1. Grand Bench ruling of the Supreme Court of Japan on Yawata Iron & Steel political donation case

(1) Does the ruling by the Supreme Court Grand Bench condone corporate political donations?

Is it possible to ban corporate political donations? Constitutional theory is an essential element in this discussion. When thinking about this issue in Japan, the starting point is the Supreme Court Grand Bench ruling made in 1970 in the case of political donations by Yawata Iron & Steel (hereinafter referred to as the "Grand Bench Ruling"). The Grand Bench Ruling states the following:

"The provisions on people's rights and obligations as guaranteed by Chapter 3 of the Constitution shall apply to domestic corporations, insofar as it is possible by its nature. Therefore, a corporation, like natural citizens, has the freedom of political action and is able to support, promote, or oppose specific policies of the country or political parties. Political donations are also part of that political freedom. Consequently, there is no constitutional requirement that the political donations by corporations should be treated differently from donations made by natural citizens, even if those donations impact political trends."

(2) Significance of the Grand Bench Ruling

The Grand Bench Ruling is directly relied upon by people who argue that a ban on corporate political donations would violate the Constitution. Such people believe that companies and organizations have the freedom to make political donations. In fact, both Prime Minister Ishiba and former Prime Minister Kishida have taken this position and assumed a negative stance on banning corporate political donations (Asahi Shimbun Digital, November 13, 2024; https://www.asahi.com/articles/ASSCD42SHSCDUTFK00CM.html). However, the Grand Bench Ruling was a response to a shareholder derivative lawsuit in regard to the question of whether political donations made by the CEO could be considered acts within the scope of the corporation's purpose. As such, the Grand Bench Ruling did not mention whether a ban on corporate political donations would violate the Constitution. Consequently, it cannot be immediately concluded that the Grand Bench Ruling provides an answer to the issue of corporate political donations. The Grand Bench ruling also states the following:

"It is said that abundant corporate political donations will lead to political corruption; however, for the time being, the means to deal with such problems must be left to legislative policy. Under the Constitution, it must be said that even corporations have the freedom to donate political funds so long as such contributions are not contrary to the public welfare. The argument that corporate political donations infringe on the people's voting right is not acceptable."

The Grand Bench Ruling acknowledged the risk that corporate political donations could foster political corruption, and entrusted legislative policy to prevent such risk. The ruling stated that restrictions on political donations by corporations are constitutionally permitted if those restrictions are justified from the standpoint of public welfare. In other words, the Grand Bench Ruling does not provide an argument against banning corporate political donations. Furthermore, it did not deny the possibility of completely banning political donations by corporations, depending on the severity of the political corruption. Therefore, the focus of discussion is whether corporate political donations lead to political corruption, and the degree of severity of said corruption.

2. Corporate political donations and political corruption

(1) Purpose and effects of corporate political donations

A typical example of political corruption is bribery. If political donations are linked to a specific job performed by a specific politician, it constitutes the crime of bribery and the politician cannot escape criminal responsibility. Because of the risk of constituting bribery, corporations carefully engage in donations so that the money cannot be deemed as payment for benefits. The Political Funds Control Act prohibits political donations to politicians themselves, and the basis of this restriction can be said to be based on the perspective of protecting politicians rather than ensuring political integrity.

However, even if corporations are prohibited from making political donations to individual politicians, this regulation is meaningless as political donations to party headquarters and branches are permitted. Unless political donations themselves are prohibited, making indirect donations to specific politicians will be possible. Politicians who have received huge donations cannot adopt policies that completely ignore the wishes of their donators. In fact, there are reports that industries that make more political donations are benefiting more from policy tax cuts (Tokyo Shimbun, Morning Edition, April 22, 2021). It is said that corporate political donations to the political funding organization of the Liberal Democratic Party of Japan, named the People's Political Association, for fiscal 2023 amounted to 2.4 billion yen (Nikkei Digital Edition, November 30, 2024; https://www.nikkei.com/article/DGKKZO85134430Z21C24A1M11300/).

