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Contributing editors
Robert S Peckar and Michael S Zicherman2017© Law Business Research 2016

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Contributing editors
Robert S Peckar and Michael S Zicherman
Peckar & Abramson PC

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CONTENTS[ Exclusively for: Atsumi &#38; Sakai (Tokyo) | 30-Sep-16, 05:22 AM ] ©Getting The Deal ThroughIntroduction5

New ZealandRobert S Peckar and Michael S Zicherman
Peckar & Abramson PC

Margaret A Helen Macfarlane, Christina Bryant, Nick Gillies andMichael O’Brien
Hesketh Henry

Austria6
Stefan Artner and Klaus Pfeiffer
Dorda Brugger Jordis

95

Norway103
Espen R Hamar and Erik Brannsten
Kvale Advokatfirma DA

Brazil12
Júlio César Bueno
Pinheiro Neto Advogados
Canada23
Bruce Reynolds, Sharon Vogel and Yvan Houle
Borden Ladner Gervais LLP

Qatar109
Marcus Boeglin, Matthias Scherer, Marie-Anne Roberty-Jabbour
and Sam Moss
Lalive in Qatar LLC
Russia115

China31
Helena H C Chen and Jean Zhu
Pinsent Masons LLPElena Gavrilina, Yuri Savvin and Anton Alekseev
Egorov Puginsky Afanasiev & Partners
Singapore121

Denmark38
Henrik Puggaard, Lene Lange, Kristian Skovgård Larsen andFrederik Læssøe Arendt
LETT Law Firm
France44
Isabelle Smith Monnerville and Jean-Olivier d’Oria
Smith d’Oria

Shourav Lahiri
Lahiri LLC
South Africa

128

Tania Siciliano
Fasken Martineau
Sweden134
Jacob Hamilton, Richard Sahlberg and Per Vestman
Foyen Advokatfirma

Germany52
Stefan Osing
Heuking Kühn Lüer Wojtek
Ghana57
David Ofosu-Dorte, Isabel Boaten and Ferdinand Adadzi
AB & David
Indonesia62
Mutiara Rengganis and Donny Fadilah
Bahar & Partners

Switzerland139
Michael E Schneider, Matthias Scherer, Bernd Ehle, Sam Moss
and Cédric Lenoir
LaliveTaiwan144
Helena H C Chen
Pinsent Masons LLP
Turkey150

Ireland67
Kevin Kelly
McCann Fitzgerald

Ziya Akıncı and Cemile Demir Gökyayla
Akıncı Law Office
United Arab Emirates

Italy73
Giuseppe Broccoli, Elisabetta Ventrella, Cecilia Laporta,
Ludovica Citarella and Andrea Serrano
BDA Studio Legale
Japan79
Miho Niunoya and Masayuki Matsuura
Atsumi & Sakai

157

Sachin Kerur, William Marshall, Charmaine Khan and Luke Tapp
Pinsent Masons LLP
164

United KingdomStacy Sinclair
Fenwick Elliott LLP
United States

172

Robert S Peckar and Michael S Zicherman
Peckar & Abramson PC

Lithuania84
Jovitas Elzbergas and Donatas Lapinskas
Motieka & Audzevičius
Mexico90
Roberto Hernández García and Adrián Roberto Villagómez
AlemánCOMAD SC

2

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PREFACE

Preface
Construction 2017
Tenth edition
Getting the Deal Through is delighted to publish the tenth edition ofConstruction, which is available in print, as an e-book and online atwww.gettingthedealthrough.com.
Getting the Deal Through provides international expert analysis in key
areas of law, practice and regulation for corporate counsel, cross-border
legal practitioners, and company directors and officers.
Throughout this edition, and following the unique Getting the Deal
Through format, the same key questions are answered by leading
practitioners in each of the jurisdictions featured. Our coverage this year
includes Austria, Denmark, Ireland, Japan, Norway and Singapore.
Getting the Deal Through titles are published annually in print. Please
ensure you are referring to the latest edition or to the online version at
www.gettingthedealthrough.com.
Every effort has been made to cover all matters of concern to readers.
However, specific legal advice should always be sought from experienced
local advisers.
Getting the Deal Through gratefully acknowledges the efforts of all
the contributors to this volume, who were chosen for their recognised
expertise. We also extend special thanks to the contributing editors, Robert
S Peckar and Michael S Zicherman of Peckar & Abramson, PC, for theircontinued assistance with this volume.

