Nagoya Citizen Ombudsmen v. Director of the Central Japan Economics and Industry Bureau of the Ministry of Economics and Industry

1083 Hanrei Times 311, 13 December 2001, (Nagoya District Court, Japan)

Theme:	Freedom of information
Sub-Issues:	Exceptions
Test:	Importance of freedom of expression
Penalty:
Decision:	A judgment ordering disclosure requested
Jurisdiction:	Japan (Nagoya District Court)

Facts:

A non-profit foundation was formed to organise and manage a World Exposition to be held in Aichi prefecture (near the city of Nagoya) in 2005 (the "Expo Foundation"). The Expo Foundation submitted various documents to the Central Japan office of the national Ministry of Economics and Industry. A local citizens group filed requests under Japan's national Freedom of Information Act to examine these documents.

In its response, the Ministry denied two types of information: 1) a list of financial institutions in negotiation with the Foundation to provide this funding, and 2) cash flow projections for the project. The Ministry relied on Article 5(2) of the Freedom of Information Act, which exempts business information from disclosure in cases where "there is a risk that public disclosure would cause injury to the rights, competitive standing or other legitimate interest" of a business entity or individual. The same rule applies to information created by the government itself or received from a third party. The requesters filed suit seeking an order overturning the Ministry's decision.

Held:

The Court granted the request, ordering disclosure of both types of information.

The Court held that business-related information in the possession of the government must be disclosed upon request unless there is objective evidence indicating that disclosure would result in injury to the "rights, competitive standing or other legitimate interest" of a business entity or individual. In assessing whether such objective evidence exists, government officers should conduct "a comprehensive review including elements such as the nature and content of the information under review, its relationship to information already published, and specific conditions surrounding these matters."

The Court stated that "because businesses are allowed to engage in free business activities as constituent elements of society", Japan's Freedom of Information Act provides an exemption in order to protect them from injury that may arise from disclosure. In applying this exemption, the Court first quoted the purpose of Japan's Freedom of Information Act, as set forth in Article 1 of the statute:

In accordance with the principle that sovereignty resides in the people, by providing for the right to examine administrative documents, the purpose of this law is to strive for greater disclosure of information held by administrative organs thereby ensuring that the government is accountable to the people for its various operations, and to contribute to the promotion of a fair and democratic administration that is subject to the accurate understanding and criticism of the people. (Article 1)

The Court then noted that Article 5 of the law establishes disclosure as the "general rule" subject to exceptions. In light of the foregoing, the court ruled that the business information exception should apply "only in cases where it can be objectively shown that there is a risk that public disclosure would cause injury to the rights, competitive standing or other legitimate interest of a business entity or individual." Citing a 27 November 2001 decision of the Supreme Court (third petty bench), the Court also said that "to subjectively feel that one does not wish the information to be known to other persons is insufficient".

The defendant government agency had argued that "if the information comes within the category of secret sales, management or financial information," and if "applying the rules of experience, there is a risk of injury to a legitimate interest," then the exemption should apply immediately. There would be no need for a concrete showing of potential disadvantage.

The Court firmly disagreed with this contention, holding that in light of the express purposes of Japan's freedom of information law, it could not recognize "rules of experience" and that it would be inappropriate to exempt all information formalistically labelled as sales, management or financial secrets. Then the Court announced its core principle:

The judgment whether information is exempt must follow the Supreme Court decision cited above, the existence or non-existence of the objective risk to be determined by a comprehensive review including elements such as the nature and content of the information under review, its relationship to information already published, and specific conditions surrounding these matters.

Regarding the names of the financial institutions, the Court noted that terms of the proposed loans appeared to be within a range typical in the marketplace and therefore "even if the proposed lenders names were made public, it is hard to believe this would invite scrutiny or criticism."

The Court concluded that, "[w]e cannot find an objectively apparent risk that disclosure of the names of the proposed financial institutions would cause injury to the Foundation's relationships of trust [with the proposed lenders] or cause difficulties in fundraising."

Regarding financial projections, the Ministry had withheld the information on the basis that disclosure would cause confusion among the public because the projections showed only tentative numbers that would later be subject to change. According to the Ministry, there would be risk that citizens and public opinion would misunderstand or falsely interpret the data to be final.

The Court disagreed with this contention, holding that since the data was clearly labelled as tentative, there was no risk that the mass media or members of the public would misunderstand or mistakenly interpret the data.

The government agency had finally argued that there was a strong likelihood that disclosure of such information as income from expected operations would injure its negotiating position with potential business partners.

The Court held that there must be a clear risk before an exemption can be applied on this ground:

As a general matter, it is not inconceivable that prematurely revealing the details of one's position to the other side may cause disadvantage in settling the conditions of a negotiation. However, according to the evidence, information at issue ... includes nothing more than annual amounts. We can assume that it does not include details such as which lender will provide how much funding or the conditions to use of trademarks or joint advertising. It is difficult to conclude that disclosure of this kind of information would cause an objectively apparent obstruction to negotiations with another party or to the financial operations of the Foundation.

Note: The defendant appealed this decision, but the Ministry later vacated the initial determination and the appeal was dismissed as moot.

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