2007.12.11

2007 (Kyo) 23

Minshu Vol. 61, No. 9

Decision concerning whether, in the case where a financial institution is requested in a civil suit to disclose customer information as a party outside the suit, if the customer him/herself has the obligation to disclose it as the party to the suit, the said information can be protected as professional secrets set forth in Article 197, para.1, item 3 of the Code of Civil Procedure

Case of appeal with permission against the decision to rescind the order to submit a document

Decision of the Third Petty Bench, quashed and decided by the Supreme Court

Nagoya High Court, Decision of March 14, 2007

1. Where a financial institution is requested in a civil suit to disclose customer information as a party outside the suit, and the customer him/herself has the obligation to disclose it as the party to the suit, the said information, except where the financial institution has its own interest in protecting the information as professional secrets, cannot be protected as professional secrets set forth in Article 197, para.1, item 3 of the Code of Civil Procedure.

2. Where, in the proceedings of a civil suit between X and Y, X has filed a petition for an order to submit a document against Z, a financial institution, so as to have Z submit written records of the transactions between Y and Z, given the factual circumstances including the facts (i) that if the said records are held by Y, they would not fall under any of the categories prescribed in Article 220, item 4 of the Code of Civil Procedures and therefore Y would have the obligation to submit them, and (ii) that Z cannot be deemed to have its own interest in concealing the transaction records, the said records cannot be regarded as a document stating information that should be protected as professional secrets under Article 197, para.1, item 3 of the said Code and they also does not fall within any of the categories of documents prescribed in Article 220, item 4(c) of the said Code.
(There is a concurring opinion concerning 1 and 2.)

(Concerning 1 and 2) Article 197, para.1, item 3 of the Code of Civil Procedure; (Concerning 2) Article 220, item 4(c) of the Code of Civil Procedure

Article 197, para.1, item 3 of the Code of Civil Procedure
(1) In the following cases, a witness may refuse to testify.
(iii) Where the witness is examined with regard to matters concerning technical or professional secrets.

Article 220, item 4(c) of the Code of Civil Procedure
The holder of the document may not refuse to submit the document in the following cases:
(iv) In addition to what is listed in the preceding three items, in cases where the document does not fall under any of the following categories:
(c) Documents stating the fact prescribed in Article 197, para.1, item 2 or the matter prescribed in item 3 of the said paragraph, both of which are not discharged from the duty of secrecy

The decision of prior instance is quashed, and the appeal filed against the decision of first instance is dismissed.
The appellee shall bear the whole cost of the proceedings for the appeal.

Concerning the reasons for the appeal argued by the appeal counsels, TACHI Masanori, et al.
I. According to the records, the outline of this case is as follows:
(1) In the suit on the merits of this case, the appellants, who are A’s heirs, assert that they have the right to seek abatement of a gift based on their legally reserved portions in the property inherited from A, and request B, who is another heir of A, to confirm that the appellants have co-owners’ shares in the real estate included in property inherited from A and to complete the procedure for registration of the transfer of co-owners’ shares in the real estate, and also request B to pay money equivalent to their co-owners’ shares in A’s deposits and savings. In this suit, the parties dispute over whether the money withdrawn by B from A’s deposit and savings account while A was alive has been appropriated for any expenses incurred for the sake of A or has been acquired by B.
(2) The appellants allege that the money withdrawn by B from the deposit account established in A’s name and acquired by B constitutes a special benefit given by A to B in the form of a gift, or by receiving the withdrawn money, B has assumed the obligation to return unjust enrichment to A or the liability to pay damages for a tort to A. Based on these allegations, the appellants, on the ground that it is necessary for the purpose of proving the fact that B has deposited the said withdrawn money in the deposit account that B established at Hirata Branch Office of the appellee, a financial institution, filed a petition for an order to submit a document (hereinafter referred to as the “Petition”) so as to have the appellee submit the written records of the transactions conducted between B and the appellee’s Hirata Branch Office after 1993 (hereinafter referred to as the “Records”). In response, the appellee argues that it does not have the obligation to submit the Records because the Records fall within the scope of “professional secrets” prescribed in Article 220, item 4 (c) and Article 197, para.1, item 3 of the Code of Civil Procedure.