LondonJuly 2016www.gettingthedealthrough.com 3© Law Business Research 2016

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JAPAN

Japan
Miho Niunoya and Masayuki Matsuura
Atsumi & Sakai

Foreign pursuit of the local market
1

If a foreign designer or contractor wanted to set up an
operation to pursue the local market what are the key
concerns they should consider before taking such a step?

A foreign designer or contractor may operate its business in Japan, if it sets
up a subsidiary or a branch. In order for a subsidiary or branch to obtain aconstruction licence, it needs to have an operations manager and a technical specialist, who may be of foreign nationality. However, for construction
projects in Japan, almost all the relevant contracts, specifications, designs
and other documents are written in Japanese, as are the regulations applicable to construction projects, which are quite complicated. Therefore, it isessential to hire Japanese persons who are familiar with the practice, customs and regulations applicable to construction projects in Japan.

Both the bribe-giver and the bribe-taker can be indicted, and thebribe-giver can be punished with up to three years’ imprisonment or afine of up to ¥2.5 million, while the bribe-taker can be punished with up to
20 years’ imprisonment.
Further, if a contractor has won a contract by an illegal act such asbribery, the contractor may be subject to administrative sanctions such as
business instruction, suspension of business or revocation of the licence,or all of them, and may also be prevented from participating in bidding on
future public works projects for a certain period.
Facilitation payments are not allowed and are illegal in Japan.
Reporting bribery
5

Licensing procedures
2

Must foreign designers and contractors be licensed locallyto work and, if so, what are the consequences of working
without a licence?

Foreign construction contractors are required to obtain one of 29 categories of construction licence to perform work in Japan, unless the contractor
handles only very small constructions. A licence issued by the Minister ofLand, Infrastructure, Transport and Tourism is required to establish offices
in more than one prefecture, and a licence issued by the prefectural governor
is required to establish an office or offices within the prefecture. Operating
a construction business without an appropriate construction licencecan be punished with up to three years’ imprisonment or a fine of up to¥3 million, or both.
Although foreign design companies themselves do not need to obtaina licence, the individuals who conduct design work for such companies are
required to have obtained an architect’s licence.
Competition
3

Do local laws provide any advantage to domestic contractors
in competition with foreign contractors?

Under local law must employees of the project team members
report suspicion or knowledge of bribery of government
employees and, if so, what are the penalties for failure toreport?

There are no laws in Japan that oblige employees of project team members
to report suspicion or knowledge of bribery of government employees.
Political contributions
6

Is the making of political contributions part of doing
business? If so, are there laws that restrict the ability ofcontractors or design professionals to work for publicagencies because of their financial support for politicalcandidates or parties?

Under the Political Funds Control Law, companies and organisations arebanned from making political donations to individual politicians (including political candidates) or organisations other than political parties.
Donations to political parties do not constitute part of doing businessin Japan. Therefore, contractors or design professionals cannot be subject
to any restrictions when working for public agencies because of their financial support for a particular political party.
Other international legal considerations

There are no laws in Japan that provide any advantage to Japanese contractors over foreign contractors.

7

Bribery

There is no such legal issue. However, in practice, foreign contractors are
not active in the construction market in Japan, mostly due to business andcommercial reasons such as language, the need for local engineers, thesize and competitiveness of local contractors, and the need for specialist skills, such as those needed for the construction of buildings to copewith earthquakes.

4

If a contractor has illegally obtained the award of a contract,for example by bribery, will the contract be enforceable? Are
bribe-givers and bribe-takers prosecuted and, if so, what are
the penalties they face? Are facilitation payments allowable
under local law?

Contracts commonly stipulate that, if a contractor wins a bid by collusion(eg, with other bidders to fix the bid), it can have the following effects:• invalidation of the bid;
• the bid riggers being banned from contracting for the project;• invalidation of any contract already executed; and• the bid riggers being liable to financial penalties.
In contrast, provisions regarding bids won as a result of bribery are lessclear, but contracts could still be invalidated on the basis of a violation of‘public order and morals’.

Are there any other important legal issues that may present
obstacles to a foreign contractor attempting to do business inyour jurisdiction?

Construction contracts
8

What standard form contracts are used for construction
and design? Must the language of the contract be the local
language? Are there restrictions on choice of law and thevenue for dispute resolution?

