Key statutes, regulations and adopted international standards
In Japan, data protection regulation for private sector and public sector are separately legislated. We explain below the overview for both sectors, with a focus predominantly on the private sector, which is particularly relevant to this book’s readership.
Rules for business operators in the private sector
The Act on the Protection of Personal Information
The Act on the Protection of Personal Information (the APPI) (Act No. 57 of 2003) is the principal legislation in Japan dealing with data protection regulating the private sector. The APPI originally came into force in 2005 and was drastically overhauled in 2017 to take into account rapid technological developments (artificial intelligence, big data, etc) and globalisation, which have brought about new challenges and the increasing need to protect personal data in an environment where the scale of data collection and the sharing of personal data have increased tremendously.
The APPI sets forth obligations imposed on ‘business operators’ (see ‘Foreign groups with an office in Japan’). As the convenient exemption applicable to small and medium-sized enterprises was abolished as part of the 2017 amendments, almost all Japan-based business operators will be covered by the APPI (but not exclusively), regardless of the amount of personal data they are handling or the size of their business (see ‘The effect of local laws on foreign businesses’).
To clarify and ensure the enforcement of these obligations, the APPI sets forth a basic framework regulating the responsibilities and policies of the national and local governments with regard to the protection of personal information (see ‘Regulatory bodies’ and ‘The effect of local laws on foreign businesses’); establishes the Personal Information Protection Commission (PPC) and defines its roles as the national data protection authority in Japan (see ‘Regulatory bodies’); and provides for a set of enforcement measures such as imprisonment or criminal fines.
The PPC has adopted guidelines to ensure the proper and effective implementation of action to be taken by business operators. The PPC’s general guidelines supplement the APPI and separate guidelines apply to specific sectors such as the finance, medical and telecommunications sectors.
Rules for public-sector organisations
Acts covering the protection of personal information in the public sector
Public-sector organisations need to comply with following:
- the Act on the Protection of Personal Information Held by Administrative Organs (Act No. 58 of 2003); and
- the Act on the Protection of Personal Information Held by Incorporated Administrative Agencies, etc (Act No. 59 of 2003).
All prefectures and municipal governments in Japan have set forth local regulations on the protection of personal information. The prefectures and municipal governments, and public schools or public hospitals of the prefectures and municipal governments, are covered by these local regulations.
The PPC is the sole national data protection authority in Japan. The local watchdog was set up as an authority independent from other government bodies. Pursuant to the terms of the APPI, the PPC chairperson and members exercise their judgement and authority independently. The main roles of the PPC are as follows.
- The PPC formulates basic policies on the protection of personal information in accordance with the APPI and promotes the protection of personal information in the public and private sectors. These basic policies include guidelines, which are updated from time to time.
- The PPC has the power to issue guidance and advice, request reports, conduct on-site inspections, make recommendations and issue orders to government institutions and business operators. The range of enforcement measures available is prescribed under article 42 of the APPI.
- The PPC promotes cooperation with data protection authorities in foreign countries through formal and informal exchanges of views with foreign data protection authorities.
- For the purpose of ensuring the proper handling of personal information, the PPC accredits private organisations (ie, accredited personal information protection-organisations) that provide services such as receiving complaints on the handling of personal information, the provision of advice to those making a complaint and the investigation of the circumstances surrounding a complaint based on the APPI. In addition, the PPC supervises these accredited organisations, requiring them to report on the conduct of their services, and may order them to improve their services or take any other necessary action.
The effect of local laws on foreign businesses
Foreign groups with an office in Japan
The APPI imposes obligations on business operators handling personal information (ie, business operators). A business operator is defined as ‘an entity using a personal information database for use in its business’. Public entities are expressly excluded from this definition. However, there is no similar carve-out for the benefit of companies incorporated in a foreign country or entities having their head office located in a foreign country (ie, a foreign company). This definition reflects the official position of the PPC that the APPI obligations and provisions equally apply to foreign companies if these foreign companies fall under the definition of business operator in Japan. The PPC takes the view that a foreign company is a business operator if it uses a personal information database for its business conducted in Japan, regardless of the place of incorporation or location of the head office.
Therefore, if a foreign company has a branch office or a business office in Japan, or if a foreign company conducts its business in Japan, and uses a personal information database for its business in Japan, this foreign company will fall under the definition of ‘business operator’. Furthermore, if a foreign company has a subsidiary in Japan using a personal information database for its business in Japan, this subsidiary falls within the definition of a business operator (although the foreign company itself might not necessarily be covered by the APPI). Accordingly, if a foreign company has an office in Japan, which falls under the definition of ‘business operator’, regardless of whether such office is branch, business office or subsidiary, APPI-complaint compliance systems must be put in place.
