Construction
Contributing editors
Robert S Peckar and Michael S Zicherman2019© Law Business Research 2018

Construction 2019
Contributing editors
Robert S Peckar and Michael S Zicherman
Peckar & Abramson PC

Reproduced with permission from Law Business Research Ltd
This article was first published in August 2018
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CONTENTS
Introduction5

Italy87

Robert S Peckar and Michael S Zicherman
Peckar & Abramson PC

Giuseppe Broccoli, Elisabetta Ventrella and Fabio Zanchi
BdaLaw

Austria6

Japan94

Stefan Artner and Klaus Pfeiffer
DORDA

Miho Niunoya and Masayuki Matsuura
Atsumi & Sakai

Brazil13

Mexico99

Júlio César Bueno
Pinheiro Neto Advogados

Roberto Hernández García and Cynthia Irene Osio Sánchez
COMAD SC

Chile23

New ZealandJuan Eduardo Figueroa Valdés and Sergio Huidobro Martinez
Figueroa, Illanes, Huidobro & Salamanca

Margaret A Helen Macfarlane, Christina Bryant and Nick Gillies
Hesketh Henry

China28

Norway112

Helena H C Chen and Nancy Ao
Pinsent Masons LLP

Espen R Hamar and Erik Brannsten
Kvale Advokatfirma DA

Colombia36

Singapore118

Claudia Benavides and Jorge I Valencia
Baker McKenzie

Shourav Lahiri
Lahiri LLC

Costa Rica

44

104

Sweden126

Christian Díaz Barcia
LPA Legal & Consulting

Jacob Hamilton, Richard Sahlberg and Per Vestman
Foyen Advokatfirma

Denmark49

Switzerland132

Lene Lange, Kristian Skovgaard Larsen andCharlotte F Malmqvist
DLA Piper Denmark P/SThomas P Müller, Christian Eichenberger and André Kuhn
Walder Wyss

France56
Frédéric Gillion and Stéphane Gasne
Pinsent Masons LLP
Germany63
Stefan Osing
Heuking Kühn Lüer Wojtek
Ghana69
David Ofosu-Dorte, Ferdinand Adadzi and Sena Abla Agbekoh
AB & David
India74
Ramesh K Vaidyanathan and Probal Bose
Advaya Legal

Taiwan137
Helena H C Chen
Pinsent Masons LLP
Turkey143
Ziya Akıncı and Cemile Demir Gökyayla
Akıncı Law Office
United Kingdom

150

Stacy Sinclair
Fenwick Elliott LLP
United States

158

Robert S Peckar and Michael S Zicherman
Peckar & Abramson PC

Ireland80
Rhona Henry
Matheson2

Getting the Deal Through – Construction 2019
© Law Business Research 2018

PREFACE

Preface
Construction 2019
Twelfth edition
Getting the Deal Through is delighted to publish the twelfth editionof Construction, 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, crossborder 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 thisyear includes Chile and Switzerland.
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 toreaders. However, specific legal advice should always be sought fromexperienced 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 their continued assistance with this volume.

LondonJuly 2018www.gettingthedealthrough.com 3© Law Business Research 2018

JAPAN

Atsumi & Sakai

Japan
Miho Niunoya and Masayuki Matsuura
Atsumi & Sakai

1

Foreign pursuit of the local market
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 toobtain a construction 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 is essential to hire Japanese persons who arefamiliar with the practice, customs and regulations applicable to construction projects in Japan.
2

Licensing procedures
Must foreign designers and contractors be licensed locally towork and, if so, what are the consequences of working withouta licence?

rigging, under the Act on Elimination and Prevention of Involvementin Bid Rigging, etc, and Punishments for Acts by Employees that Harm
Fairness of Bidding, etc, damage compensation can be claimed against
the officer, and this Act provides for up to five years’ imprisonment or afine of up to ¥2.5 million on the officer.
5

Bribery
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.

