WaveLength
JSE Bulletin No. 61
March 2016
CONTENTS
Judgment: Japanese court jurisdiction over its insolvency law issues
despite London arbitration clause ................................................... Shohei Tezuka 1
The Revision of the Transport Law and the Maritime Commerce Law
in the Commercial Code of Japan....................................................Kenji Sayama 12
The Costs for a ship arrest in Japan .......................................................Mitsunari Taketani 24Ⓒ The Japan Shippng Exchange, Inc. March 2016, All Right Reserved.

Published by The Japan Shipping Exchange, Inc.
Wajun Building
Koishikawa 2-22-2
Bunkyo-ku
Tokyo 112-0002
Japan
ISSN 0448-8741Ⓒ The Japan Shipping Exchange, Inc. March 2016, All Rights Reserved.
All correspondence should be addressed to:
The Japan Shipping Exchange, Inc.
Tel: +81-3-5802-8363
Fax:+81-3-5802-8371
E-mail: tomac@jseinc.org
Website: www.jseinc.org

WaveLength - JSE Bulletin No. 61 (March 2016)

Judgment: Japanese court jurisdiction over its insolvency
law issues despite London arbitration clause
Shohei Tezuka (Mr.)*In the Orient Vega1, the Tokyo District Court was asked to consider whether it has thejurisdiction over issues as to the construction of the Japanese Corporate Reorganization
Act, despite the dispute resolution clause in the underlying time charterparty providing for
London arbitration, and confirmed its jurisdiction as an interim judgment.
I. Background
1. On 23rd July, 2008, Polestar Ship Line S.A. (the “Owners”), a Panamanian subsidiaryof Japanese shipping company, and Sanko Steamship Co., Ltd. (the “Charterers”), a
Japanese ship operator, entered into a time charterparty for the tanker “Orient Vega”(the “Vessel”) on an amended New York Produce Exchange 1946 form for the periodof 13 years (two months more or less at the Charterers’ option) at the hire rate of US$
22,000 per day (the “Charterparty”). Pursuant to the Charterparty, the Vessel wasdelivered to the Charterers on 20th June, 2011. Clause 17 of the Charterparty provided
for London arbitration as the dispute resolution2 (the “Arbitration Clause”) and its
Clause 83 set out English law as the governing law of the Charterparty.
2. On 2nd July, 2012 (the “Filing Date”), the Charterers, facing substantial financial
difficulties, filed a petition for the commencement of insolvency proceedings,
Corporate Reorganization proceedings, at the Tokyo District Court (the “Court”). On
23rd July, 2012 (the “Commencement Date”), the Court accepted the petition, ordered
for the commencement of Corporate Reorganization proceedings and appointed atrustee (the “Trustee”) for the Charterers.
3. In pursuance of Article 61.1 of the Corporate Reorganization Act (the “ReorganizationAct”), entitling a trustee of the Reorganizing company to elect either to continue or*

Attorney-at-law qualified in Japan at HIGASHIMACHI, LPC. (Kobe), LLM International Commercial Law(University College London).
1
Polestar Ship Line S.A. v Sanko Steamship Co., Ltd. (Tokyo District Court judgment rendered on 28th
January, 2015).
2
It seems to the author from the texts of the judgment in Japanese language that the Arbitration Clause was
identical to clause 17 of NYPE 1946 form except for an amendment of the seat of arbitration from New Yorkto London.

1

Judgment: Japanese court jurisdiction over its insolvency law issues despite London arbitration clauseterminate a “bilateral contract” under which the obligations of both parties have notbeen completely performed by the time of commencement of the Reorganization
proceedings, the Trustee elected to terminate the Charterparty and served a notice oftermination dated 13th August, 2012 (the “Termination Notice”) to the Owners.
4. On 7th September, 2012, the Owners notified in writing to the Trustee that the Owners
thereby set off the Charterers’ claim for the bunkers, remaining on board the Vessel at
the time of her redelivery, at the amount of US$ 170,779.07 (the “Bunker Claim”),
against an equivalent proportional amount of the charterhire, which shall otherwise fall
into the “Reorganization Claim” and therefore be subject to the distribution
proceedings in accordance with the Reorganization plan (the “Owners’ Set-off).
5. Arguing that the Termination Notice was delivered to the Owners on 14th August,2012 and, accordingly, the Charterparty terminated on the same date, the Owners
commenced separate proceedings against the Charterers at the Tokyo District Court.
The Owners claimed the charterhire for the periods (1) from the Filing Date until theimmediately preceding date of the Commencement Date3 (the “Dispute Claim I”) and(2) from the Commencement Date until the Termination Date4 (the “Dispute Claim II”,
collectively with the Dispute Claim I the “Dispute Claims”) as the “Common Benefit
Claim” under the Reorganization Act. Under the said Act, the Common Benefit Claims
are granted priority over the Reorganization Claims and enforceable for their fullamount, irrespective of the Reorganization plan and its distribution proceedings5.
6. In the separate proceedings above, the Trustee relied upon the Arbitration Clause andargued that the Dispute Claims should have been referred to London arbitration, andJapanese courts should not have the jurisdiction over these claims. The Trustee also
submitted their arguments as to the merits that the Dispute Claims were not theCommon Benefit Claims but the Reorganization Claims and that the Owners’ Set-off
was not permissible under the Reorganization Act6 and therefore invalid. On this basis
3

The Owners relied on Article 62.2 of the Reorganization Act, which stipulates that a claim arising from theperformance by the counterparty to a “bilateral contract” set forth in 62.1 thereof from the filing of a petition
for commencement of reorganization proceedings until the commencement of reorganization proceedings
shall be a common benefit claim.
4
The Owners’ case was that the charterhire for the said period fell into “a claim for expenses for the
management of the reorganizing company’s business and the administration and disposition of thecompany’s property after the commencement of reorganization proceedings” set out as a Common Benefit
Claim in Article 127.2 of the Reorganization Act.
5
Article 132 of the Reorganization Act
6
Article 49.1.1 of the Reorganization Act prohibits creditors to effect a set-off where they have assumed debts
to the reorganizing company after the commencement of reorganization proceedings.