2. The court of first instance granted the appellants’ Petition, holding that the Records could not be regarded as a document stating professional secrets. However, the court of second instance revoked the decision of first instance and dismissed the Petition, on the following grounds.
Financial institutions maintain the relationships of mutual trust with their customers and carry out their operations smoothly by keeping secret the contents of the transactions with their customers and other information on their customers that they have learned in relation to such transactions. If a financial institution discloses such information, it would obviously face difficulties in maintaining or carrying out its business because customers might refrain from having transactions with such a bank. Financial institutions prepare written records of transactions for the purpose of clarifying the contents of the transactions with their customers, and they do not intend to disclose the transaction records to any person other than the parties to the respective transactions. In this respect, financial institutions have the duty to keep the customers’ secrets, and if they breach this duty, they might suffer disadvantages, for example, by losing trust of customers in general and by customers refusing to deal with them, which could make it difficult for them to maintain and carry out their business in the future. In this case, it is obvious that the Records, which can clarify the full particulars of the transactions with B, are a document stating professional secrets. Certainly, it is necessary to take into consideration the purposes of discovering the truth and realizing a fair trial when determining whether or not it is allowable to refuse to submit a document. However, the Petition in this case should inevitably be deemed to be filed for the purpose of sounding out, and it cannot be regarded as being indispensable for the purpose of discovering the truth or realizing a fair trial. Consequently, the appellee should be allowed to refuse to submit the Records under Article 220, item 4(c) and Article 197, para.1, item 3 of the Code of Civil Procedure.

3. However, the determination of the court of second instance mentioned above cannot be affirmed, on the following grounds.
Financial institutions owe the duty of confidentiality under law merchant or by contract to their customers with regard to customer information such as the information on the contents of transactions between them and their customers and the information on customers’ credibility that they have learned in the course of the transactions with customers, and they are prohibited from divulging the customer information to outsiders without good reasons. However, such duty of confidentiality owed by financial institutions is effective only in the relationships with individual customers based on the grounds mentioned above. Therefore, where a financial institution is requested in a civil suit to disclose certain information on a customer as a party outside the suit, and the customer him/herself has the obligation to disclose it as the party to the suit, if the financial institution discloses the customer information in the court proceedings as requested, it should not be deemed to be in breach of the duty of confidentiality, since the customer does not have any justifiable interest to be protected by the financial institution’s duty of confidentiality with regard to the said customer information. In such case, we should conclude that financial institutions are not allowed to refuse to disclose the customer information in the court proceedings by alleging that they owe the duty of confidentiality to their customers, and the requested customer information, except where the financial institutions have their own interest in protecting that information as professional secrets, cannot be protected as professional secrets set forth in Article 197, para.1, item 3 of the Code of Civil Procedure.
In this case, the Records state the records of the transactions conducted between the appellee and its customer, B. The appellee cannot be deemed to have its own interest in keeping the transaction records in secret but it only owes the duty of confidentiality to B with regard to these records. If the Records are held by B, a party to the suit on the merits, it would not fall under any of the categories prescribed in Article 220, item 4 of the Code of Civil Procedures and therefore the appellee would have the obligation to submit it. Therefore, it should be concluded that B does not have any justifiable interest to be protected by the appellee’s duty of confidentiality with regard to the transaction records stated in the Records, and that the appellee, even if it submits the Records in the proceedings of the suit on the merits, should not be deemed to be in breach of the duty of confidentiality. Consequently, the Records cannot be regarded as a document stating the information that should be protected as professional secrets, and therefore the appellee is not allowed to refuse to submit the Records in response to the Petition.

4. For the reasons stated above, the determination of the court of second instance mentioned above contains a violation of laws and regulations that has apparently affected the court decision. The appeal counsels’ argument is well-grounded in that it alleges this point, and the decision of second instance should inevitably be quashed. According to the reasoning presented above, the decision of first instance that granted the appellants’ Petition is justifiable, and therefore we dismiss the appellee’s appeal against the decision of first instance.

Therefore, the decision has been rendered in the form of the main text by the unanimous consent of the Justices. There is a concurring opinion by Justice TAHARA Mutsuo.