Two standard forms of construction contracts are widely used: thegeneral conditions of construction contract, which is provided by a privatesector association and the general conditions of construction contract for
public work, which is provided by the Central Council on Construction

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Contracting Business. The former is used if the owner is a private company
and the latter if the owner is a public institution.
For design contracts, a general conditions of design and supervisioncontract is provided by a private-sector association, and is widely used.
There are no restrictions on choice of contract language or governing law. However, it is common practice for the Japanese language andJapanese law to be specified as the contract language and governing law
because the construction work is conducted in Japan. In terms of venue for
dispute resolution, Japanese law does not restrict the choice of jurisdiction
or arbitration forum. However, in the general conditions of construction
contract for public work and the general conditions of construction contract, the Committee for Adjustment of Construction Work Disputes is the
specified forum for the resolution of disputes. In the case of public works,even if the general conditions of construction contract for public work is
not used, it would be difficult to persuade the public institution owner toagree to the use of a foreign language, law or jurisdiction.
Payment methods
9

How are contractors, subcontractors, vendors and workers
typically paid and is there a standard frequency for payments?

Contractors are typically paid by electronic payment or note. It is common
for the contract fee to be paid in several instalments. For example, typically, the first instalment would be paid upon entering into a construction
contract, a further instalment paid upon completion of some portion of thework and the remainder paid upon completion of all construction work. In
the case of large-scale construction projects, milestone payment is common, where the owners pay a portion of the contract price upon completionof each major portion of the building.
Contractual matrix of international projects
10 What is the typical contractual matrix for a major project inyour jurisdiction in terms of the contractual relationships
among the various construction project participants?
Construction project participants typically form a contract-based consortium and all the members of the consortium sign a construction contract
directly with the owner.
Subcontractors are commonly used, and it is not rare for a subcontractor to use sub-subcontractors. However, in principle it is prohibited under
the Construction Business Act to use a subcontractor for all or the major
portion of the construction work, except in private projects, where all or the
major portion of the work may be subcontracted with the owner’s writtenconsent. There is no such exception for public projects.
PPP and PFI
11 Is there a formal statutory and regulatory framework for PPP
and PFI contracts?
The PFI Act stipulates the basic policy and procedures of the government
in promoting and operating PFI projects. The PFI Act was substantiallyrevised in 2011 and one of the main changes was the introduction of a concession system, which enables public institutions to offer business rights
to the private sector in relation to public facilities. The PFI Act stipulates
items that must be set forth in such concession agreements, although it
does not provide any formal framework for other PFI contracts.
The PFI Promotion Office in the Cabinet Office, a governmental
agency, has released a standard PFI contract, ‘Guidelines on PFI Contracts’,and a paper entitled ‘Basic Approaches to Issues on PFI Contracts’.
The PFI Promotion Office also released a guideline in June 2013 related
to concessions, which provides details of its procedure. However, the PFI
Act does not cover all types of PPP contract and, as there is no official statutory or regulatory framework for PPP contracts not covered by the PFI Act,the public sector usually follows the samples of PFI precedents.
Joint ventures
12 Are all members of consortia jointly liable for the entire
project or may they allocate liability and responsibility amongthem?
A consortium is typically established as a form of partnership, in whichcase (or if it is operated so as to seem to be legally a partnership) all members will be jointly and severally liable for obligations assumed by the consortium or for which it is held liable; members of such a consortium may