2

WaveLength - JSE Bulletin No. 61 (March 2016)

the Trustee set off the Dispute Claims to the extent of US$ 170,779.07 against the
Bunker Claim at the equivalent amount. The Owners counter-argued the reliance of theTrustee upon the Arbitration Clause and submitted that Japanese courts had thejurisdiction. Amongst others, the details of each party’s submissions as to thisjurisdiction issue shall be summarised in subsequent paragraphs.
7. The Reorganization proceedings in Japan were recognized as the foreign mainproceedings by the High Court in England on 30th July, 2013 under the Cross-Border
Insolvency Regulations 2006. The English court ordered, inter alia, that no legal
process, including arbitration, may be instituted or constituted against the Charterers
or their property, except with the consent of the Foreign Representative or thepermission of the English court (the “English Court Order”).
8. The following arguments were submitted before the Tokyo District Court, and on 28th
January, 2015, the court rendered an interim judgment as to the jurisdiction issue.
II. Owners’ Submissions
9. Whether an arbitration agreement has been concluded(1) The Vessel was substantially owned by a Japanese parent company despite being
registered under the ownership of their Panamanian subsidiary, and the Owners
were subject to Japanese tax authority through consolidated accounting with theparent company.
(2) The Charterparty was agreed through negotiation in Japan, through Japanesepersons in charge of both the Owners and Charterers (the “PICs”). Despite the
Owners’ standard form of charterparty including the Arbitration Clause being used
for the Charterparty, it was an agreement between the parties that, in the event ofdispute, they should mutually discuss the matter in Japan through their Japanese
PICs and, in cases where the matter would not be resolved through suchdiscussions, it should be referred to Japanese courts, where fewer legal costs would
be incurred, rather than referring it to London arbitration and instructing English
solicitors and/or barristers. In the shipping practice in Japan, most disputes arereferred to Japanese courts or TOMAC Arbitration7 even if the underlying contractcontains a London arbitration clause.

7

Tokyo Maritime Arbitration Commission of the Japan Shipping Exchange, the details of which are described
at: http://www.jseinc.org/en/tomac/index.html.

3

Judgment: Japanese court jurisdiction over its insolvency law issues despite London arbitration clause

10. Termination of Arbitration Clause
Even if the Arbitration Clause had once existed, the said clause lost its effect together
with the full effect of the Charterparty upon its termination by the Trustee. In thisregard, the Trustee applied for and obtained the English Court Order with the intention
to gather as many proceedings relating to the Charterers’ insolvency as possible inJapan. Such action by the Trustee evinces the intention of the Charterers to refer any
legal dispute as to the Charterparty to Japanese courts.
11. Scope of arbitration agreement(1) Even if the Arbitration Clause is in itself legally valid, it should be construed as anagreement to resolve English law disputes in arbitrations in London. In otherwords, disputes to be resolved in London are confined to those on the point ofEnglish law.
Arbitrators in London are not suitable to consider legal issues of the Reorganization
Act of Japan. The parties of the Charterparty would not have intended to refer such
issues to arbitrators in London who would not be able to construe and apply theprovisions of the Reorganization Act otherwise than through their English
translation.
(2) The issue in question is whether the Dispute Claims are the Common Benefit
Claims or Reorganization Claims. This is an issue specific to the Reorganization
proceedings and the Charterers and/or Trustee are not entitled to refer it to anarbitration in London.
In the present case, the point in issue is not an issue arising from the Charterparty
but an issue of how the Dispute Claims should be dealt with under the
Reorganization Act. The nature of the Dispute Claims, i.e. whether they are theCommon Benefit Claims or Reorganization Claims, is an issue between theclaimant and all creditors against the insolvent company. The Arbitration Clause ismerely an agreement to resolve individual disputes between one creditor and theinsolvent company and its scope shall not extend to the present issue.
12. Eligibility for Arbitration
The Arbitration Clause stipulates that the arbitrators shall be “commercial men”, where
not legal practitioners but shipping practitioners such as executives of shipping
companies, marine surveyors and master mariners are intended to be the main sourceof the arbitrators. The dispute in the present case is a specific case which could arise
only after commencement of insolvency proceedings. It would adversely affect thepractice of the Corporate Reorganization proceedings in Japan if such a case wereconsidered by arbitrators in England, who could be amateurs with respect to the4WaveLength - JSE Bulletin No. 61 (March 2016)

Reorganization Act of Japan. Such an outcome would not be acceptable as a matter of
judicial policy.
13. Article 14.1.2 of the Arbitration Act
Article 14.1.2 of the Arbitration Act of Japan, which entitles the court to accept a filingof a claim which is subject to an arbitration agreement when it is impossible to carryout arbitration proceedings pursuant to said arbitration agreement, applies to thepresent case. This is because (1) the present case is a dispute relating to the legal issue
of Japanese insolvency laws and, as such, a tribunal in London would not be able toconsider and make decisions properly, and (2) the Owners are barred from submitting
the claim to arbitration in London by virtue of the English Court Order.
14. Emergency Jurisdiction
It is accepted under international civil procedure laws that the courts in one jurisdiction(the “Alternative Jurisdiction”) shall have the jurisdiction over a dispute even if thecourts of another jurisdiction (the “Exclusive Jurisdiction”) have the exclusive
jurisdiction, where (1) it is impossible or unreasonable to carry on the proceedings in
the Exclusive Jurisdiction, (2) there is sufficient connection between the dispute andthe public order of the Alternative Jurisdiction and (3) there are no other grounds for
the Alternative Jurisdiction to have the jurisdiction over the dispute. This principle
similarly applies to the construction of an arbitration agreement.
15. Possibility of Violation of Public Order of Japan
The principle established by a Supreme Court judgment that, where an international
jurisdiction agreement is extremely unreasonable and in violation of the public ordersuch an agreement8 shall not apply, is applicable to arbitration agreements. This
principle should apply where following the jurisdiction agreement would lead tosignificant loss or delay in the proceedings.
16. Breach of Duty of Good Faith and Abuse of Rights
The Trustee’s reliance upon the Arbitration Clause, while he also applied for andobtained the English Court Order prohibiting any institution or constitution of legal
proceedings in England, is against the duty of good faith and constitutes abuse ofrights.

8

Supreme Court Judgment rendered on 28th November, 1975.

5

Judgment: Japanese court jurisdiction over its insolvency law issues despite London arbitration clauseIII. Trustee’s Submissions
17. The Trustee relied upon the Arbitration Clause and asked for the court to dismiss theclaim for the following reasons:
18. Whether arbitration agreement has been concluded
The Charterparty including the Arbitration Clause has been executed by the
representative of the Owners. It is quite common in shipping practice in Japan that acharterparty provides for English law as its governing law and arbitrations in Englandas the dispute resolution for disputes arising from time charterparties or othercontracts. Even if it could practically be the case that the contractual parties agree
subsequent to arising of a dispute to refer it to the courts or any other alternative
dispute resolution in Japan, such practical possibility shall not support the Owners’
argument that the Arbitration Clause would become invalid by reason of the intentionof one party.
19. Termination of Arbitration ClauseAn arbitration agreement is incorporated into a contract in order to resolve disputes
arising out of, or in connection with, the main body of that contract. The main bodyand arbitration agreement are separate and independent agreements and, therefore,
termination of the main body would not cause termination of the arbitration agreement.
Such a legal principle is supported by a Supreme Court Judgment9 as well as scholars’
views10.
20. Scope of arbitration agreement
The Arbitration Clause stipulates that any and all the disputes arising from theCharterparty shall be referred to arbitration. Arbitration agreements and governing law
issues do not logically link between each other. Judges and arbitrators are, in general,
expected to make decisions by applying foreign laws and, therefore, in the present casethe governing law clause in the Charterparty providing for English law does notnarrow the scope of the arbitration agreement.
21. Eligibility for Arbitration
Eligibility for arbitration is not an issue relating to the nationality and/or skill ofarbitrators but an issue of whether a dispute can be resolved by arbitration. The present
9106Supreme Court Judgment rendered on 15th July, 1975.
In Japan, it is not uncommon that, in addition to court precedents, scholars’ views on legal issues are referred
to in the parties’ submissions.