Foreign groups without an office in Japan
Even if a foreign company has no office in Japan, if this foreign company is collecting personal information from individuals in Japan in connection with a supply of goods or services to these individuals, certain obligations under the APPI would apply to them on an extraterritorial basis. Accordingly, these entities must take measures to comply with these provisions of the APPI.
Core principles on personal data
The key concepts under the APPI are the following:
- ‘Personal information’ means information by which a specific living individual is identifiable or information containing an individual identification code (ie, passport number or driver’s licence number). Personal information includes information that can be readily combined with other information and make the identification of a specific individual possible.
- ‘Personal data’ means personal information constituting a personal information database.
- ‘Personal information database’ means a collective body of information comprising personal information systematically organised to be able to retrieve personal information.
- ‘Personal information requiring special care’ means sensitive information categorised and defined under the APPI that requires special handling measures, including but not limited to the individual’s race, creed, social status, medical history, criminal record, and status as the victim of a crime (ie, sensitive personal information).
- ‘Anonymously processed information’ means information processed so that such information can no longer be used to identify a specific individual with the necessary safeguards prescribed by the APPI being taken to make it impossible to retrieve personal information.
Overview of the main obligations under the APPI
The following chart provides a brief outline of the obligations imposed on business operators for each phase during which information is handled.
Type of information
Summary of duties
Disclosure of the purpose of use prior to collection of personal information
No need to obtain the individual’s consent (except for sensitive personal information)
Personal information and personal data
No need to obtain the individual’s consent when utilising within the scope of a previously disclosed purpose of use
Duty to take reasonable security measures including preventing the leakage, loss of, or damage to, personal data when handling personal data
III Third-party disclosure
In principle, individual consent is required for disclosure of personal data to a third party
Consent requirement is exempted in case of entrustment of personal data, disclosure upon business succession (ie, M&A), and joint use
Regarding joint use, if a business operator informs in advance or ensures that the individual can easily become aware of five statutory elements, the business operator can jointly utilise personal data with a third party, such as a subsidiary, without obtaining any prior individual consent to the disclosure
If the business operator meets the opt-out process requirements, there is no need to obtain the individual’s consent upon each disclosure of personal data (except for sensitive personal information)
An entity disclosing personal data to a third party must keep track (ie, records) of disclosure
An entity receiving personal data from a third party must confirm the status of the disclosing party and keep track of disclosure
Cross-border transfer restrictions
In principle, individual consent is required for disclosure to a third party in a foreign country
Consent requirement is exempted in those cases described below.
Cross-border transfer restrictions
Unless exemption requirements are met, a business operator disclosing personal data to a third party in a foreign country must obtain the individual’s prior consent. However, the consent requirement is exempted in the following cases:
- Transfer to a country that is designated by rules of the PPC as a foreign country having established a personal information protection system recognised as being subject to equivalent standards to those applicable in Japan with regard to the protection of an individual’s rights and interests (currently, only the European Union is designated as such (effective as of 23 January 2019))
- The disclosing business operator and the recipient ensure that the recipient develops and implements arrangements through appropriate and reasonable measures for the handling of personal data to be performed consistently with the APPI obligations provisions. These measures may include:
- contracts between the disclosing business operator and the recipient; or
- internal rules that are commonly applied to the disclosing business operator and the recipient.
- The recipient receives certification based on the APEC cross-border privacy rules framework (CBPR). The PPC explicitly accepts the APEC-CBPR certification as qualified to meet the standards for ’recognition based on a cross-border privacy rules framework’.
Overview of the main enforcement measures in the APPI
The main enforcement measures are: imprisonment or criminal fine; an order to cease, desist and take other necessary action to rectify a violation of the APPI against the business operators; or any other action deemed necessary by the PPC within its authority.
Automated processing, profiling and data analytics
There is currently no regulation specifically restricting automated processing, profiling and data analytics. Under article 12 of the Supplement of the Act amending the APPI, the Japanese government is required to review the rules governing personal information every three years in the light of global trends, technological and industrial developments affecting the protection of personal information. Therefore, the Japanese government may have to review the restrictions on profiling in 2020.
Under the current interpretation of the APPI, even if information that is equivalent to sensitive personal information is generated or presumed as a result of profiling, this information does not qualify as sensitive personal information under the APPI.
In addition, a business operator handling anonymously processed information is not allowed to collate this information with other information to identify an individual to whom the anonymously processed information relates under the APPI. However, if a business operator identifies a certain individual as a result of profiling using anonymously processed information, this business operator is not considered to have collated anonymously processed information with other information to identify an individual to whom the anonymously processed information relates.