allocate liabilities of the consortium between themselves as they see fit,
but this would not bind third parties unless they are aware of the allocation. If a consortium is established as a company, then the members of
the consortium company are liable for the project within the limit of thevalue of their capital contributions. In addition, they are liable for the project to the extent of the agreements into which they enter with the consortium company.
Tort claims and indemnity
13 Do local laws permit a contracting party to be indemnified
against all acts, errors and omissions arising from the work of
the other party, even when the first party is negligent?
It is possible to stipulate in contracts that a contracting party be indemnified against all acts, errors and omissions arising from the work of the otherparty, regardless of whether the first party was negligent in any way, andsuch provisions are, at least in principle, valid.
However, the Construction Business Act requires parties to construction contracts to enter into fair contracts based on an agreement on an
equal footing. Therefore, contracts that expose one party to excessive
responsibility are more likely to be determined to be invalid due to violation of the principle of faith and trust. Such indemnity provisions may
also become an issue in terms of abuse of a superior bargaining position.
Parties should, therefore, exercise caution when including such clauses
in agreements.
Liability to third parties
14 Where a contractor constructs a building that will be sold orleased to a third party, does the contractor bear any potential
responsibility to the third party? May the third party pursue
a claim against the contractor despite the lack of contractual
privity?
Pursuant to the Civil Code, a person whose action has negligently or intentionally infringed any right of another shall be liable to compensate that
person for any damages resulting from that act. Therefore, in the context
of building construction, if there is any defect in the building that causes
damage to third parties, the contractor will be liable to the third parties forthat damage. However, since the third parties need to prove negligence or
intentional infringement by the contractor, it can be difficult to establish aliability. Nevertheless, in recent years there have been a number of cases
in which courts have accepted tort liability on the part of a contractor, particularly in the case of illegal defects.
Insurance
15 To what extent do available insurance products afford acontractor coverage for: damage to the property of third
parties; injury to workers or third parties; delay damages; anddamages due to environmental hazards. Does the local law
limit contractors’ liability for damages?
The extent of insurance coverage is a purely commercial matter determined by the insured. Contractors commonly purchase construction insurance (which covers damage arising from any accident, for example, fire,
during the construction), damages insurance (which covers compensation
claimed by a third party, for example, a third party who was injured or suffered damage to their property due to the construction by the contractor)
and labour insurance (which covers injury, etc, suffered by employees of
the contractor, and is in addition to the coverage by the government labour
insurance). Local law does not limit contractors’ liability for damages.
Labour requirements
16 Are there any laws requiring a minimum amount of local
labour to be employed on a particular construction project?
There is no requirement for local labour to be employed on construction
projects in Japan. However, in order to obtain a construction licence, aforeign contractor must show it employs engineers with a certain level ofpractical experience. Also, it is often difficult for a foreign national to obtaina working visa and work in Japan without special skills. As a result, foreign
contractors have little choice but to rely on local labour in most cases.

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Local labour law
17 If a contractor directly hires local labour (at any level)
for a project, are there any legal obligations towards theemployees that cannot be terminated upon completion of theemployment?
As a general rule, parties to a labour contract may agree the timing andconsequences of termination of the contract. However, even if the parties
agree that no rights or obligations under the contract will continue after
completion of the employment, unperformed obligations (eg, unpaid salaries) may continue and the contractor, foreign or otherwise, can be liable
for expenses or damages arising from injuries caused during the period of
employment. Also, the contractor may be required to provide social insurance (eg, medical and pension insurance) for employees, and if not paid,
payment may be enforced even after completion of the employment.
Labour and human rights
18 What laws apply to the treatment of foreign construction
workers and what rights do they have? What are the local law
consequences for failure to follow those laws?
Foreigners are only allowed to work within the field permitted by theirresidency qualifications under the Immigration Control and Refugee
Recognition Act. In this regard, an employer must verify the residency
qualification, etc, by a ‘resident card’ and notify the public employment
security office when it hires a foreigner. In case of hiring an illegal foreign
worker, the employer can be punished with up to three years’ imprisonment or a fine of up to ¥3 million, or both.
As a general rule, Japanese labour laws and regulations such as theLabour Standards Act, the Minimum Wage Act and the Industrial Accident
Compensation Insurance Act are applicable to foreign workers. Therefore,
foreign workers have the same rights with regard to worker protection as
Japanese nationals. It is prohibited for an employer to discriminate against
any foreign worker with respect to the working conditions including wages
and working hours.
Close of operations
19 If a foreign contractor that has been legally operating decides
to close its operations, what are the legal obstacles to closing
up and leaving?
Since a foreign contractor needs to establish a branch office or subsidiarycompany in Japan in order to do business there, it will be necessary to go
through the process of closing the branch office or dissolution and liquidation of the subsidiary company, or both, when it withdraws from its
Japanese business. Both require specific procedures to be followed, which
can be quite time-consuming and lengthy. There are no specific legal
obstacles to effecting such closures, although creditors may object to theclosures and will need to be dealt with.
When a foreign contractor ceases operations in Japan, it is likely that
employees engaged in the project will need to be dismissed. In the case of
fixed-term labour contracts, employers cannot generally dismiss employees during the term of the contract, except where there are unavoidable
grounds for doing so. For labour contracts where there is no fixed term,
dismissal is treated as an abuse of rights and is invalid under labour laws if
it lacks objectively reasonable grounds and is not considered to be appropriate by social standards.
The closure of a branch office or liquidation of a subsidiary company
is usually considered sufficient grounds for a valid dismissal, although, inpractice, employers need to offer substantial amounts in compensation
for dismissal.
Except as stated above, there are no generally applicable obstacles towithdrawal from business in Japan.
Payment rights
20 How may a contractor secure the right to payment of its costs
and fees from an owner? May the contractor place liens on theproperty?
A contractor has a statutory right of retention in respect of the building
being constructed in order to secure a claim for construction fees or othercosts. This gives the contractor the right to refuse to deliver the building
until it receives payment of its construction fees and other costs.