WaveLength - JSE Bulletin No. 61 (March 2016)

case, being a normal civil claim, shall not be denied its eligibility for arbitration.
22. Article 14.1.2 of the Arbitration Act
The Arbitration Act of Japan is applicable to arbitration proceedings the seat of whichis in Japan11, thus it shall not apply to the Arbitration Clause setting out arbitrations in
London. Moreover, even if said act were applicable, its Article 14.1.2 does not apply
because even under the English Court Order arbitrations in London can be instituted
by obtaining the consent of the Trustee or permission of the English court.
23. Emergency Jurisdiction
Under Japanese law there is no room for the emergency jurisdiction because theprinciple was intentionally not incorporated into the recent amendments to the Civil
Procedure Code and Civil Preservation Act of Japan in 2011. Moreover, the present
case does not satisfy the general requirements for the emergency jurisdiction.
24. Possibility of Violation of Public Order of Japan
It is unclear why the Supreme Court judgment referred to by the Owners could apply
to arbitration agreements. Moreover, the possibility of delay in the proceedings shallnot be the grounds for denying the validity of the Arbitration Clause because theparties in the present case have agreed in advance to refer any disputes to arbitrations
in England, which is widely adopted as the dispute resolution in the shipping practicein Japan.
25. Breach of Duty of Good Faith and Abuse of Rights
The Trustee applied for the English Court Order in order to achieve the Reorganization
under the Reorganization Act and fair and equal treatment between creditors. The
application and obtaining of said order shall not adversely affect the Trustee’s reliance
upon the Arbitration Clause. The Owners can commence an arbitration for the present
case in England.
IV. Interim Judgment
26. Governing Law of the Arbitration Clause
Applying the conflict of laws rule of Japan12, the court construed that, by setting out
English law as the governing law of the Charterparty and London as the seat of
11
12

Article 1 of the Arbitration Act of Japan.
Article 7 of the Act on General Rules of Application of Laws of Japan stipulates that “The formation andeffect of a juridical act shall be governed by the law of the place chosen by the parties at the time of the act.”7

Judgment: Japanese court jurisdiction over its insolvency law issues despite London arbitration clausearbitration, the parties have impliedly agreed to English law being the governing lawof the Arbitration Clause.
27. Whether the Arbitration Clause has been agreed(1) Whether the Arbitration Clause has been agreed shall be determined in accordancewith English law as the governing law of said clause. It is interpreted that underthe Arbitration Act 2006 of England an arbitration agreement shall be concluded
where the parties reach an agreement to refer to arbitration13.
(2) The Charterparty was on the New York Produce Exchange 1946 form as amended,
which has been used by the Owners as their standard form of time charterparties.
The Arbitration Clause was based upon clause 17 of said form with the amendmentof the seat of arbitration from New York to London. The authorized representativesof each party affixed their signatures to the last page of the Charterparty. English
law and arbitration in London are broadly adopted in international shipping
disputes because of the accumulated English court precedents, accessibility fortribunals in London to English law issues and concentration of shipping experts in
London. In view of these aspects, the court regarded it reasonable for theCharterparty to stipulate English law as the governing law and arbitrations in
London as the dispute resolution and accordingly the parties reached an agreement
to refer to arbitrations in London. Whilst the Owners were a one hundred percent
subsidiary of a Japanese company, and its representative and PIC are Japanesecitizens, these did not affect this determination.
(3) The director of the Owners stated in his witness statement that he understood that,in most cases, time charterparty disputes have been referred to the courts in Japanor TOMAC Arbitration, and as both parties to the Charterparty were substantiallyJapanese companies, the Charterparty would have contained either the jurisdiction
clause specifying Tokyo District Court or TOMAC Arbitration clause. It could be
the case that the parties reach an agreement after a dispute arises to refer it to thecourts in Japan or TOMAC Arbitration despite an inconsistent arbitration clause;
however, it would not affect the validity of the arbitration agreement concluded
upon execution of the contract. The Owners’ understanding evidenced in theirwitness statement did not have material effect to alter the effect of the Arbitration
Clause, and no other evidence suggested any agreement other than the Arbitration
Clause as contended by the Owners.

138

Articles 5 (1) and 6 (1) of the Arbitration Act 1996 of England.

WaveLength - JSE Bulletin No. 61 (March 2016)

28. Termination of Arbitration Clause
Article 7 of the Arbitration Act 1996 of England stipulates that “Unless otherwise
agreed by the parties, an arbitration agreement which forms, or was intended to form,
part of another agreement (whether or not in writing) shall not be regarded as invalid,
non-existent or ineffective because that other agreement is invalid, or did not come into
existence or has become ineffective, and it shall for that purpose be treated as a distinct
agreement”. Pursuant to this article, termination of the Charterparty by the Trustee
could not automatically terminate the Arbitration Clause.
The court accepted the submission of the Trustee as to the purpose of his application
for the English Court Order14 and accordingly held that such an application could not
be construed as termination of the Arbitration Clause.
29. Scope of Arbitration Clause
The Arbitration Clause adopted the original wording of Clause 17 of NYPE 1946, “Thatshould any dispute arise”, for determination of the subject of a dispute to be referred toarbitrations, which wording was broad and without limitation. However, as stated inparagraph 27, the main reasons for London arbitrations being agreed to as dispute
resolution for international shipping disputes are the accumulated English court
precedents, accessibility to English law issues and concentration of shipping experts in
London. Moreover, whilst “commercial men” as the requirement for arbitrators, as set
out in the Arbitration Clause, refers to shipping practitioners rather than scholars orformer judges in the practice of London arbitrations, the main issues of the Dispute
Claims are specific to the construction of the Reorganization Act namely (1) whether
the Dispute Claims are the Common Benefit Claims15 and (2) whether the Owners’
Set-off is permissible16, which would be difficult for arbitrators in London to properly
determine. Furthermore, under English law, creditors may not institute arbitrations
against debtors applying for insolvency proceedings unless exceptional cases such as
an English Court’s permission being rendered. Taking these circumstances into
account, the Arbitration Clause could not be construed as including the Dispute Claimsas the dispute to be referred to arbitration in London.
30. Conclusion
The Dispute Claims are not within the scope of the Arbitration Clause. Thus, thereliance upon said clause by the Trustee is dismissed. The court hereby renders aninterim judgment on this point.
14

ibid [26].
Articles 62.2 and 127.2 of the Reorganization Act (n 3,4)
16
Article 49.1.1 of the Reorganization Act (n 6).
15

