Kigyō Hōgaku no Hōhō (Analytical Methods for Commercial Law)

This book is a collection of papers related to the methodology of commercial law studies.

The original title of this book is Kigyō Hōgaku no Hōhō, which directly translates to "methodologies for the studies of law of business entities." In Japanese legal scholarship, Shōhō (商法, commercial law) is generally used in the sense of the entire body of law concerning business entities, and the English title of this book, Analytical Methods for Commercial Law (University of Tokyo Press), follows this usage.
 
Pursuing the Methodology of Commercial Law Studies
 
I have long pursued the question of what methodology is most desirable for conducting interpretive and legislative arguments in the field of commercial law, centered on Company Law. This book contains papers discussing this methodology (Part 1) and papers applying this perspective to specific issues in commercial law, including Company Law, Secured Transactions Law, and Insolvency Law (Part 2).
 
The motivation behind writing this book stems from my critical awareness of the traditional methodologies in legal scholarship.
 
While I have long supported the "interest balancing theory" (or "interest consideration theory"), a prominent approach to statutory interpretation in Japan, I felt a distinct dissatisfaction with that approach. One key concern was the lack of adequate analytical tools in traditional legal studies to thoroughly investigate what interests are realized or protected, what interests are frustrated or unprotected, when designing legal systems. A systematic methodology was missing for analyzing the indirect effects of legal systems—how they influence people's behavior and, consequently, their interests.
 
To address this, I have actively incorporated knowledge from the field of "Law and Economics," which analyzes legal systems using economic methods, into my research. Law and Economics has developed useful tools for predicting and evaluating the effects of legal systems on people's interests. All the papers included in this volume incorporate such research findings.
 
The Importance of the "Efficiency" Standard
 
My other dissatisfaction with the traditional legal methodology, the interest balancing theory, was its failure to clearly articulate how the determination of normative judgment or “value judgement,” which, according to an advocate of this theory, serves as the "decisive factor" in interpretation and legislation, should be made.
 
Designing a legal system inevitably creates winners and losers, those who gain and those who suffer disadvantages. The question of whose interests should be prioritized requires a clear method of judgment.
 
The consistent position advocated throughout this book is that the question of "Will the legal system bring, on the whole, greater benefits to people in society?" is an extremely important factor in judging the desirability of a legal system. Specifically, a legal system is desirable if, when summing up benefits and disadvantages (negative benefits) regardless of who receives them, the net benefit is maximized.
 
As the standard for measuring the magnitude of these benefits, I adopt the "Efficiency" standard, which is influential in Law and Economics, deeming it fundamentally appropriate for the field of commercial law while remaining mindful of its limitations. The efficiency standard measures the magnitude of a benefit by the monetary value an individual would place on it (their willingness to pay).
 
Relation to Justice and Fairness
 
A natural question arises: can the desirability of a legal system be judged solely by the "Efficiency" standard, or are considerations of social justice and fairness also important? Based on my experience researching commercial law, I emphasize two points:
 
1. Legal systems supported by notions of fairness and justice can often be supported from the perspective of efficiency, as they are expected to increase the net benefit to society when widely adopted. For instance, prohibiting fraud is justified by efficiency because it prevents inefficient outcomes in transactions where information trustworthiness is compromised.
 
2. In many specific legal issues—such as the permissibility of defensive measures against hostile takeovers or the limits on the effectiveness of security interests in insolvency proceedings—it is often unclear what guidance the concept of fairness provides. By using the efficiency standard and leveraging economic insights for these issues, it has often been possible to gain valuable insights into which legal system is desirable.
 
This book compiles my ideas on methodology and the results of applying them to specific problems. The opening section, "Introduction," details the evolution of my methodological concerns and my current perspective on the methodology of corporate law studies. It also explains economic concepts such as "efficiency," and I would therefore be pleased if readers would first turn their attention to the Introduction.
 
I hope that many readers will recognize the analytical approach employed in this book as a powerful tool for assessing the desirability of legal systems, at least within the domain of commercial law.
 

(Written by TANAKA Wataru, Professor, Institute of Social Science / 2025)