Communications and marketing
Telecommunications businesses are very large-scale businesses involving the public and, given the nature of their business, operators generally handle large amounts of personal information. Accordingly, the Ministry of Internal Affairs and Communications (MIC), acting as supervisory authority for the telecommunications sector, has issued the following guidelines.
Guidelines regarding the protection of personal information for the telecommunications sector
These guidelines contain rules that telecommunication business operators should comply with when they collect, use and transfer information such as communications history, information on callers that includes callers’ ID and location information (caller information) for telecommunications (phone calls).
Guidelines regarding personal information of the caller in the service of notification of caller information
Certain telecommunication business operators provide a service of notifying the caller’s information to the receiver of the call (the caller information notification service). Because caller information is treated as personal information, the MIC has adopted the ‘Guidelines regarding personal information of the caller in the context of caller information notification services’.
These guidelines contain rules that caller information notification service providers should comply with when they record, use and transfer caller information.
The MIC has established a working group regarding the handling of information stored in smartphones such as location information and history of communications (smartphone user information) and this working group has published a Smartphone Privacy Initiative paper that reports their conclusions on how smartphone user information should be protected.
The MIC has also established a committee for the review of the handling of location information in the case of emergency. This committee has reviewed how location information should be utilised for accident prevention. This committee has issued a non-binding report on how such information be protected.
The Act on Specified Commercial Transactions
Under this act, sellers or service providers can only make advertisement to consumers via email when recipients opt in to receive email; when sellers or service providers send email advertisement with notice of matters regarding contracts (ie, finalisation of an agreement and shipment of goods); or when sellers or service providers send an email advertisement with an email newsletter that is sent with consent from a recipient.
The Act on Regulation of Transmission of Specified Electronic Mail
Under this act, senders can only advertise via email when recipients opt in to receive such email; when recipients notify their email address to the sender in writing (for instance, by providing a business card); when recipients have a business relationship with the sender; or when recipients make their email address available on the internet for business purposes.
Right to request disclosure
A data subject may request disclosure of retained personal data to a business operator that holds such retained personal data. A business operator must disclose the retained personal data without delay in writing when having received such request.
However, the business operator is exempt from disclosing the retained personal data requested pursuant to article 28(1) of the APPI, in whole or in part, if:
- there is a possibility of harming a data subject or a third party’s life, body, assets or other rights and interests;
- there is a possibility of seriously interfering with the business operator from running its business properly; or
- the disclosure violates other laws and regulations.
Right to request correction, addition or deletion
A data subject may request a business operator to make a correction, addition or deletion (collectively, correction) in relation to the content of retained personal data when said retained personal data is incorrect. The business operator must conduct a necessary investigation without delay to the extent necessary to achieve a purpose of use and, based on the result thereof, make a correction of the content of the retained personal data when having received the request pursuant to article 29(1) of the APPI.
However, the business operator is exempt from making a correction where a special procedure concerning a correction of the content is prescribed by other laws or regulations.
Right to request suspension of use or deletion
A data subject may request suspension of use or deletion (suspension of use) of the retained personal data if that data is handled in violation of article 16 (purpose-of-use limitation) of the APPI, has been acquired in violation of article 17 (proper acquisition) of the APPI, or has been disclosed to a third party in violation of article 23(1) (Restriction on disclosure to a third party) or article 24 (Restriction on disclosure to a third party in a foreign country) of the APPI. A business operator must suspend the use of the retained personal data to the extent necessary to remedy the violation without delay, following receipt of a request made pursuant to article 30(1) or (3) of the APPI and when it has become clear that there is a reason for the request.
However, the business operator is exempt from suspension of use where a suspension of use of the retained personal data requires a large amount of expenses or other cases where it is difficult to fulfil a suspension of use, and when necessary alternative action is taken to protect the rights and interests of the data subject.
The role of the data protection officer
The APPI has no provision mandating the appointment of a data protection officer. However, a business operator is required to take necessary and appropriate action for the security control of personal data including preventing the leakage, loss or damage of its handled personal data. In connection with this provision, the PPC Guidelines require a business operator to take security control measures, including the following:
- Organisational security control measures: appointing a person responsible for handling personal data, establishing a system to respond to leakage, loss or damage or personal data, and conducting safety audits on systems that manage personal data.
- Human security control measures: employee training on the handling of personal data.
- Physical security control measures: access control to areas where important personal data is handled, and storage of documents containing personal data in a cabinet that can be locked.
- Technical security control measures: for example, installing a firewall on computers connected externally through networks, and putting restrictions on access to systems that handle personal data.
As stated in (1), since the appointment of a person responsible for handling personal data is listed as one example of organisational safety control measures in the PPC Guidelines, it is the prevailing practice in Japan for a business operator to appoint the responsible person whose tasks or roles are similar to that of a data protection officer in many other jurisdictions.