9Judgment: Japanese court jurisdiction over its insolvency law issues despite London arbitration clause

V. Comments
31. The court took the approach of construction of the parties’ intentions from the wordingof the Arbitration Clause. Such an approach is widely adopted by the courts for theconstruction of contracts or agreements and is generally accepted by the practice.
32. From the implication of the judgment, the court could have reached a different
conclusion if the Arbitration Clause expressly included disputes relating to insolvency
proceedings or construction of relevant insolvency laws. However, in the context ofarbitration clauses, the phrase frequently come across in practice would be “anydisputes arising from or in connection with this Agreement” or in its similar wording
and further detailed wordings in the determination of the disputes to be subject to thearbitration clause could rarely be seen. Assuming such above phrase and the phrase ofClause 17 of New York Produce Exchange form 1946, “That should any dispute arise”,
are practically adopted in common, it would be beyond the parties’ expectations at thetime of conclusion of the contract if they are required to expressly refer to the disputes
relating to insolvency proceedings or their laws in addition to the wording of “anydisputes” and otherwise their intention would be construed as excluding such disputes
from the arbitration agreement.
33. The court put emphasis on the difficulty which arbitrators in London could face inconstruing and applying the Reorganization Act. In view of the scarcity of Englishlanguage books and journal articles on Japanese law, and the fact that all court
proceedings in Japan are conducted in the Japanese language17, it could be true that
arbitrators in London are not so familiar to Japanese laws and they would have to rely
significantly upon expert evidence to be submitted by the parties as to the legislation
itself and from its basic principles to construction of specific articles and its legal
issues. In such sense it was sensible to reach the conclusion that the Dispute Claims
are not subject to the Arbitration Clause and that Japanese courts shall have thejurisdiction.
34. However, contractual parties may agree to refer disputes to arbitration in a state where
the agreed governing laws (of another state) are not frequently practiced by thearbitrators. Even in such a case, the basic position for the courts would be to appreciate
the agreement by the parties. To the extent that the court took into account thedifficulty for the arbitrators in considering and applying the laws of another state, the17

Any documentary evidence written in a foreign language to be submitted to the court must be accompanied
by its Japanese translation and any submissions must be in Japanese language.

10

WaveLength - JSE Bulletin No. 61 (March 2016)

judgment in the present case would be an exceptional decision.
35. (1) While the interim judgment was a decision on the effect of the arbitrationagreement only, shipping practitioners should be interested in the merits of thecase, i.e. (1) whether the Dispute Claims I and II are the prioritised Common
Benefit Claims or non-prioritised Reorganization Claims and (2) whether the
Owners’ Set-off is permissible under the Reorganization Act, particularly becausesome ship operators have recently commenced insolvency proceedings in somejurisdiction and others have also been facing financial difficulty due to the current
extreme downturn of the shipping markets.
(2) It has not been reported that the court has rendered judgment on the merit of thepresent case and no other court decisions dealing with these issues relating tocharterparties have been confirmed by the author of this article. However, such
issues would inevitably arise when charterers commence insolvency proceedings
and these issues should have been resolved by local legal counsels. Any parties
having concern with overseas insolvent shipping companies are recommended toconsult local legal counsels of the debtors’ state to protect their interests.
[end]

11

WaveLength - JSE Bulletin No. 61 (March 2016)

The Revision of the Transport Law and the Maritime
Commerce Law in the Commercial Code of Japan
Kenji Sayama (Mr.)*
Ⅰ. Introduction
The long deliberation regarding the revision of the transport law and the maritime
commerce law in the Commercial Code of Japan, which has been held by the Transportand Maritime Commerce Section of the Commercial Code Committee of the Legislative
Council of the Ministry of Justice since April 2014 (“the Committee”), came to an end in
this February 2016. The Outline of such revision (“the Revision Outline”) as a result of
the above deliberation was approved in the general meeting of the Council on February 12,2016 and was finally submitted to the Minister of Justice.
In the context of the amazing fact that the above laws has been left untouched without
significant revision for over 100 years since their enforcement in the year of 1899, througha stage of reflection of public comments on the tentative revision proposal published in
March 2015, the Revision Outline was finally prepared responding to the Minister’s
request made in February 2014 that the thorough review and drastic revision on thesesomewhat obsolete provisions would be necessary from the three points of view; theresponse to the change of social and economic situation since the enforcement of suchlaws, the rational coordination of interests among shipper, carrier and other parties relating
to the transport, and the response to the global movement in regard to the maritime legal
system.
The target of this revision is mainly Part II (Commercial Transactions), Chapter 8(Transport Business), namely the article 569 – 592, and Part III (Maritime Commerce),
namely the article 684 – 851 of the Commercial Code, which originally regulate thedomestic transport and maritime commerce, and therefore, the influence of the revision to
the field of international transport and maritime commerce, which for instance is governedby the Carriage of Goods by Sea Act of Japan, would be thought to be partial and limited.
The suggestion by the Revision Outline has made also in consideration of consistency with
the Carriage of Goods by Sea Act of Japan, which applies to the international maritime
transport, and several relevant international conventions or rules (For example, the YorkAntwerp Rules 1994, the International Convention for the Unification of Certain Rules of
Law with respect to Collision between Vessels 1910, the International Convention on*

LLB (Waseda University), Attorney-at-Law, Yoshida & Partners,

12WaveLength - JSE Bulletin No. 61 (March 2016)

Maritime Salvage 1989 and so on.).
As the subjects revised in the Revision Outline are extensive, hereby the writer roughly
introduce the contents of it focusing on the particular subjects which are thought to behighlighted in the sense that they would bring about some significant changes on thecurrent legal system regarding the transport and maritime commerce.
Ⅱ. Highlighted Subjects in the Revision Outline
1. Transport Law(1) General Provisions concerning Transport
In the Revision Outline the general provisions which cover land, maritime and airtransport has been created. The Provisions concerning domestic air transport which
had not been seen in the current law were newly added this time1.
Also, there had been in the deliberation one of the subjects of great debate made which
was thought to be remarkable, namely the change of the borderline between land andmaritime transport. Article 569 of the Commercial Code2 provides: The term “carrier”
means a person who engages in the business of transporting goods or passengers onland, over lakes and rivers, or at ports and harbors. The extent of “lakes and rivers, orat ports and harbors” is in detail designated as “calm water areas” in accordance withthe other laws (article 122 of the Enforcement Act of the Commercial Code and theMinisterial Ordinance of the Ministry of Communication No.20). Thus, under thecurrent transport law the land transport includes the carriage over lakes and rivers or at
ports and harbors (However, even under the current law it is not thought as the landand-maritime combined transport that a voyage starting from a port to outside the calm
water areas, but just as maritime transport as a whole).
Backed by several persuasive grounds such as that it is not natural in light of common
sense to regard such transport on calm water areas including for instance a large partof the Seto Inland Sea as land transport and that vessels navigating anywhere in waterarea should integrally be governed by the regulations required to the maritime
transport, in the Revision Outline the meaning of the word “maritime transport” hasbeen drafted as the transport of goods or passengers by means of vessel provided in theCommercial Code.
Under the Revision Outline, transport by vessel or barge only on the calm water areas
would newly be governed by the provisions regarding maritime transport which
1

