Shaping and Re-shaping the Duty of Loyalty in Japanese Law

Abstract

AbstractThe duty of loyalty has been notoriously vague since its introduction into Japanese law. The vagueness of the duty becomes particularly problematic because although the duty overlaps with the duty of care, a breach of each of the duties is subject to different remedial rules. By focusing primarily on duties owed by a trustee and agent, this article attempts to re-define the duty of loyalty and clarify the conceptual relationship between the duties of loyalty and care in Japanese law. The article first explains the current complexity in the scope and nature of the duty of loyalty, and the relationship between the duties of loyalty and care in corporate, trust, and agency laws in Japan. Second, borrowing ideas from Lionel Smith's account of the fundamental nature of the fiduciary duty, this article attempts to re-shape the concept of the duty of loyalty while properly differentiating it from the duty of care in Japanese law.