfer of claims, there are following deficiencies, assignee have to be faced with risk by without recognition and public notice methods of claims and defense of obligor, The agreement of prohibiting assignment can not balance the interests between the obligor and the assignee. The reason why the rules of contract law baffles of claims transfer is the design idea behind the rule, which focus on protection of the obligor's interests over the safety of the assignee, overemphasize the relativity of claims without the public notice method. In order to enhance the flow of claims, the rules not only must balance the interests of between the assignee and the obligor under the premise of guarantying the safety of the assignee, but also should use the public notice method.Like China, there are multiple impairments of transfer of claims in Japanese Civil Code, which can not meet the enterprise's needs by claims finance. To overcome the defects of inscribed claims, the Japanese Diet made Electronically Recorded Monetary Claims Act on June 20, 2007.The Act has come into force December 1, 2008, which including accrual and assignment and guarantee and pledge, etc. of Electronically Recorded Monetary Claims, as well as the necessary matters regarding the business and supervision, etc. of Electronic Monetary Claim Recording Institutions that making the Electronic Records pertaining to said Monetary Claims. In order to achieve the modernization of the rule claims finance and extricate enterprises from a difficult position, China should set up a unified national market of electronically recorded monetary claims and adopt electronic registration of public notice method and establish the principle of non-causa in assignment of electronically recorded monetary claims and electronically recorded guaranty and restriction on assertion of defense by using the experience of Japan's Electronically Recorded Monetary Claims Act.Chapter I General Provisions electronically recorded monetary claims actions The term "Electronically Recorded Monetary Claims" as used in this paper means monetary claims for which electronic records provided for in law, are required for their accrual or assignment. Electronically recorded monetary claims has servable characteristics, firstly, it accrued basing on causal claim, secondly, the accrual and assignment and extinguishment of electronically recorded monetary claims must make record, thirdly, it is a new type of monetary claims which is different of inscribed claims and right of bill.The term " electronically recorded monetary claims actions" as used in this paper means law actions for which electronic records provided for in law on Electronic Registry, are required for their accrual and assignment and extinguishment. The term " Electronic Registry" in this Act means a book in which a Monetary Claims Record is recorded, and which is prepared by the Electronic Monetary Claim Recording Institution using a magnetic disk (which includes media specified by the ordinance of the competent ministry as being capable of unfailingly recording certain matters by means equivalent to those of magnetic disks). Electronically recorded monetary claims actions has servable characteristics, firstly, it didn't come into force until making record matters on electronic registry, secondly, the contents of electronically recorded monetary claims actions should be determined by electronic registry even if record matters is inconsistent with the facts, thirdly, electronically recorded monetary claims actions is independent of each other, the validity of an act shall not affect other's, furthermore, the validity of electronically recorded monetary claims actions is separated from the cause relation, so the cause relation have no influence on the electronically recorded monetary claims actions.Manifestation of intention electronically recorded monetary claims actions apply civil law in principle. The nullity by virtue of defect of manifestation of intention and the rescission by virtue of flaw of manifestation of intention, of the manifestation of intention made to thecounterparty in the request of Electronic Records, may not be asserted against a third party in good faith, however, it shall not be applied in the cases where a person who attempts to assert the nullity or rescission of manifestation of intention is an individual. There are several kinds of registration of electronically recorded monetary claims which is accrual record and assignment record and payment discharge record and guaranty record and pledge creation record. China should set up a unified national Electronic Monetary Claim Recording Institution. In order to reduce costs, Electronic Monetary Claim Recording Institution may set up by changing Registration of pledge creation which is administered by Credit Reference Centre of PBC. Registration pattern should adopt registration effectiveness. The request for Electronic Records shall, unless otherwise prescribed by laws and regulations, be made by the both Electronically Recorded Claim Holder and the Electronically Recorded Claim Obligor. Electronic Records based on the final and binding judgment ordering Electronically Recorded Claim Holder or