Regarding the international air transport, Japan has ratified the Warsaw Convention, the Hague Protocol to
the Warsaw Convention and the Montreal Convention.
2
English translation of the provisions in the current Commercial Code of Japan is cited from the website“Japanese Law Translation” operated by the Ministry of Justice. http://www.japaneselawtranslation.go.jp/

13The Revision of the Transport Law and the Maritime Commerce Law in the Commercial Code of Japanrequires vessels to be seaworthy, for instance (article 738).
(2) Shipper’s Obligation to inform the Carrier of the Necessary Information in caseof Dangerous Goods Transport
Concerning this point there is no provision in the current Commercial Code andtherefore, the ground of shipper’s obligation to inform the carrier of the necessary
information regarding dangerous goods has been sought under the so-called fair andequitable principle. Based on the growing mood of safe transport and the diversity of
the kinds of dangerous goods these days (For instance, a shipper of dangerous goods is
obliged to submit the Declaration of Dangerous Goods to the shipowner or the masterof the vessel which is scheduled to load them, in accordance with article 17 of The
Regulations for the Carriage and Storage of Dangerous Goods by Ships.), in the
Revision Outline the provision regarding the shipper’s obligation to inform the carrierof the necessary information, such as the name, nature and required handling
instruction, has been newly added.
Concerning the meaning and the extent of “dangerous goods” has been drafted as the
goods which have dangerousness such as the inflammable or explosive character.
Also, according to the Revision Outline, such obligation is to be imposed on the
shipper of dangerous goods regardless of whether the carrier is aware of suchdangerousness of the goods (The carrier who is aware of it shall be under the
obligation to scrutinize the handling instruction of the goods and to prevent an accident
from occurring.3 However, in such case, the shipper’s liability may be reduced by suchas fault offsetting).
The nature of shipper’s liability was also one of the subjects of great debate in this
deliberation. Based upon discussion in the Committee and many comments collected
through the process of the public comment, it has been finally drafted that the nature ofshipper’s liability is negligence liability, namely the liability from which the shipper
may be exempted in case the breach of such obligation is due to grounds not
attributable to the shipper. The contents of the Revision Outline in this regard is said tobe the proposition taking the concept of carrier protection a step further from thecurrent position of the law by easing the carrier’s burden of proof (under the Revision
Outline the carrier would not be required to establish concerning the shipper’s
negligence but only to the fact that the damage was caused due to the absence of thenotification from the shipper.), in view of that it is thought to be of great difficulty forthe shipper to prove that he is not negligent.

3

Sup. Ct. Mar. 25, 1993.

14

WaveLength - JSE Bulletin No. 61 (March 2016)(3) Discharge of the Carrier’s Liability in case of the Goods of High-Value without
the Shipper’s Declaration
Article 578 of the Commercial Code provides: A carrier shall not be liable tocompensate for damage with regard to cash, negotiable instruments of value or otherexpensive goods unless the consignor declared the type and value therefore upon
entrusting such goods for transport.
This provision has been basically maintained even in the Revision Outline. However,
the express provision of exemption has been newly added in the Revision Outline thatsuch discharge of the carrier’s liability shall not apply in case the carrier is aware at thetime of conclusion of a contract that the goods is of high-value and in case the loss,
damage or delay occurred intentionally or by gross negligence of the carrier.
(4) Prescription Time for Claim pertaining to the Carrier’s Liability
The current Commercial Code provides in regard to extinguishment of the carrier’s
liability for loss or damage of the goods: The liability of a freight forwarder shall be
extinguished by prescription when one year has elapsed from the day on which theconsignee received the freight (article 566(1). Although this article originally applies
to the liability of a freight forwarder, this shall apply mutatis mutandis to the carrier’s
liability in accordance with article 589 of the Commercial Code). However in thisregard, the prescription time shall be 5 years in case the carrier has knowledge of theloss or damage at the time of discharge of the goods (article 589, 566(3) and 522 of theCommercial Code).
Backed by several persuasive grounds such as that the prescription time shall not be
influenced by whether or not the carrier has knowledge of the loss or damage
considering the period required to prepare the claim has to be the same from the viewof the cargo interests such as consignee, the current provision on this point has been in
the Revision Outline revised as being equivalent to the provision in the Carriage ofGoods by Sea Act of Japan4, which is equivalent to the Hague Visby Rules.
(5) Relationship between Contractual and Tort Liability of the Carrier
Under the current law the contractual liability and tort liability of the carrier canseparately arise and in principle they do not have influence on each other5, andtherefore, the choice of the ground when for instance the claim is brought before the4

Article 14 (1) and (2) of the Carriage of Goods by Sea Act of Japan provides: In any event the carrier shallbe discharged from all liability unless a judicial claim for loss or damage of the goods is made within one
year from the date on which the goods were delivered (or the date on which those should have beendelivered in case those were lost). Such period may be extended by the agreement only after the damage tothe goods arose.
5Sup. Ct. Oct. 17, 1969.

15

The Revision of the Transport Law and the Maritime Commerce Law in the Commercial Code of Japan

court is up to the claimant. In order to ensure the realization of the Commercial Codewhich has several provisions regarding the exemption of the carrier’s liability such as
the exemption regarding the goods of high-value (article 578), calculation of total
amount recoverable for damage (article 580) and the prescription time for claim
pertaining to the carrier’s liability (article 589 and 566(3)), in the Revision Outline it
has been drafted that such provisions of exemption in the Commercial Code shallapply mutatis mutandis to the carrier’s tort liability for loss or damage to the goods. In
this regard, considering that the legal position of the shipper is different from that ofconsignee who usually does not make a carriage contract with the carrier, in the
Revision Outline it is drafted that such application with modifications shall not bemade on the carrier’s liability to the consignee who in advance refused to accept suchtransport under the contract made by the shipper (Although the Carriage of Goods by
Sea Act of Japan has the equivalent provision of the article 20-2(1), it has no such
limitation concerning the consignee’s status.).
Also, another and further issue should be noted whether or not an agreement
exempting the carrier’s contractual liability has an effect on the carrier’s tort liability.
This issue is beyond even the new regulation suggested by the Revision Outline andtherefore shall be concluded by considering several aspects such as the construe ofsuch agreement.
By the way, also the institutionalization of the rule shown in the well-known Himalaya
Clause concerning, for instance, the employees of the carrier in the maritime transport
contract has been suggested in the Revision Outline, which is almost the same as the
Article 20-2(2) of the Carriage of Goods by Sea Act of Japan.
(6) Rules for Combined Transport
In the Current Commercial Code there is no provision concerning combined transport,
namely the transport which includes at least two kinds of mood of transport (regarding
land transport, transport by railway and truck are regarded as the separate mood oftransport, for instance.). In the context that combined transport is very common today,in the Revision Outline the provision regarding combined transport has been newly
added.
Regarding the carrier’s liability in case of combined transport, it is provided to be
determined by the provisions of Japanese law or of the international conventions Japan
has ratified, which would have applied if the contracting parties had made a separate
and direct contract in respect of the particular stage of the transport during which theloss or damage occurred. For instance, according to the Revision Outline, under the
combined transport contract with the Japanese law as the governing law, if damage
occurred in the transport between the foreign ports, the carrier would be liable under16