JAPAN

Contractors also have a statutory lien on construction work to secureclaims pertaining to construction fees and other costs for the construction work.
Given this, construction contracts normally stipulate that the contractor will deliver the building upon payment of the remainder of thecontract price.
Contracting with government entities
21 Can a government agency assert sovereign immunity as adefence to a contractor’s claim for payment?
A government agency cannot claim sovereign immunity as a defence to acontractor’s claim for payment.
Statutory payment protection
22 Where major projects have been interrupted or cancelled, do
the local laws provide any protection for unpaid contractors
who have performed work?
Under the Civil Code, if a contract is terminated due to it being breached
by a party, the breaching party must compensate the other party (or parties) for consequential damages suffered. The Civil Code also provides
that the project owner may terminate the project at any time until the construction work is completed, even if the contractor has not breached therelevant contract, provided, however, that the project owner compensates
the contractor for the damages it suffers as a result of the termination.
On the other hand, under the Civil Code, when bankruptcy procedures have commenced in respect of a project owner, either the contractor
or the bankruptcy administrator may terminate the existing construction
contract and the contractor may claim for any unpaid work in the bankruptcy procedure. However, the damage caused by the termination may becompensated only when the bankruptcy administrator, not the contractor,
terminates the contract.
Force majeure and acts of God
23 Under local law are contractors excused from performing
contractual obligations owing to events beyond their control?
There are no laws or regulations pertaining to the handling of obligationsin the case of force majeure in relation to construction work in Japan.
Therefore, the parties are not automatically exempted from contractual
obligations. However, if a construction contract specifies that the contracting parties can terminate the contract, or will be exempt from performing
contractual obligations in the case of force majeure events, then the contracting parties may terminate the contract pursuant to such clause andmay be relieved from their obligations. It is common practice to include
such provisions.
The Construction Business Act requires a construction contract tostipulate any change in its construction period or liability for damages (andthe method of calculation of such damages) due to a natural disaster orother force majeure.
Courts and tribunals
24 Are there any specialised tribunals that are dedicated toresolving construction disputes?
The Construction Works Dispute Settlement Board and the Resident
Disputes Examination Board are only used for construction disputes.
Dispute review boards
25 Are dispute review boards (DRBs) used? Are their decisions
treated as mandatory, advisory, final or interim?
DRBs are not commonly used in Japan. In cases where DRBs are used,
whether DRBs’ decisions are binding or not depends on the contracts.
Mediation
26 Has the practice of voluntary participation in professionallyorganised mediation gained acceptance and, if so, how
prevalent is the practice and where are the mediators coming
from? If not, why not?
The Construction Works Dispute Settlement Board is regulated under theConstruction Business Act and is commonly used to mediate construction

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Governing law and arbitration providers
Update and trends
In 2014, the Japanese government liberalised the rules regulating
the ability of foreigners to be employed in construction work. Under
the new system, a foreign worker who has completed three years’
training in Japan may be employed in construction work in Japan forseveral years. This new system was implemented to cover a shortfallof manpower in construction and, therefore, is only applicable until
March 2021.
The Cabinet Office issued a request, in December 2015,
addressed to the government authorities and the major local governments. It requested them to put a priority on PPP/PFI schemes whenplanning public projects and also for each authority and large local
government to prepare and issue guidelines stipulating the procedure for utilising PFI/PPP schemes. As a result of this, the number of
PFI/PPP projects is increasing.
The infrastructure fund market was established in April 2015
and Takara Leben, which invests in renewable power projects, has
become the first infrastructure fund to be listed on the infrastructure
fund market in Japan (listed on 2 June 2016). It is predicted that several other infrastructure funds are to be listed this year.

disputes. The parties may elect to use the Board’s reconciliation, mediation or arbitration processes. It is not mandatory to use the Board and theparties may go to a court unless they have already agreed to settle disputes
by arbitration.
Confidentiality in mediation

