A Look at How Japan Reformed Payment Orders

I recently read the op-ed by Judge Ch'en Yü-hsiu, "Payment Orders Lacking Res Judicata Increase Likelihood of Litigation," which echoed my piece, "Payment Orders Truly Must Be Reformed." I would like to express my respect for our shared condemnation of slothful judicial administrative bureaucrats, and respond to Judge Ch'en's argument—that abolishing res judicata is a mistaken legislative direction—by examining Japanese legislative precedents:

Under the former Japanese Code of Civil Procedure, the urging procedure included payment orders and declarations of provisional execution, which possessed res judicata (i.e., binding force) if not objected to. After the bursting of Japan's economic bubble, payment orders were abused by collection agencies, prompting the legal profession to initiate reforms with the following key points:

1. Payment orders were renamed "payment urgings."
2. Payment urgings and declarations of provisional execution were changed to be issued by court clerks.
3. Legal basis was added for processing urging procedures through electronic data systems.

Under the revised new law, finalized payment urgings are not recognized as having res judicata; parties disputing the establishment of a payment urging may file a debtor's objection lawsuit for relief. The new law took effect on January 1, 1998, and has been in place for 17 years. It has successfully reformed abuses without reducing the public's utilization rate of payment urgings.

Similar to the Japanese legislative precedent, the draft passed in the first reading by the Legislative Yuan also limits payment orders to having "enforceability" rather than "res judicata" (i.e., binding force). Although the content of the claim is not conclusively determined, it can serve as an executive title to proceed with compulsory execution first, and only disputed portions will enter litigation proceedings for contention. Much like the current system of rulings on promissory notes, there is no practical difficulty in operation. As for the length of the original claim's statute of limitations and preventing claims from being extinguished by prescription, these are matters that creditors ought to attend to themselves. Furthermore, if financial institutions or creditors with short-term limitation periods choose to obtain a final and binding judgment as an executive title through "litigation" rather than resorting to urging procedures, this is also the result of the parties' exercise of procedural choice. In practice, some financial institutions already have "promissory note rulings" available for execution, yet they still choose to initiate separate lawsuits or apply for payment orders. This distinction arises because promissory notes do not allow claims for penalty charges, whereas loan agreements do, and such practices mostly apply only to unsecured loans—there is no necessary connection to extending the limitation period!

Japan's abolition of the res judicata of payment orders did not cause the Japanese judiciary to collapse. Abolishing the res judicata of payment orders in Taiwan is not nearly as terrifying either. Debtors who do not dispute a claim yet are unable to pay simply do not care about the amount of litigation or non-contentious fees. What truly needs to be addressed are those debtors who do raise disputes. When creditors interrupt the limitation period through applications for compulsory execution, it just happens to allow creditor-debtor relationships with genuine disputes to be promptly resolved through litigation proceedings. Is this not precisely the purpose for which the judiciary exists? Let us not forget that the judiciary exists for the people, rather than forcing the people to accommodate flawed judicial practices. I once again urge legislators to pass the payment order amendments during this legislative session to meet the fervent expectations of the public!