WaveLength - JSE Bulletin No. 61 (March 2016)

the Japanese law namely the Carriage of Goods by Sea Act of Japan. In this respect, in
the Revision Outline it is not clearly provided concerning which law applies in case it
is unknown where the loss or damage occurred and that indicates this provision
regarding combined transport shall apply only on the case where the transport during
which the loss or damage occurred is clearly identified.
Also, in the Revision Outline the provisions have been newly added concerning the
combined transport documents.
(7) The Carrier’s Liability in case of Passenger Transport
Current Commercial Code set out the provisions concerning the passenger transport
separately in land transport and maritime transport. This time the general provisions
have newly drafted in the Revision Outline concerning the passenger transport which
cover land, maritime and air transport.
In the discussion there had been one of the subjects of great debate raised, namely the
carrier’s liability to passenger’s damage. The current Commercial Code provides: A
passenger carrier may not be released from the liability of compensating for thedamage suffered by a passenger due to transportation unless the passenger carrier
proves that he/she or his/her employee was not negligent in exercising due care incarrying out the transportation (article590(1)).
In the discussion by the Committee the subject was focused whether to set out theprovision that makes any agreement contrary to the contents of article 590(1) andhaving a disadvantage for the passenger, for instance the agreement exempting thecarrier from the liability for personal injury damage, null and void. This issue has beenclearly raised in view of the respect for human life.
On the other hand, a somewhat persuasive point of view was raised that especially incase of emergency carriers tend to reject offer of passenger transport under such strict
provision, although even in such situation transport service is necessary.
Finally, in the Revision Outline it has been drafted that any agreement shall be null andvoid exempting or reducing the carrier’s liability for the damage caused by the bodily
harm to a passenger (except the damage caused by the delay in transport), provided,
however, that such rule shall not apply to the transport in case of wide-scale disaster or
its risk does exist, or to the transport of the passenger who would be exposed to therisk of fatal damage to his/her life or body by the vibration which would generally
arise associating with the normal transport.

17

The Revision of the Transport Law and the Maritime Commerce Law in the Commercial Code of Japan

2. Maritime Commerce Law(1) Seizure or Provisional Seizure on a Vessel for which Preparations for Departure
have been finished
Article 689 provides: No seizure or provisional seizure (excluding provisional seizureby means of registration) may be executed on a ship for which preparations for
departure have been finished; provided, however, that this shall not apply to any
obligation arising from the ship due to its departure. This provision is said to be backed
by the consideration on the difficulty in preparation of a substitute vessel mainly in the
tramper service if the vessel were to be seized after completion of the preparation for
departure. However, such realization is not necessarily appropriate in the situationthese days where liner service has become popular. In addition, impoundment of thecertificates necessary for seizure, such as the certificate of the vessel’s nationality, ispractically feasible to the vessel tied up even after completion of the preparation for
departure. Therefore, in the Revision Outline the acceptable range of seizure has beenslightly expanded by revising the above provision as that no seizure or provisional
seizure may be executed on a vessel on a voyage (conversely, seizure or provisional
seizure may be executed on a vessel tied in harbor even after the completion of the
preparation for departure.).
(2) Provisions concerning Time Charterparty
There has been no provision concerning time charterparty in the current Commercial
Code although such kind of contract is very common and popular not only in Japan but
also in other countries (In the Commercial Code of Japan provisions starting fromarticle 737 only provide regarding voyage charterparty.).
In this Revision Outline, provisions concerning time charterparty have been newly
added. However, as the thinkable contents of time charterparty can vary widely, in the
Revision Outline the time charterparty has been legally positioned as one type ofcontract which generally utilizes the function of the vessel. In the Revision Outline
several basic and typical issues have been covered by the clear provisions such as thecharterer’s burden of expense including bunker, pilotage, port charges, and any othernormal costs required to the use of the vessel (these provisions are discretionary
provisions therefore individual and concrete contents of the contract would depend oneach contract in question, as ever.).
(3) The Obligation for vessel’s seaworthiness
Article 738 of the Commercial Code provides: A shipowner shall warrant to a charterer
or a consignor that the ship is capable of making a safe voyage as of the time of its
departure.
18

WaveLength - JSE Bulletin No. 61 (March 2016)

This provision concerning the vessel’s seaworthiness applies to voyage charterparty
and contract of affreightment.
The nature of such obligation imposed on the shipowner or carrier has been construed
as the strict liability6.
Through discussion in the Committee and backed by several persuasive grounds such
mainly as that the carrier’s obligation for seaworthiness has been construed as thenegligence liability under the Carriage of Goods by Sea Act of Japan (article 5) and theinconsistency in regulation between domestic and international transport on this pointshould be eliminated, finally it has been drafted in the Revision Outline that the
obligation for seaworthiness shall be revised as the negligence liability and thecontents of obligation shall be clearly specified in the same items as those provided in
the article 5(1) of the Carriage of Goods by Sea Act of Japan.
Such revisions in the Revision Outline apply not only to the voyage charterparty andcontract of affreightment but also to the newly added time charterparty.
(4) Prohibition of any Agreement intending Exemption of the Liability of Carrier’s
Side
Article 739 of the Commercial Code provides: A shipowener may not be released fromthe liability of compensating for any damage arising from his/her own negligence, anintentional act or the gross negligence of a mariner or other employee or from the ship
not being seaworthy, even when he/she has agreed to any special provisions to thecontrary.
This provision is said to have been set out in accordance with the resolution passed in
the international conference held in Brussel in 1888, where the over-used exemption
clause was opposed. However, in the International Convention for the Unification of
Certain Rules Relating to Bill of Lading, 1924, from which the Carriage of Goods by
Sea Act of Japan is originated, it was set out that the carrier shall be exempted from all
liability arising out of the crew’s fault in navigation or management of the vessel (suchexemption is not provided in the Hamburg Rules nor in the Rotterdam Rules.).
In the context of such inconsistency between the regulation on domestic andinternational maritime transport, it was pointed out that the general risk of extremely
unfair agreement would be low even without the above provision considering that theintervention by law into the agreement made by the parties is not necessarily required
these days as the most of maritime transport contract appears to be so-called B to B
contract and that several administrative regulations such as the Coastal Shipping Act
would prevent an unfair contract from being made.
6Sup. Ct. Mar. 15, 1974

