Cross-border e-commerce terms: consumer sales, governing law and jurisdiction

Hello! I’m Noriaki Asato, representative attorney at LegalAgent.

A website originally built for Japanese customers starts receiving more orders from overseas. Product pages are available in English, but its terms still assume domestic sales. Can the operator simply specify Japanese law and give the Tokyo District Court exclusive jurisdiction?

When selling to consumers abroad, consumer protection rules in the country where they habitually reside may apply even if the terms select Japanese law. Jurisdiction agreements also face restrictions. The operator needs to identify the countries it serves, the products it sells and whether purchasers are consumers or businesses, then review both its terms and its actual order and return procedures.

Consumer protections that remain despite a choice of Japanese law

A governing-law clause selects the law used to determine matters such as the formation and effect of a contract. International consumer contracts, however, are subject to rules that the parties cannot necessarily exclude by agreement.

Where a Japanese court determines the applicable law, Article 11 of the Act on General Rules for Application of Laws is relevant. Paragraph 1 provides that, where the parties choose a law other than that of the consumer’s habitual residence, particular mandatory provisions of the latter law also apply if the consumer expresses to the business an intention that those provisions apply. Selecting Japanese law therefore does not eliminate all consumer protections under the other country’s law.

Without a choice of law, the general rule is that the law of the consumer’s habitual residence applies. Habitual residence concerns where a person’s life is based; it is not the same as nationality. A delivery address might be a temporary location or a forwarding service, so the destination country alone should not be treated as conclusive.

Paragraph 6 contains exceptions. These include certain contracts concluded after a consumer travels to the country where the business has an establishment, but there is an exception to that exclusion where the business solicited the trip. Neither buying at an overseas shop nor placing an order online determines the answer by itself. Relevant facts include solicitation, the places of contracting and performance, and how the purchaser represented their status.

This explanation concerns Japanese private international law. If proceedings take place abroad, the rules that the foreign court uses to determine the governing law must also be examined. Japan’s Act alone does not establish a worldwide answer.

For example, when an overseas individual requests a return, the operator should distinguish defective goods, returns for personal reasons and any statutory withdrawal right, rather than replying solely by reference to a “no returns” clause. For each destination country, checking mandatory rights, time limits, product exceptions and required advance information provides a basis for responding to requests.

Choosing a court and collecting payment require separate analysis

A clause naming a court is not necessarily effective against an overseas consumer. The amendment introducing Article 3-7(5) of Japan’s Code of Civil Procedure restricts international jurisdiction agreements concerning future consumer-contract disputes.

For example, an agreement selecting the courts of the country where the consumer was domiciled when the contract was concluded may be effective, but generally does not have the effect of requiring proceedings exclusively in that country. The provision also addresses situations where the consumer brings proceedings in the agreed court or invokes the agreement after the business brings proceedings.

An operator therefore cannot assume that naming the Tokyo District Court as the exclusive forum means it can always sue a consumer domiciled abroad in Tokyo, or that the consumer cannot sue elsewhere. A jurisdiction clause taken from a business-to-business contract requires particular care when used in consumer sales terms.

Even with an effective agreement and a successful Japanese judgment, recognition and enforcement abroad become separate issues if the customer’s assets are located overseas. Applicable treaties and local law, documentation and translation costs vary by country. For small purchases, the cost of proceedings can make judicial recovery impractical.

Alongside the contract terms, the operator should examine advance payment, payment-service arrangements, chargeback handling and records of shipment and receipt. The agreement with a payment provider also needs to be checked to establish who bears losses from fraud or refunds. Naming a court alone does not address the risk of nonpayment.

Aligning the English and Japanese terms

When preparing English terms, decide which language prevails if the versions differ. If Japanese is to prevail, both versions should contain a clause with the same meaning, accessible before contracting. That clause does not override mandatory local law or language requirements.

A prevailing-language clause also does not replace translation review. If an English product page promises free returns but the Japanese terms make customers pay return postage, the discrepancy may not be resolved merely by invoking the Japanese version. Review the terms, product pages, FAQs, checkout screens and order-confirmation emails together.

Translation checks should focus particularly on payment timing, cancellation deadlines, eligibility for refunds, return costs and liability limits. Cancellation before dispatch and returns after dispatch are different rights. Likewise, terms under which the contract forms upon dispatch in Japanese but upon an order-confirmation email in English can affect how stock shortages are handled.

After revision, align version numbers and effective dates and keep records identifying the version each customer accepted. The application of revised terms to existing orders requires separate consideration. Updating the website should not automatically be treated as changing the conditions of earlier orders.

Checking delivery, returns and personal information

Where country-specific conditions are used, explain their relationship with the general terms. Specify the extent to which the supplement takes precedence, the customers it covers and its effective date, and make the applicable conditions available during purchase. Whether to use a supplement or separate terms depends on sales volume and the differences between the conditions.

For delivery, review shipping charges, customs duties and import taxes, information required for clearance, who acts as importer, and refunds or return costs if delivery is refused or customs clearance fails. Saying that customers pay duties does not resolve product import restrictions. Product-specific export and import controls, permits, labeling and the carrier’s permitted scope also need checking.

Consider returns according to their reason. An unsuitable size, damage in transit and delivery of the wrong item can involve different responsibilities and costs. Taking account of local statutory rights, define notification periods, return addresses, postage, refund methods and the treatment of exchange rates, so support staff can explain consistent conditions.

For personal information, identify the data disclosed to delivery companies, payment providers and overseas warehouses, and its purposes. The EU GDPR can apply to businesses established in the EU and, in certain circumstances, to businesses elsewhere offering goods or services to people in the EU or monitoring their behavior there. The European Commission’s explanation of its scope distinguishes activities targeting people in the EU. Nationality, or the mere ability to access a website from the EU, is not enough to determine applicability.

Consider the privacy policy, cookies and similar technologies, processor arrangements and data-transfer destinations alongside the terms. Our article on preparing SaaS terms and a privacy policy before launch discusses basic points to check when reviewing these documents together.

Defining destination countries and operational scope

Begin by reviewing orders, sales plans, products, payment methods and destinations. Distinguish consumer sales from business purchases and identify the countries to examine first. Some matters, including regulated products and personal information, require attention even when sales volumes are small.

If sales are restricted to particular countries, align the terms with the checkout process. A restriction may not operate as intended if customers can select excluded destinations, advertisements indicate availability there, or support staff accept exceptional orders. Define who may approve exceptions and how those decisions are made.

Then revise the general terms, check destination-country law, prepare English and country-specific provisions, update purchase screens and emails, and brief staff. Before publication, walk through the actual purchase process to verify what customers see, what they accept and the conditions under which they order. Both documentation and operations need to evolve as overseas sales begin or expand.