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 of Land, Infrastructure, Transport and Tourism is required toestablish offices in more than one prefecture, and a licence issued by theprefectural governor is required to establish an office or offices within
the prefecture. Operating a construction business without an appropriate construction licence can 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 toobtain a licence, the individuals who conduct design work for such companies are required to have obtained an architect’s licence.

In contrast, provisions regarding bids won as a result of bribery are lessclear, but contracts could still be invalidated on the basis of a violationof ‘public order and morals’.
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 suchas business instruction, suspension of business or revocation of thelicence, 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.

36Competition
Do local laws provide any advantage to domestic contractors
in competition with foreign contractors?

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

There are no laws in Japan that provide any advantage to Japanese contractors over foreign contractors.
4

Competition protections
What legal protections exist to ensure fair and open
competition to secure contracts with public entities, and toprevent bid rigging or other anticompetitive behaviour?

The Act Concerning Prohibition of Private Monopolisation and
Maintenance of Fair Trade stipulates that the Japan Fair Trade
Commission may issue an order for a situation violating the Act to beeliminated, and may impose an administrative fine on a bidder who
conducted any bid rigging. The Act also provides criminal punishment of imprisonment for up to five years or a fine of up to ¥5 million
on the person who conducted the bid rigging, and a fine of up to ¥500
million on the company for which the person works. The Penal Codealso imposes a penalty of imprisonment for up to three years or a fineof up to ¥2.5 million. In cases where a public officer is involved in bid

Reporting bribery

There are no laws in Japan that oblige employees of project teammembers to report suspicion or knowledge of bribery of government employees.
7

Political contributions
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 are banned from making political donations to individual politicians (including political candidates) or organisations other thanpolitical parties.

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Donations to political parties do not constitute part of doing business in 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.

12 Contractual matrix of international projects

8

A construction professional that acts as a public entity’s representative
or agent is deemed a public officer and is subject to the sanctions forbribery under the Penal Code as if he were a public officer.

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 prior written consent. There is no such exception for public projects.

913 PPP and PFI

Compliance
Is a construction manager or other construction professional
acting as a public entity’s representative or agent on a project(and its employees) subject to the same anti-corruption andcompliance as government employees?

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

There is no such legal issue. However, in practice, foreign contractors
are not active in the construction market in Japan, mostly for businessand commercial reasons such as language, the need for local engineers, the size and competitiveness of local contractors, and the needfor specialist skills, such as those needed for the construction of buildings to cope with earthquakes.
10 Construction contracts
What standard contract forms 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
private-sector association and the general conditions of construction
contract for public work, which is provided by the Central Council on
Construction 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 ofvenue for dispute resolution, Japanese law does not restrict the choiceof jurisdiction or arbitration forum. However, in the general conditionsof construction contract for public work and the general conditions ofconstruction 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 to agree to the use of a foreign language,
law or jurisdiction.

What is the typical contractual matrix for a major project inyour jurisdiction in terms of the contractual relationships
among the various construction project participants?

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
substantially revised in 2011 and one of the main changes was the introduction of a concession system, which enables public institutions tooffer business rights to the private sector in relation to public facilities.
The PFI Act stipulates items that must be set forth in such concessionagreements, although it does not provide any formal framework forother 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 June2013 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.
14 Joint ventures
Are all members of consortia jointly liable for the entire
project or may they allocate liability and responsibility
among them?
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 awareof the allocation. If a consortium is established as a company, then themembers of the consortium company are liable for the project within
the limit of the value 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.
15 Tort claims and indemnity

11 Payment methods
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 ofsome portion of the work 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 thecontract price upon completion of each major portion of the building.

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 theother party, regardless of whether the first party was negligent in any
way, and such 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 toviolation 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.