19

The Revision of the Transport Law and the Maritime Commerce Law in the Commercial Code of Japan

In view of the above, finally in the Revision Outline the provision concerning the
exemption agreement from the carrier’s liability for any damage arising from its own
negligence, an intentional act or gross negligence of a mariner or other employee has
been deleted.
Also, whether to accept the exemption agreement concerning the carrier’s obligation
for seaworthiness was one of the subjects of great debate in the discussion by theCommittee. With respect to the voyage charterparty in the international maritime
transport field, the provision concerning shipowner’s obligation for seaworthiness isgenerally construed as the discretionary provision (article 16 of the Carriage of Goods
by Sea Act of Japan, GENCON form, for instance.).
On the other hand, in the contract of affreightment in the international maritime
transport, such obligation is still generally construed as compulsory provision (article
15 of the Carriage of Goods by Sea Act of Japan).
On this issue many opinions had been raised even after the tentative revision proposal
was published and public comments were collected. Finally in the Revision Outline, inconnection with the current article 739, obligation for seaworthiness in voyage
charterparty has been revised as the discretionary provision but on the other hand it incontract of affreightment has been maintained as the compulsory provision.
With respect to the time charterparty, provisions concerning such obligation have beendrafted as the discretionary provision.
(5) Provisions regarding Sea Waybill
In the current Commercial Code there is no provision regarding sea waybill.
However, there have been many cases reported where the bill of lading is not received
by the consignee at the time of the vessel’s arrival to the port of discharge for somereasons, such as the speeding up of vessel.
In addition, sea waybill is said to be used often as an alternative to the bill of lading for
instance in the transaction between group companies. In the context that the CMI
Uniform Rules for Sea Waybills was adopted in 1990 and some other countries haveset out the provisions concerning sea waybill, this time the provisions regarding sea
waybill have been newly created in the Revision Outline.
The establishment of these provisions also aims to promote appropriate and sufficientdescription on the sea waybill and finally appropriate use of it.
(6) Collision liability
In the Commercial Code there are only two articles regarding the collision of thevessels (article 797 and 798). This time in the Revision Outline several revisions havebeen suggested considering the inconsistency in contents between the Japanese
20

WaveLength - JSE Bulletin No. 61 (March 2016)

domestic law and the International Convention for the Unification of Certain Rules of
Law with respect to Collisions between Vessel, “1910 (“the Collision Convention”)”,
which Japan has already ratified.
Firstly, revision has been suggested concerning how to handle the determination which
vessel was more seriously negligent in the relationship between the colliding vessels.
In case the Collision Convention shall not apply namely for instance where one of thecolliding vessels is of the flag state which has not ratified the Collision Convention, thecurrent provision provides that if a victim is negligent, the court may take the relevant
factors into consideration when determining the amount of compensation. In order toeliminate the inconsistency between Japanese law and the Collision Convention insuch case, in the Revision Outline it is suggested that, when deciding the collision
liability and further the amount of compensation, the court has to take it into accountwhich vessel was more seriously negligent.
On the other hand, concerning the nature of collision liability of the colliding vessels
in relation to the other parties such as the cargo owner, there has not been any revisionin the Revision Outline. In this regard, article 4(2) of the Collision Convention
provides for so-called divisible liability as follows: the damages caused, either to thevessels or to their cargoes or to the effects or other property of the crews, passengers,or other persons on board, are borne by the vessels in fault in the above proportions,and even to third parties a vessel is not liable for more than such proportion of suchdamages.
However, in this regard, the Japanese Civil Code provides as follows and suchprovision of so-called joint-and-several liability was maintained even after thethorough discussion in the Committee for some reasons such as the significance of therelief of the victim: If more than one person has inflicted damages on others by theirjoint tortious acts, each of them shall be jointly and severally liable to compensate forthose damages. The same shall apply if it cannot be ascertained which of the joint
tortfeasors inflicted the damages (article 719(1) of the Civil Code).
In regard to the negative prescription (time bar), article 798(1) provides: Any claim
arising from a general average or the collision of ships shall be extinguished byprescription when one year has elapsed. It is thought that this article shall apply only
to the claim regarding property damage7 and that the prescription time starts to run
from the date on which the party who had suffered damage came to have theknowledge of its damage and the tortfeasor.8
In this point, on the other hand, article 7(1) of the Collision Convention provides thatthe action for the recovery of any type of damages is time barred after an interval of7
8

Daishin-in(Predecessor of the Sup. Ct.) Apr. 24, 1915
Sup. Ct. Nov. 21, 2005

21

The Revision of the Transport Law and the Maritime Commerce Law in the Commercial Code of Japantwo years from the date of the collision.
Finally in the Revision Outline, in view of the respect for human life, the prescription
time for the personal injury claim was maintained as 3 years in accordance with article
724 of the Civil Code9, whilst the prescription time for the property damage claim has
been revised as 2 years in accordance with the Collision Convention.
(7) Maritime LienIn the Revision Outline, in view of the respect for human life, it has been newly
suggested the order of the claims which are secured by the maritime lien as follows:
1. Personal damage claim based on damage resulting directly from loss of life or
personal injury (article 2(1)(v) of the Act for Limitation of Liability of Ship
Owners)2. The salvage charge and the general average to be borne by the vessel (current article
842(v) )3. The taxes imposed on the vessel in connection with the voyage, the pilotage charge
and towage charge (current article 842(iii) and (iv))
4. Any claims which arise from the necessity of continuing the voyage (current article
842 (vi))
5. Any claims of the captain and other mariners which arise from employment
contracts (current article 842(vii))
6. Property damage claim other than a personal damage claim (article 2(1)(vi) of the
Act for Limitation of Liability of Ship Owners)
Also, article 704(2) of the Commercial Code10 is suggested in the Revision Outline tobe applied mutatis mutandis to the case of time charterparty, by reason that it isunjustifiable the view that the protection of creditors should be set back further in caseof time charterparty than in case of demise charterparty, because the shipowner in thecase of time charterparty is obviously well involved in the maritime business activity
with the vessel in question by, for instance, outfitting and operating such vessel.
Ⅲ. To the Enactment of the Revised Laws
Now that the Revision Outline as a result of the long discussion in the Committee has
9

The Japanese Civil Code is now under revision procedure where it is proposed that this prescription time on
this point should be extended to 5 years. Thus the revision of the Civil Code would have influence also on
the construe of the prescription time for collision liability.
10
It provides: In case referred to the preceding paragraph, any statutory lien arising from the use of the ship
also be effective against the shipowner, provided, however, that this shall not apply if the holder of thestatutory lien knows that the use of the ship is in violation of the contract. This translation is also cited fromthe website “Japanese Law Translation” operated by the Ministry of Justice.

