Shareholder Derivative Suit against Former Kobe Steel Directors

This case stems from Kobe Steel's 2017 admission to fabricating product quality data. Shareholders filed derivative lawsuits in 2018 (case no. Heisei 30 (wa) 883 etc.) against former executives, alleging breach of fiduciary duties. The Tokyo District Court initially ordered former Chairman Hiroya Kawasaki and others to pay about 3.3 billion yen in damages. On February 26, 2025, the Tokyo High Court upheld the liability of Kawasaki and former President Hiroshi Tomono but reduced the total compensation to approximately 1.6 billion yen, finding some former directors not liable. The ruling underscores that directors must exercise adequate oversight to prevent systemic misconduct.

The Tokyo High Court ordered former Chairman Hiroya Kawasaki and former President Hiroshi Tomono to pay approximately 1.6 billion yen in damages, reducing the lower court's 3.3 billion yen award. The court denied liability for certain other former directors.

Whether former directors breached their duty of care and duty of oversight regarding the systematic product data fabrication; whether the statute of limitations had expired; and the proper calculation of damages caused to the company.

The ruling reinforces the accountability of top management for large-scale corporate misconduct in Japan and demonstrates the effectiveness of shareholder derivative actions as a governance tool. It prompted renewed focus on compliance systems and internal controls across Japanese manufacturers.