The concurring opinion by Justice TAHARA Mutsuo is as follows.
This case concerns a petition for an order to submit a document containing the customer information that a financial institution has acquired in the course of transactions with the customer. The court opinion concludes that the decision of prior instance should be quashed because the document in question cannot be regarded as a document stating the information that should be protected as professional secrets set forth in Article 197, para.1, item 3 of the Code of Civil Procedure. In light of the fact that the decision of prior instance, on the contrary, regarded the document in question as a document stating professional secrets set forth in the said item, I would like to give my opinion with regard to the relation between customer information and professional secrets.
Financial institutions, through transactions with their customers, acquire information on the transactions of their customers and various other information on customers related to the transactions (hereinafter collectively referred to as “customer information”). Customer information can be roughly categorized as follows: (i) transaction information (e.g. details of deposit transactions or loan transactions, agreements on bank transactions, contracts for loan for consumption); (ii) information on customer that the financial institution has acquired from the customers in association with the transactions between them (e.g. financial statements, supplementary schedules, lists on the status of mortgages, business plans); (iii) related information on a customer that the financial institution has acquired in the course of transactions with the customer (e.g. information on the creditability of the customer’s trading partner(s), personal information on customer’s officers); (iv) materials for the financial institution’s internal analysis of the status of customers’ creditability, information on customers’ creditability obtained from third parties, etc. Among these types of information, those mentioned in (i) and (ii) are held by the customers themselves as well as the financial institution, whereas those mentioned in (iii) and (iv) can be regarded as information independently owned by the financial institution.
It is considered that even where a financial institution does not enter into confidentiality contracts with individual customers with regard to customer information, they generally have, by expressed or implied contract or under law merchant or doctrine of good faith, the duty of confidentiality for customer information, and that they are not allowed to divulge such information to outsiders without good reasons. This duty of confidentiality is, as clearly indicated above as its legal grounds, effective only in the relationships with individual customers concerned. Although it is sometimes argued that financial institutions owe the duty of confidentiality for customer information as a whole, this argument should be construed to only mean that financial institutions, as a result of the accumulation of the general duties of confidentiality that they owe to each of their customers, have come to assume the duty of confidentiality for a wide range of customer information. In this respect, financial institutions’ duty of confidentiality differs from the professional duty of confidentiality owed by doctors and lawyers as set forth in Article 197, para.1, item 2 of the Code of Civil Procedure.
Since the general duty of confidentiality for customer information, as explained above, prohibits divulgation of the information to outsiders without good reasons, it is needless to say that financial institutions are allowed to disclose customer information to third parties not only in the case where they have the legal obligation to disclose it but also in the case where there are justifiable grounds for permitting them to disclose it to third parties. Such justifiable grounds should include, in principle, investigations by the Financial Services Agency or other competent authorities, tax investigations, court orders, and any other cases where disclosure is required based on certain statutory grounds, and it should be said that even if financial institutions disclose customer information as ordered or requested in these cases, they would basically never be held liable for the breach of the general duty of confidentiality owed to customers.
Also, since this duty of confidentiality is effective only in the relationships with individual customers as explained above, in the case where the customer him/herself has disclosed a specific piece of customer information to a third party or has the obligation to disclose the specific piece of customer information held by him/her to a third party, the customer does not have any justifiable interest to be protected by the financial institution’s duty of confidentiality for that piece of customer information with regard to that third party, unless there are any special circumstances, and therefore even if the financial institution discloses the information to that third party, it does not amount to the breach of the duty of confidentiality.
Consequently, where a customer of a financial institution is requested in the court proceedings of a civil suit by the court to submit a specific piece of customer information and the customer should have complied with the request, even if the financial institution submits that piece of customer information as requested by the court, it does not amount to the breach of the duty of confidentiality. Among the aforementioned types of customer information, those mentioned in (i) and (ii) can be regarded as customer information that should be submitted in such case. The document requested in this case falls under the category of information mentioned in (i), and as pointed out in the court opinion, if it is held by B who is a customer of the appellee, and a petition for an order to submit it is filed against B as a party to the suit on the merits, he/she has the obligation to submit the document because it falls under none of the cases prescribed in Article 220, item 4 of the Code of Civil Procedure. Therefore, even if the appellee follows the order to submit the document, it does not amount to the breach of the duty of confidentiality, without needing to examine whether or not there are any justifiable grounds as mentioned above.
On the other hand, even where a document for which a petition for an order to submit is filed against a financial institution is categorized as customer information mentioned in (i) or (ii), if it is not a document for which the customer concerned does not have the obligation to submit as a party to the suit or if the customer information contained in the requested document pertains to any person other than the parties to the suit, a question would arise as to whether or not following the order to submit can be regarded as a justifiable ground for being discharged from the general duty of confidentiality that the financial institution owes to the customer. Meanwhile, documents categorized as customer information mentioned in (iii) or (iv) can be regarded as containing the information which the financial institution has independently gathered and for which it has its own interest of confidentiality, and what is more, these documents can also be regarded as documents containing the information protected by the aforementioned general duty of confidentiality that the financial institution owes to individual customers to whom the customer information pertains.