22

WaveLength - JSE Bulletin No. 61 (March 2016)

submitted, the amendment bill of the Commercial Code which will be submitted to theDiet is currently under preparation basically in line with the contents of the Revision
Outline, although the detailed wording of the provisions in connection with the revision
this time can be slightly changed.

23

WaveLength - JSE Bulletin No. 61 (March 2016)

The Costs for a ship arrest in Japan
Mitsunari Taketani (Mr.)*
Ⅰ.Introduction
1. There are two ways of ship arrest in Japan. One is arresting a ship for compulsory
auction sales (hereinafter called the “Arrest”). Another is arresting a ship by way ofprovisional attachment to preserve the debtor’s asset (hereinafter called the“Provisional Arrest”).
2. The Arrest can be executed by the following grounds:・maritime liens,・mortgages, and・judgments in Japan.
A compulsory legal auction is commenced after the Arrest.
3. The Provisional Arrest is a procedure to arrest a vessel provisionally for a judgementin the future.
A compulsory legal auction is not commenced in the Provisional Arrest.
4. The Arrest or the Provisional Arrest will involve various costs. Main costs aremaintenance expenses and counter-security. But it is difficult to find referencematerials about them. The purpose of this article is to explain these costs based on ourlaw firm’s experiences.
But please note that the figures quoted in this article are only a guide, because figures
will be different depending on the facts of each case.
Ⅱ.Arrest
1. Procedure
Japanese laws have a procedure to confiscate the certificate of the vessel’s nationality
before the Arrest: “Order to Deliver the Certificate of the Vessel's Nationality, etc. Prior
to the Filing of a Petition for Execution against a Vessel” (Civil Execution Act
Article115 (1)).
*

A partner in the law firm of Tagawa Law Office in Tokyo, Japanese qualified attorney- at-law, LL.B.
(Hitotsubashi University).

24

WaveLength - JSE Bulletin No. 61 (March 2016)

A petition for the Arrest has to be filed within five days from the day on which thecertificate of the vessel’s nationality was confiscated (Civil Execution Act Article
115(4)).
And a court will order the prepayment of expenses (Civil Execution Act Article 14(1)).
In practice, many cases seem to get settled between the parties before paying the
Prepayment of Expenses to the court.
Even when the Prepayment of Expenses is paid to the court, vessels are often released
by providing guarantees.
In the procedure of the Arrest, no counter-security can be requested.
2. Maintenance expenses
The amount of the Prepayment of Expenses is decided from the view point of that how
much it will cost to maintain the vessel considering her size. If the actual maintenancefees are likely to exceed the Prepayment of Expenses, the court will order to pay theadditional Prepayment of Expenses.
When the vessel is sold by the legal auction, the receipts are distributed to pay thearrestor for Prepayment of Expenses prior to others.
3. Example
Case 1 and Case 2 are handled by our law firm. Case 3 is based on the reported
publication.1
Case 1 Hiroshima district court Heisei24nen (ke) No.106
Two vessels were arrested at the same time based on maritime lien.
Flag
GRT
Type

Japan
387
passenger ship

Flag
GRT
Type

Japan
388
passenger ship

Prepayment of Expenses for two vessels was JPY10million
The vessels were released 2 months after the Arrest since a guarantee was provided.
The actual expenses occurred to maintain the vessels for 2 months were about
1

Kinyuuhoumujijyou No.1941 page 116-120

25

The Costs for a ship arrest in Japan

JPY6.7million.
Case2 Shizuoka district court Heisei25nen (ke) No.202
The petition for the Arrest against the below vessel was filed based on maritime lien.
Flag
GRT
Type

Sierra Leone
2,962
cargo ship

JPY10million were required for the Prepayment of Expenses.
The vessel was released before prepaying the expenses.
Case3 Hakodate district court Heisei22nen
The below vessel was arrested based on a mortgage.
Flag
GRT
Type

Panama17,663bulk carrier

The vessel was sold by the legal auction at JPY 1,530million.
It took about 6 months from the Arrest to the completion of the legal auction. The
court at first requested to pay JPY13.5million as the Prepayment of Expenses, but it
requested to pay the additional Prepayment of Expenses. Its final figures amounted toabout JPY 80million.
Ⅲ. Provisional Arrest
1. Procedure
The amount of counter-security is informed by the court after filing the petition of theProvisional Arrest. The execution of the Provisional Arrest is done after the paymentof the amount.
If a long time has passed after the Provisional Arrest, the court will order to pay the
Prepayment of Expenses.
2. Counter-security
The amount of counter-security is determined by the court depending of the following
factors.
① a ship value,② a type and an amount of the claim,
26

WaveLength - JSE Bulletin No. 61 (March 2016)③ losses the ship owner will suffer,④ a degree of a prima facie proof of the claim and the necessity of the Provisional
Arrest.
As to ① a ship value, a court will subtract an amount of the mortgage (e.g. The ship’svalue is JPY100million. If she has the mortgage of JPY20million, the court willconsider ① the sip value as JPY80million.).
③ Losses the ship owner will suffer will be usually a large amount. Therefore an
expensive counter-security is often requested. But in our experience so far the price ofcounter-security to be requested doesn’t exceed the amount of claims in any case.
3. Example
These cases were handled by our law firm. Soon after the Provisional Arrests, they
were withdrawn because the parties reached settlements in both cases.
Case1 Yamaguchi district court Ube branch Heisei25nen (yo) No.1
The below vessel was provisionally arrested based on the below claims.
Claim amount: about USD500,000
The speed and consumption claims.
Flag
Switzerland
GRT
32,297Typebulk carrier
Ship value JPY 2,300million
Revolving mortgage-maximum amount CHF32million
The court ordered JPY20million as counter-security.
Case2 Kagoshima district court Kanoya buranch Heisei27nen (yo) No.8
The below vessel was provisionally arrested based on the below claims.
Claim amount: about KRW100million
Claims, delayed damages and the costs of a lawsuit based on the confirmed Koreanjudgement2.
2

We can’t arrest a vessel by foreign judgements or arbitration awards unless the procedure of recognition andenforcement of a foreign judgement is followed. Therefore we provisionally arrested the vessel.

27

The Costs for a ship arrest in Japan

Flag Belize
GRT 1,970
Type bulk carrier
Ship value USD1.7million
Mortgage
N/A
The court ordered JPY6.4million as counter-security.
Ⅳ.Conclusion
The amount of the Prepayment of Expenses and counter-security is decided by the court
depending on facts of each case. There is some room for negotiation. Therefore it isimportant that to explain the details of the case to the court and negotiate with them so that
only the reasonable amount will be ordered.
Also, if a case is likely to go forward to the completion of a legal auction, we need toforesee how much maintenance fees will be charged in total and the price of a vessel to be
sold.

28

The Japan Shipping Exchange, Inc.
Wajun Building, Koishikawa 2-22-2,
Bunkyo-ku, Tokyo 112-0002, Japan
Tel: 81 3 5802 8363
Fax: 81 3 5802 8371
Website: www.jseinc.org