Electronically Recorded Claim Obligor to make request for Electronic Records, may be requested by other Electronically Recorded Claim Holders or Electronically Recorded Claim Obligors, who have to make said request. The Electronic Monetary Claim Recording Institution shall, when a request for Electronic Records is made pursuant to the provision of law or an order based on law, make Electronic Records pertaining to said request without delay. The Electronic Monetary Claim Recording Institution shall be responsible for compensating for the damage suffered by the person requesting said Electronic Records and other third parties, from the cause application without rights.The accrual and extinguishment right of agency apply civil law and commercial law in principle. Person without authority of representation must carry out electronically recorded obligation. Only the principal take responsibility when he or she has fault on agent's apparent authority. The principal and agent must undertake joint liability for agent who overstepped his or her authority.Chapter II Accrual of Electronically Recorded Monetary ClaimsTo prevent financial crisis, electronically recorded monetary claims must arise by real cause claims. Whether cause claims extinguished is decided by party's intention. If there is no agreement, the cause claims must extinguish by law. The electronically recorded monetary claims and cause claims have assigned at the same time, if cause claims didn't extinguish by party's agreement, obligor must carry out obligator to assignee of electronically recorded monetary claims and assignee of cause claims, so obligor could request creditor to return unjustified enrichment. The order of exercise of rights is decided by party's agreement when cause claims is not extinguishment. If there is no agreement, creditor should exercise electronically recorded monetary claims. One Come true, another extinguished after finishing nullification of registration.The accrual of electronically recorded monetary claims shall not be effective unless accrual record is made. In the accrual record, the following matters shall be recorded:(i) A statement to the effect that the obligor shall pay a certain amount of money;(ii) The amount of the claims;(iii) Name and address of the obligee;(iv) In case where there are two or more obligees, and if the claim is an indivisible claim, a statement to this effect. If the claim is divisible, an amount of the claims for each respective obligees; (v) Name and address of the obligor; (vi) In case where there are two or more obligors, and if the obligation is an indivisible or joint and several obligation, a statement to this effect. If the obligation is divisible, an amount of the obligation for each respective obligors; (vii) The record number; and (viii) Date of Electronic Records.In the accrual record, the following matters may be recorded:(i) Date of payment; (ii)In case where an agreement is made regarding interest, delinquency charges or penalties, the agreement; (iii) In case where an agreement is made regarding acceleration; (iv) In case where an agreement not to make an assignment record, guaranty record, pledge creation record or division record is made, or in case where an agreement is made regarding the restriction of the number of times of or other restrictions on such Electronic Records is made, the agreement; (v) The electronically recorded monetary claims is trust; (vi) In case where an agreement is made not to apply the provision of acquisition by bona fide third party and restriction on assertion of defense and electronically recorded guaranty, etc.Chapter III Assignment of Electronically Recorded Monetary ClaimsThe assignment of Electronically Recorded Monetary Claims shall not be effective unless assignment record is made. In the assignment record, the following matters shall be recorded:(i) A statement to the effect that the Electronically Recorded Monetary Claims shall be assigned;(ii) In case where the assignor is the heir to the Electronically Recorded ClaimObligor, the name and address of the assignor; (iii) Name and address of the assignee; and (iv) Date of Electronic Records. Assignee acquired all of rights of electronically recorded monetary claims after finishing assignment record. The assignment of electronically recorded monetary claims shall not bear the liability for payment of obligor unless guaranty record is made. The assignor enjoys the right to makes a disbursement and the record of payment, who can acquire the Electronically Recorded Monetary Claims of the amount equal to the aggregate of the amount jointly discharged with the disbursement, the amount of delinquency charges accrued after the date of the disbursement, and the amount of unavoidable expenses against principal obligor and other electronically recorded guarantors who have extended electronically recorded guaranties for the same principal obligation before the person became an electronically recorded guarantor.The obligor may not assert a defense arising from an agreement of forbidding assignment of electronically recorded monetary claims against a third party in good faith. The assignee who finished assignment record could obtain