(2) Corporations and freedom of political activity

The Grand Bench Ruling stated that companies have the same political freedoms as citizens. However, the ruling entrusted the Diet to decide on what constitutes the means of political corruption. In other words, the Diet is faced with the challenge of deciding what kind of system should be created to prevent political corruption and the distortion of democracy. As a result, the Grand Bench Ruling did not deny the possibility of significant restrictions on corporate political donations.

However, even if corporate political donations are banned, any number of loopholes can be created by corporations; for example, placing advertisements in party journals or holding parties. This is like a game of cat and mouse or whack-a-mole. If we are to discuss banning corporate political donations, shouldn't we clarify how much money goes into politics and discuss how to achieve politics that doesn't cost money? There is also a need for discussion on reforming the imbalanced electoral system and making the policy-making process more transparent.

In this column exactly one year ago, I stated that the issue of political donations needs to be discussed from a broad perspective (Chuo Online "A Viewpoint for Political Donations and Democracy;" https://yab.yomiuri.co.jp/adv/chuo/dy/research/20240206_en.php). When I listen to debates in the Diet, I can't help but feel that the discussions are too symptomatic and ad hoc. According to a Kyodo News opinion poll (results announced at 5:08 p.m. on November 17), 67.3% of people are in favor of abolishing corporate political donations. Under the Constitution, Diet members are representatives of the entire nation (Article 41) and act based on the trust of the nation (Preamble), so politicians and political parties themselves have a responsibility to explain the integrity of politics. With this in mind, it would be best to start by clarifying what is explicitly and implicitly stated by the Grand Bench Ruling.

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Reference Literature
Koga, J. Seiji-kenkin - Jittai to Ronri (Political Donations--Reality and Logic), Iwanami Shinsho, 2004
Kamiwaki, H. Kensho Seiji to Kane (Verification of Politics and Money, Iwanami Shinsho, 2024
My Articles
"Corporate Speech," the Chuo Law Review, Vol. 127, No. 11, p. 77, 2021
"Campaign Finance and Judicial Review," the Comparative Law Review, Vol. 49, No. 1, p. 1, 2015
Kindaikenpo niokeru danntai to kojin (Organizations and Individuals in Modern Constitutions), Fuma Shobo, 2004

Motohiro Hashimoto／Vice President of Chuo University and Professor of the Faculty of Law
Area of Specialization: Public Law

Motohiro Hashimoto was born in Tokushima Prefecture in 1959. He graduated from the Department of Law, Faculty of Law, Chuo University in 1982.
He completed the Doctoral Program of the Public Law Course in the Graduate School of Law, Chuo University in 1989. He holds a Ph.D. in law.
He became a Professor in the Faculty of Law, Chuo University in April 2004 after serving as an Assistant Professor and a Professor at Kochi Women’s University (currently the University of Kochi).
He was appointed as Dean of the Faculty of Law, Chuo University in November 2009 (served until October 2013).
He was appointed as a member of the Chuo University Board of Directors in November 2009 (served until October 2013).
He was appointed as a Vice President of Chuo University in November 2014 (served until November 2017).
He was appointed as an Executive Director of Chuo University in November 2017 (served until June 2020).
He was appointed as a Vice President of Chuo University in May 2021 (current position).

His current areas of research and activity include the positioning of individuals and organizations in the Constitution, modern society and freedom of information, and questions concerning the right to enact ordinances.

His major written works include Kindaikenpo niokeru danntai to kojin (Organizations and Individuals in Modern Constitutions”, Fuma Shobo and Shinzansha, Puchi zemi Kenpo I (Jinken) (Petit Seminar Constitution 1 (Human Rights)), Hougakushoin, Yoku wakaru Chiho jichiho (Concise Local Autonomy Act), co-authored, Minerva Shobo, Kenpo no kiso (Introduction to Japanese constitutional law), Hokuju Shuppan, Kokka koumuin-ho no Kaisetsu (Explanation of the National Public Service Act), co-authored, Hitotsubashi Shuppan, Hyogen no Jiyu Riron to Kaishaku (Freedom of Expression: Theory and Interpretations), Chuo University Press, Nihonkoku Kenpo wo Manabu dai-san-pan (The Constitution of Japan: 3^rd Edition), Chuokeizai-Sha, and more.

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