Unpacking principles of modern secured transactions law and local deviation: the case of Japan

Abstract The “modern principles” of secured transactions law have emerged from international and regional efforts, including UNCITRAL’s Model Law on Secured Transactions, Unidroit’s Cape Town Convention, and regional frameworks such as the DCFR. The implementation of these modern principles has become a driving force behind the reform of secured transactions law in many jurisdictions, including those in Asia, contributing to what is often described as the “modernisation” of secured transactions law. However, the extent to which these principles are adopted varies significantly due to differing interpretations and jurisdiction-specific circumstances.The diversity of international instruments, along with varying scholarly perspectives on what constitutes modern principles—ranging from ideal codification to facilitating access to credit—further complicates their understanding. This article focuses primarily on modern principles as conceptualised in academic discourse, which establishes a list of ideal principles while also elucidating their similarities and differences with UNCITRAL’s Model Law on Secured Transactions. It further examines whether these principles are functional or tied to doctrinal institutions, using Japan’s ongoing legislative reform as a case study. While Japan’s draft legislation aligns with modern principles, notable deviations exist. These deviations are assessed as (i) expected, (ii) conforming, (iii) problematic, or (iv) highly problematic, with the argument that some seemingly problematic deviations may, in fact, offer valuable alternatives to modern principles.