the electronically recorded monetary claim before others when the electronically recorded monetary claim took place in duplication of assignment. The assignment which happened after the date of payment may be compared with the assignment which happened in the date of payment. The obligor in the accrual record or an electronically recorded guarantor (hereinafter referred to as "electronically recorded obligor") may not assert a defense arising from an in personal relationship with the person who assigned said electronically recorded monetary claims to the obligee of those claims, against the obligee of the Electronically Recorded Monetary Claims using; provided, however, that this shall not apply in case where said obligee acquired those Electronically Recorded Monetary Claims knowing that said obligor would be harmed. The provision of restriction on assertion of defense shall not apply in case where the electronically recorded obligor is an individual (excluding those recorded as an individual business operator). A person recorded as the assignee of the electronically recorded monetary claims by a request for an assignment record shall acquire said electronically recorded monetary claims; provided, however that this does not apply to cases in which the person acted with knowledge or gross negligence. The provision of acquisition by bona fide third party shall not apply in case where the manifestation of intention of an assignor of the electronically recorded monetary claim being an individual (excluding those recorded as individual business operators) towards the assignee, regarding the request for an assignment record, is not effective; and when the person prescribed in the preceding paragraph has been recorded by the request for an assignment record made after said assignment record.Chapter IV Electronically Recorded GuarantyThe term "Electronically Recorded Guaranty" in this paper means a recorded guaranty whose principal obligation pertains to electronically recorded monetary claims. Electronically recorded guaranty has dual-function to ensure fulfillment and promoting liquidity of electronically recorded claims. The electronically recorded guarantor should have the corresponding capacity for civil conduct, the electronically recorded claim obligor stand guarantee for himself or herself and other obligor. The ability of payment of electronically recorded guarantor does not affect the validity of electronically recorded guaranty, the electronically recorded claim holder may replace the electronically recorded guarantor who has no ability of payment. Electronically recorded guaranty accrues when the guaranty record is made. The following matters shall be recorded in the guaranty record:(i) A statement to the effect that guaranty will be provided;(ii) Name and address of the guarantor;(iii) Name and address of the principal obligor and other matters that are required to identify the principal obligation; and(iv) Date of Electronic Records.Electronically recorded guaranty is independence that is not collateral to the duty of the primary obligor, which involves at least three aspects. Firstly, the guarantor cannot claim any defense, which the principal obligor is entitled to enjoy. Secondly, the bindingness of electronically recorded guaranty will not be affected by substantial ineffectiveness of electronically recorded obligation. Thirdly, the limitation of action on electronically recorded guaranty will not be affected by interpellatio of limitation of action on principal obligation, furthermore, electronically recorded guaranty is not privilege of order, because the guarantor is not entitled to enjoy the defense of demand, or beneficium ordinis. The special right to reimbursement will not accrue until the guarantor has made payment, which must be recorded. The guarantor, who enjoys the special right to reimbursement, can claim the several kinds of obligor, including principal obligor, other guarantors who are jointly responsible for the principal obligation, and other electronically recorded guarantors who have extended electronically recorded guaranties for the same principal obligation before the person became an electronically recorded guarantor.Chapter V Extinguishment of Electronically Recorded Monetary ClaimsThe causa of extinguishment of electronically recorded monetary claims is payment and merger and set-off and Extinctive Prescription. The electronic monetary claim recording institution should make nullification of registration when the electronically recorded monetary claim has been utterly extinguishment. The electronic monetary claim recording institution should make record of payment when the electronically recorded monetary claim hasn't been utterly extinguishment, so the person who made the payment could enjoy the special right to reimbursement. The extinguishment of electronically recorded monetary claims shall not be effective unless payment record is made, the person who made the payment could plead against the recipient or the person who has known the fact of payment. The place of payment is decided by party's intention. If there is no agreement, the place of payment is place of business or residence of the