29 If a foreign contractor wanted to pursue work and insisted
by contract upon international arbitration as the dispute
resolution mechanism, which of the customary international
arbitration providers is preferred and why?
The JCAA is preferred by Japanese parties. The Singapore International
Arbitration Centre is also popular because of its location and its clear rules
and procedures.
Dispute resolution with government entities
30 May government agencies participate in private arbitration
and be bound by the arbitrators’ award?
It is possible for government agencies to participate in private arbitration
and be bound by its award, although it would be unusual for a Japanese
government agency to do so.
Arbitral award
31 Is there any basis upon which an arbitral award issued by aforeign or international tribunal may be rejected by your local
courts?
The Arbitration Law in Japan provides the basis of rejection of an arbitral award issued by a foreign or international tribunal, which is upon thesame basis provided by the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
Limitation periods

27 Are statements made in mediation confidential?
Statements in mediation are confidential and cannot be used in subsequent litigation or arbitration; the confidentiality is contract-based and abreaching party is liable to a penalty for its breach.
Arbitration of private disputes
28 What is the prevailing attitude towards arbitration of
construction disputes? Is it preferred over litigation in thelocal courts?
Mainly there are two types of private arbitration bodies for construction
disputes in Japan: the Construction Works Dispute Settlement Board(which operates nationally, with each prefecture having its own board)and the Japan Commercial Arbitration Association (JCAA). Arbitration
is widely used in the resolution of construction disputes as they require
highly specialised experts and confidentiality is protected during the arbitration process. Court proceedings are also used in many cases.

32 Are there any statutory limitation periods within which
lawsuits must be commenced for construction work or
design services and are there any statutory preconditions forcommencing or maintaining such proceedings?
The Civil Code sets a limitation period of three years from completionof the construction for claims, such as for non-payment for work done.
An invocation is required for a plaintiff to make the statutory limitation effective.
International environmental law
33 Is your jurisdiction party to the Stockholm Declaration of
1972? What are the local laws that provide for preservation of
the environment and wildlife while advancing infrastructure
and building projects?
Japan is party to the Stockholm Declaration of 1972. Japan has manylaws and regulations to protect the environment, for example, the Basic
Environment Act, the Water Pollution Control Act, the Air Pollution
Control Act, the Soil Contamination Countermeasures Act, the NoiseControl Act and the Environmental Assessment Act. In addition, contractors of large projects are obliged to recycle certain construction materials
under the Construction Material Recycling Law.

Miho Niunoya
Masayuki Matsuura

miho.niunoya@aplaw.jp
masayuki.matsuura@aplaw.jp

Fukoku Seimei Building, Reception 12F
2-2-2 Uchisaiwaicho
Chiyoda-ku
Tokyo 100-0011
Japan

Tel: +81 3 5501 2111
Fax: +81 3 5501 2211
www.aplaw.jp

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JAPAN

Local environmental responsibility

Tax treaties

34 What duties and liability do local laws impose on developers
and contractors for the creation of environmental hazards orviolation of local environmental laws and regulations?

36 Has your jurisdiction entered into double taxation treaties
pursuant to which a contractor is prevented from being taxed
in various jurisdictions?

Each environmental law provides a different sanction depending on thenature and seriousness of the violation, for example, a contractor that does
not have a licence for the treatment and disposal of construction waste andeither disposes of the waste itself or entrusts it to a company that does nothave such a licence either, is liable to five years’ imprisonment or a fine of
up to ¥10 million.

Japan is party to 54 double taxation treaties with 65 countries or areas.

International treaties

There are no such controls in Japan.

35 Is your jurisdiction a signatory to any investment agreements
for the protection of investments of a foreign entity inconstruction and infrastructure projects? If so, how does yourmodel agreement define ‘investment’?

Removal of revenues, profits and investment

Japan is a signatory to economic partnership agreements (EPAs) with anumber of countries. The EPAs provide stronger protection for investment
into Japan, including national treatment at the approval stage. One suchagreement defines ‘investment’ as every kind of asset, particularly including ‘rights under contracts, including turnkey, construction, management,
production and revenue-sharing contracts’.

There are no such controls or laws in Japan, other than transfer pricing taxation, which is a special tax treatment to prevent multinational
corporations from shifting profits overseas through transactions withforeign affiliates. Under transfer pricing taxation, Japanese tax authorities will impose a tax on a corporation when there is a gap between
arm’s-length price and the actual price in transactions with a foreign affiliate, by regarding the arm’s-length price as the actual transaction price.

Currency controls
37 Are there currency controls that make it difficult or
impossible to change operating funds or profits from one
currency to another?

38 Are there any controls or laws that restrict removal ofrevenues, profits and investments from your jurisdiction?

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