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16 Liability to third parties
Where a contractor constructs a building that will be soldor leased 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 ofcontractual 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, inthe context of building construction, if there is any defect in the buildingthat causes damage to third parties, the contractor will be liable to thethird parties for that damage. However, since the third parties need toprove negligence or intentional infringement by the contractor, it can bedifficult to establish a liability. Nevertheless, in recent years there havebeen a number of cases in which courts have accepted tort liability on
the part of a contractor, particularly in the case of illegal defects.
17 Insurance
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 coverageby the government labour insurance). Local law does not limit contractors’ liability for damages.
18 Labour requirements
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 levelof practical experience. Also, it is often difficult for a foreign national
to obtain a 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.
19 Local labour law
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
the employment?
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.
20 Labour and human rights
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
the Labour 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 toworker 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.
21 Close of operations
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 subsidiary company in Japan in order to do business there, it will be necessary
to go through the process of closing the branch office or dissolution andliquidation of the subsidiary company, or both, when it withdraws fromits Japanese business. Both require specific procedures to be followed,
which can be quite time-consuming and lengthy. There are no specificlegal obstacles to effecting such closures, although creditors may object
to the closures and will need to be dealt with.
When a foreign contractor ceases operations in Japan, it is likelythat employees engaged in the project will need to be dismissed. In thecase 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 underlabour 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,in practice, employers need to offer substantial amounts in compensation for dismissal.
Except as stated above, there are no generally applicable obstacles
to withdrawal from business in Japan.
22 Payment rights
How may a contractor secure the right to payment of its
costs and fees from an owner? May the contractor place lienson the property?
A contractor has a statutory right of retention in respect of the building being constructed in order to secure a claim for construction feesor other costs. This gives the contractor the right to refuse to deliver thebuilding until it receives payment of its construction fees and other costs.
Contractors also have a statutory lien on construction work tosecure claims pertaining to construction fees and other costs for theconstruction work.
Given this, construction contracts normally stipulate that the contractor will deliver the building upon payment of the remainder of thecontract price.
23 ‘Pay if paid’ and ‘pay when paid’
Does local law prohibit construction contracts fromcontaining terms that make a subcontractor’s right to payment
contingent on the general contractor’s receipt of payment
from the owner, thereby causing the subcontractor to bear therisk of the owner’s non-payment or late payment?
The Construction Business Act prohibits construction contracts whichcontain terms that make a payment contingent on a main contractor’sreceipt of payment from the owner if certain conditions are met. Where(i) the main contractor is a ‘special construction operator’ (which hasa special construction licence to contract out the construction of ¥40
million or more per project to subcontractors) and (ii) the subcontractor is a ‘general construction operator’ (which has a general construction
licence) whose stated capital is less than ¥40 million, the main contractor shall make a payment within 50 days of the offer of the delivery by

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the subcontractor, regardless of the main contractor’s receipt of payment from the owner under the Construction Business Act.

Board and the parties may go to a court unless they have already agreed
to settle disputes by arbitration.

24 Contracting with government entities

30 Confidentiality in mediation

Can a government agency assert sovereign immunity as adefence to a contractor’s claim for payment?

Are statements made in mediation confidential?

A government agency cannot claim sovereign immunity as a defence toa contractor’s claim for payment.

Statements in mediation are confidential and cannot be used in subsequent litigation or arbitration; the confidentiality is contract-based anda breaching party is liable to a penalty for its breach.

25 Statutory payment protection

31 Arbitration of private disputes

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 otherparty (or parties) for consequential damages suffered. The Civil Codealso 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 the relevant contract, provided, however, that the project
owner compensates the contractor for the damages it suffers as a resultof 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 workin the bankruptcy procedure. However, the damage caused by the termination may be compensated only when the bankruptcy administrator, not the contractor, terminates the contract.
26 Force majeure and acts of God
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 obligations in the case of force majeure in relation to construction work inJapan. Therefore, the parties are not automatically exempted from contractual obligations. However, if a construction contract specifies thatthe 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 and may 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(and the method of calculation of such damages) owing to a natural disaster or other force majeure.
27 Courts and tribunals
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.
28 Dispute review boards
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 their decisions are binding or not depends on the contract.

