Case Summary and Outcome

The Japanese Supreme Court held that it was impermissible for a government arts council to deny funding to a movie when an actor had been convicted of illegal cocaine use. The film publication and distribution company had applied for and been preliminarily recommended for funding before the actor was arrested and convicted on the drug charge. The council chose not to confirm the funding on the grounds that awarding funding to the film threatened the public interest in discouraging illegal drug use. The Court of First Instance had found that the council’s decision was impermissible before the High Court overturned that decision, emphasizing the discretion the council retains in making its funding decision. The Supreme Court found that the council can only deny funding based on the public interest where there is a clear threat of harm and the public interest is high.

Facts

In 2018, Star Sands, a Japanese movie production and distribution company in Japan, filmed a movie which was pre-released in early 2019 after completing the editing process. In parallel, in 2018, Star Sands applied for funding from the Japan Arts Council, a government body which provides financial or other support for artistic projects to promote arts.

Upon receiving funding requests from artists for their projects, the Council’s head tentatively selects projects based on suggestions made by a committee of outside experts specializing in a specific mode of expression. For movies, the committee’s evaluation is centered on excellence and creativity in content and high expertise among staff and cast members. The selected artists are then entitled to submit funding applications to the Council. Upon receiving applications, the head of the Council makes funding decisions.

Following this process, the head of the Council selected Star Sands’s movie based on the suggestion made by the expert committee. In March 2019, the head of the Council notified Star Sands of the specified grant amount of JPY 10,000,000 which was to cover a part of the approximate total cost of the movie, which was approximately JPY 80,000,000.

In June 2019, one of the movie’s cast members was arrested and convicted for illegal cocaine use and these facts were widely reported in Japan.

In July, Star Sands submitted the funding application to the Council. A week later, the Council denied the application with a note that “An individual with a criminal conviction for violating drug regulations is present in the movie. The [Council] concluded that funding from a government initiative to the movie is inappropriate from a public interest perspective.” The movie was publicly released in September 2019.

In December 2019, Star Sands filed a case in Tokyo District Court seeking the revocation of the Council denial of its funding application. The Council argued that its funding of the movie would be perceived as delivering the message to the public that Japan is tolerant of drug abuse, harming the public interest in promoting the prevention of drug abuse.

In 2021, the District Court set aside the Council’s denial, stating that the risk of the harm was too remote and insufficient to override the suggestion made by the Council’s expert committee, which is respected in the Council’s process as a safeguard to protect artists’ freedom from the majority’s perspectives or political pressure.

The Council appealed to the Tokyo High Court.

In 2022, the High Court overturned the District Court’s judgment. The High Court found that the Council possesses broad discretion in funding decisions by emphasizing the contingent nature of its funding, derived from limited taxpayer sources, and underscoring the Council’s obligation to ensure upright and efficient spending. Applying this standard, the High Court concluded that the Council’s funding of the movie could, as the Council claimed, promote a tolerant attitude toward drug use and consequently harm the general public’s trust in the body’s funding initiative, and so held that denying Star Sands’s application fell within the discretion granted to the Council decision.

Star Sands appealed to the Supreme Court.

Decision Overview

The Supreme Court delivered a unanimous opinion. The key question was whether the Council’s denial of funding for the movie, when it had already qualified for funding, on a public interest ground, was permissible and an exercise of its legitimate discretion. This question comprised two specific elements: first, the scope of the Council’s discretion in the funding decision; and second, whether weighing in the alleged public interests, of drug abuse prevention and the maintenance of the general public’s trust in the Council’s funding initiative, was within that scope.

First, the Court affirmed the Council’s discretionary power in funding decisions. The Court noted the absence of explicit conditions in the relevant laws governing funding, highlighting the necessity for technical judgment to appropriately allocate funds from limited financial resources to achieve the Council’s mission, which is the promotion of arts. Further, the Court recognized that within the scope of this discretion, the Council may take public interests into account as a negative factor, even when a project may warrants funding from an artistic standpoint.

However, the Court set limits on how public interest can be considered. It noted that, if the body widely rejects funding based on public interest, that would cause “a chilling effect on future funding applications by those who need funds as well as on the content of potential applicants’ expressions” because “the ‘public interest’ is such a vague concept that criteria for funding decisions get inevitably unclear.” Next, the Court emphasized that such a potential chilling effect “should not be overlooked given the value of freedom of expression protected by Article 21 of the Japanese Constitution” because that would harm the promotion of arts which is the Council’s mission as well as “damage ‘the freedom and creativity of artists, etc’.”

The Court established a standard that denying funding based on expression content for public interest grounds should only be allowed when there is a concrete and clear threat to an important public interest. This would mean that denials of funding based on public interest which would not meet these conditions would be an abuse of the Council’s discretion.

In applying the standard to the facts, the Court did not find any substantial threat to an important public interest. Regarding drug abuse prevention, the Court found no evidence supporting the notion that the Council’s funding of the movie would immediately foster a lenient attitude toward drug abuse among the public, and so there was an absence of a concrete threat to the public interest. While the Council asserted that financing the movie might wrongly convey a message implying government tolerance for drug-related crimes, the Court emphasized that the convicted cast member would not benefit from the Council’s funding decisions. Consequently, the Court concluded that the risk of such misperception is remote, irrespective of the cast member’s popularity or the significance of their role in the movie. Furthermore, the Court determined that, while the funding originated from government funds, the Council’s assertion that the denial was important in “maintaining the general public’s [trust in the Council’s] funding initiative” was abstract and did not align with an essential public interest.

In conclusion, the Court held that the Council’s denial of funding to Star Sands, which the expert committee had deemed artistically worthy of funding, exceeded the Council’s discretionary powers and the denial based on the alleged “public interests” was thus impermissible.