Now, I consider the relation between the customer information for which a financial institution owes the duty of confidentiality to its customers, and the order to submit a document issued by the court to the financial institution. Since an order to submit a document imposes a general obligation for the purpose of realizing a fair trial, if the financial institution follows the order to submit a document, it can be, in principle, regarded as a justifiable ground for being discharged from the general duty of confidentiality owed to the customer concerned, and therefore it should be said that the customer may not charge the financial institution for the breach of the duty of confidentiality only because it has followed the said order.
On the other hand, in the case where a petition for an order to submit a document containing customer information is filed against a financial institution, if keeping the duty to confidentiality owed to its customers deserves protection from the perspective of protecting a financial institution’s professional secrets, the financial institution may refuse to comply with the petition for an order to submit the said document under Article 220, item 4(c) and Article 197, para.1, item 3 of the Code of Civil Procedure. It can be construed that the financial institution may refuse to submit customer information by reason that the information constitutes professional secrets set forth in Article 197, para.1, item 3 of the Code of Civil Procedure, in the cases where the disclosure of the information would make it difficult for the financial institution to carry out its business and therefore the financial institution has a material interest in keeping the information secret, or more specifically, in the cases where, if the financial institution discloses the customer information, it would have a serious influence on the relationship of mutual trust with the customer concerned or it is very likely that the customer would discontinue the transactions with the financial institution (See 1999 (Kyo) No. 20, decision of the First Petty Bench of the Supreme Court of March 10, 2000, Minshu Vol. 54, No. 3, 1073). Whether or not a certain piece of customer information constitutes professional secrets in the meaning described above can be determined by comparing, on a case-by-case basis, the type, nature, and contents of the information to be protected as secrets by the duty of confidentiality, the necessity to keep the said information secret, and the nature and degree of the influence on the financial institution’s business in the case where the document containing the information is submitted to the court as evidence, on one hand, with the necessity to identify the substantial truth by having the document containing the said information be submitted to the court as evidence, on the other hand.
When a petition for an order to submit a document is filed by a third party against a financial institution, the institution may sometimes have the obligation, under a confidentiality contract with the customer concerned, to allege that the document contains professional secrets and therefore the financial institution is unable to comply with the petition. For instance, where a financial institution holds customer information such as a draft M&A contract that it has received from a customer after entering into a confidentiality contract upon accepting an application for a loan for the M&A project and a petition for an order to submit said information is filed against the financial institution, the financial institution should be deemed to have a contractual duty under the said confidentiality contract to allege that the said customer information constitutes professional secrets. Furthermore, even where the document containing the customer information for which a petition for an order to submit a document is filed is only protected by the aforementioned general duty of confidentiality, if the financial institution can easily recognize that the customer concerned may refuse to submit the said document, the financial institution should be deemed to also have the obligation under the general duty of confidentiality to allege that the customer information constitutes professional secrets.
If the financial institution has, without making such an allegation despite its obligation to do so, followed the order to submit a document and submitted the requested document, it should be said that there is the possibility that the financial institution may be liable for a default of the obligation to the customer. On the other hand, if the financial institution has made such allegation but the court, having examined the allegation, has nevertheless issued an order to submit a document on the grounds that the requested customer information does not constitute professional secrets, the financial institution has the obligation to follow the order, and it should never be blamed by the customer for the breach of the duty of confidentiality because of following the order.
As explained above, whether or not the customer information held by a financial institution constitutes professional secrets should be determined on a case-by-case basis. The scope of information that the financial institution may allege as constituting professional secrets based on the duty of confidentiality owed to its customers includes, not only the customer information for which a specific confidentiality contract has been concluded and the customer information that the customer concerned him/herself will surely refuse to submit, but also information that is generally considered as highly confidential (such as information on technologies under development and information on the customer’s M&A projects or business strategy) among the information in the above mentioned category (ii), as well as part of the information in categories (iii) and (iv). Particularly, information in category (iv) may be information that is not only customer information but also information that can be regarded as professional secrets from the financial institution’s own standpoint. But, this point is out of the scope of opinion that I would like to state here.
I admit that what I have mentioned above goes beyond the bounds of a concurring opinion attached to the court opinion, but I have stated it because the decision of prior instance referred to the relation between the customer information held by a financial institution and the order to submit a document issued by the court.

Justice TAHARA Mutsuo
Justice FUJITA Tokiyasu
Justice HORIGOME Yukio
Justice NASU Kohei
Justice KONDO Takaharu