Procedure for dealing with data protection breaches and the consequences
For inspectors and investigators, the PPC has the power to require a business operator to submit necessary information or materials relating to the handling of personal information or have its officials enter a business office or other necessary places of a business operator, enquire about the handling of personal information, or inspect books, documents and other properties.
As to corrective measures, the PPC has the power to:
- issue guidance or advice against a business operator with regard to handling personal information;
- recommend a business operator to suspend the violation act or take other necessary action to rectify the violation when recognising there is a need to protect an individual’s rights and interests in cases where the business operator has violated the various provisions of the APPI; and
- order a business operator to take action in line with the recommendation when recognising that a serious infringement of an individual’s rights and interests is imminent in cases where the business operator having received a recommendation pursuant to article 42(1) of the APPI did not take action in line with the recommendation without legitimate ground.
A business operator who has violated an order pursuant to article 42(2) shall be subject to imprisonment with labour for not more than six months or a criminal fine of not more than ¥300,000.
Updates and trends
Reciprocal adequacy decision (European Union and Japan)
The European Commission adopted its adequacy decision on Japan on 23 January 2019. On the same date, Japan admitted the European Commission member states as jurisdictions giving adequate level of protection as regards personal data. These mutual adequacy decisions remove cross-border transfer restrictions of personal data between the European Union and Japan. Accordingly, the European Union and Japan comprise the world’s largest ‘free trade zone’ of personal data, which is in line with the Economic Partnership Agreement entered into between the European Union and Japan as of 1 February 2019.
Proposed amendment to the APPI
The APPI was originally enacted in 2003 and was revamped in May 2017 to strengthen data protection regulations in line with global standards. As mentioned above, at the time of the 2017 revision, it was agreed that the revised APPI would be reviewed every three years. At present, the PPC is reviewing the Act and preparing amendments due to become effective in 2020. Among others, the following three points are likely to be reviewed:
- right to request suspension of use regardless of violation of the APPI on business operators;
- the introduction of the concept of pseudonymisation; and
- the digitalisation of information disclosure.
In addition, the adoption of the ‘right to be forgotten’ has been discussed but is not expected to be covered in the 2020 review.
Images of individuals captured by a surveillance camera and facial recognition data obtained from these images fall under personal information if the images or data can be used to identify a specific individual.
In addition, when such images or facial recognition data are stored in a systematically organised manner, they fall under ‘personal information database’ and are treated as personal data.
Therefore, the regulations under the APPI would apply to the collection, use or transfer of images of individuals captured by a surveillance camera and facial recognition data obtained from those images.
Article 21, paragraph 2 of the Constitution of Japan guarantees the secrecy of any means of communications as a basic human right. In accordance with the Constitution of Japan, the Telecommunications Business Act, the Wire Telecommunications Act and the Radio Act in the area of telecommunications contain provisions protecting the secrecy of communications.
For example, the Telecommunications Business Act provides that ‘the secrecy of communications being handled by a telecommunications carrier shall not be violated’, which prohibits a third party other than originators and recipients from intentionally viewing communications managed by the telecommunications carrier. Any person who violates provisions of the Telecommunications Business Act is subject to criminal punishment. For example, any person who has violated the secrecy of communications handled by a telecommunications carrier shall be punished by imprisonment with labour of not more than two years or a criminal fine of not more than ¥1 million.
Accordingly, private organisations may not conduct email monitoring in principle. If a company investigates employees’ emails that are stored on an internal server to investigate misconduct in the company, this investigation may not violate the secrecy of communications or the right of privacy. However, when conducting an investigation, a cautious approach would be to obtain the consent of the data subject, and if this is not possible, it is recommended to obtain proper legal advice.
Benesse Corporation (Benesse) contracted Synform Co Ltd (Synform) for the development and operation of a system to analyse the personal information of Benesse’s customers. In 2014, it became known that an employee of a subcontractor of Synform had leaked personal information of multiple Benesse’s customers (such as name, gender, date of birth, address, telephone number and email address), and this incident attracted significant attention.
Regarding this case, several civil (Japanese-style) class action lawsuits have been filed against Benesse and Synform by customers based on tort, claiming damages for mental suffering. In one of these lawsuits, the Tokyo High Court entered a judgment on 27 June 2019, admitting the liability of Benesse and Synform and ordering them to pay ¥2,000 to each individual plaintiff.
This case demonstrates that it is important to comply with data protection regulations to mitigate risks of dispute. Furthermore, the judgment refers to the fact that Benesse has paid voluntary compensation to each victim (¥500 per person to approximately 35 million people). As a result of such voluntary compensation payment, Benesse recorded a ¥26 billion special loss during such fiscal year, including ¥6 billion to strengthen security controls and ¥20 billion to fund voluntary compensation.