electronically recorded claim holder.Payments of electronically recorded monetary claims made to the electronically recorded person are effective even in case where said electronically recorded Person does not have the right to receive the payment; provided, however, that this shall not apply to cases in which the person who made the payment has acted in bad faith. Whether perform before the date of payment is decided by party's intention. The electronically recorded claim holder could receive and reject the payment after the date of payment, if electronically recorded claim holder received, the payment which happened after the date of payment may be compared with the payment which happened in the date of payment. Whether permit part payment is decided by party's intention. If there is no agreement, the electronically recorded claim holder could reject part payment, the guarantor may assert a defense for rejecting part payment against the electronically recorded claim holder, the pledge may require the electronically recorded claim holder to provide assurance. If there is no agreement of forbidding part payment, the electronic monetary claim recording institution must make payment record when the obligor took part payment.Whether extinguishment is decided by obligor's intention when the electronically recorded monetary claim is merger except that the electronically recorded monetary claim has been created pledge. Persons listed in the following respective items may not request the performance of obligations that arises from the Electronically Recorded Guaranty (hereinafter referred to as "Electronically Recorded Guaranty Obligation") against the persons prescribed in said respective items, even if they acquire the Electronically Recorded Monetary Claims: (i) Obligor in accrual record: Electronically Recorded Guarantor; and(ii) Electronically Recorded Guarantor: Other Electronically Recorded Guarantors (limited to those who could exercise the Special Right to Obtain Reimbursement against the Electronically Recorded Guarantor listed in this item if payment or other act to extinguish the obligation recorded as principal obligation in exchange for his/her property had been conducted).The obligor may not assert a defense arising from set-off the electronically recorded claim holder of accrual record against the assignee except that the intention of set-off has been recorded. The obligor may assert a defense against recipient or the person who has known the fact of payment which set-off is not made payment record. The obligor may assert a defense against anybody which set-off has made payment record. This set-off shall not have retroactive effect, unless the party's agreement.Electronically recorded monetary claims shall be extinguished in case where said Claims have not been exercised for two years for reason of prescription. The extinctive prescription commences to run when it has become possible to exercise the right. The extinctive prescription of the electronically recorded claim holder commences to run on payment date. The extinctive prescription of the person who has special right to reimbursement commences to run on date of payment record. The extinctive prescription shall not have retroactive effect. The electronically recorded claim holder has claim right for restitution of interests after the expiration of extinctive prescription if cause claim extinguished or cause claim is not extinguished but assigned others.Chapter VI Improve Claim Finance of Legal Regulations of China by Using the Experience of Japanese Electronically Recorded Monetary Claims Act for ReferenceIt is an effective means that improving domestic law by using the experience of other countries for reference. In order to create and regulate the market of electronically recorded monetary claims and reduce the cost of legislation and realize modern of civil law and acquire equality of legislative power in the international community, China should improve claim finance of legal regulations by using the experience of Japanese electronically recorded monetary claims act for reference. There are following conditions which China could use the experience of Japanese electronically recorded monetary claims act for reference: China has entered the network society; China has established a relatively complete socialist market economic system; The electronically recorded monetary claims act has technical feature; Cultural is no longer an important factor in the development of law.Justice is fundamental evaluation criteria for law. Electronically Recorded Monetary Claims Act in China should use the experience of Japanese electronically recorded monetary claims act for reference after evaluating it by scientific talents criteria. Law is not only legal text or regulation text but also Ideas, Values and Basic Principles. The most important thing of using the experience of other country's law for reference is rebuilding the system of Ideas and Values behind legal orders and legal text. In order to realize modernization of Claim Finance Act of China, we should cleanse out-of-date ideas of inscribed claims assignment with advanced ideas of Japanese electronically recorded monetary claims act.