What is the prevailing attitude towards arbitration of
construction disputes? Is it preferred over litigation in the local
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 thearbitration process. Court proceedings are also used in many cases.
32 Governing law and arbitration providers
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.
33 Dispute resolution with government entities
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.
34 Arbitral award
Is there any basis upon which an arbitral award issued bya foreign or international tribunal may be rejected by yourlocal 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.
35 Limitation periods
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 completion of 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.
36 International environmental law

29 Mediation
Has the practice of voluntary participation in professionallyorganised mediation gained acceptance and, if so, how
prevalent is the practice and where do the mediators comefrom? If not, why not?
The Construction Works Dispute Settlement Board is regulated under
the Construction Business Act and is commonly used to mediate construction disputes. The parties may elect to use the Board’s reconciliation, mediation or arbitration processes. It is not mandatory to use theIs 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 Noise97

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Control 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.
37 Local environmental responsibility
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?
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 constructionwaste and either disposes of the waste itself or entrusts it to a company
that does not have such a licence either, may be punished with up to five
years’ imprisonment or a fine of up to ¥10 million.
38 International treaties
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
your model agreement define ‘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 such agreement defines ‘investment’ as every kind of asset, particularly including ‘rights under contracts, including turnkey, construction, management, production and revenue-sharing contracts’.

39 Tax treaties
Has your jurisdiction entered into double taxation treaties
pursuant to which a contractor is prevented from being taxed
in various jurisdictions?
Japan is party to 55 double taxation treaties with 66 countries or areas.
40 Currency controls
Are there currency controls that make it difficult or impossible
to change operating funds or profits from one currency toanother?
There are no such controls in Japan.
41 Removal of revenues, profits and investment
Are there any controls or laws that restrict removal ofrevenues, profits or investments from your jurisdiction?
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 with foreign affiliates. Under transfer pricing taxation, Japanese tax authorities
will impose a tax on a corporation when there is a gap between arm’slength price and the actual price in transactions with a foreign affiliate,by regarding the arm’s-length price as the actual transaction price.

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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Automotive

GamingPublic M&A

Aviation Finance & Leasing

Gas Regulation

Public-Private Partnerships

Aviation Liability

Government Investigations

Public Procurement

Banking Regulation

Government Relations

Real Estate

Cartel Regulation

Healthcare Enforcement & Litigation

Real Estate M&A

Class Actions

High-Yield Debt

Renewable Energy

Cloud Computing

Initial Public Offerings

Restructuring & Insolvency

Commercial Contracts

Insurance & Reinsurance

Right of Publicity

Competition Compliance

Insurance Litigation

Risk & Compliance Management

Complex Commercial Litigation

Intellectual Property & Antitrust

Securities FinanceConstruction

Investment Treaty Arbitration

Securities Litigation

Copyright

Islamic Finance & Markets

Shareholder Activism & Engagement

Corporate Governance

Joint Ventures

Ship FinanceCorporate Immigration

Labour & Employment

Shipbuilding

Corporate Reorganisations

Legal Privilege & Professional Secrecy

Shipping

Cybersecurity

LicensingState Aid

Data Protection & Privacy

Life Sciences

Structured Finance & Securitisation

Debt Capital Markets

Loans & Secured Financing

Tax Controversy

Dispute Resolution

Mediation

Tax on Inbound Investment

Distribution & Agency

Merger Control

Telecoms & Media

Domains & Domain Names

MiningTrade & Customs

Dominance

Oil Regulation

Trademarks

e-Commerce

Outsourcing

Transfer Pricing

Electricity Regulation

Patents

Vertical Agreements

Energy Disputes

Pensions & Retirement Plans

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ISBN 978-1-78915-005-6© Law Business Research 2018