JAPAN Law and Practice Contributed by: Taro Omoto, Yusuke Nakajima and Makoto Sakai, Mori Hamada & Matsumoto
2.5.4 Enforceability of “Cut-Through” Clauses As long as the parties involved agree appropriate - ly, a cut-through clause in insurance documents is enforceable. 2.5.5 Assignment of Insurance/Reinsurance An assignment of claims under an insurance policy is generally permitted. However, the assignment of claims under a liability insurance policy is prohibited by the Insurance Act (Act No 56 of 6 June 2008). 2.6 Lease Enforcement 2.6.1 Restrictions on Lessors’ Abilities In principle, a lessor may terminate the lease in accordance with the provisions of the lease agree - ment. However, there is a possibility that a court may, in its discretion, limit such lessor’s right of termination depending on the circumstances, such as termination based on the lessee’s default in the event of a minor breach of the lease agreement (eg, a single failure to pay rent) or termination based on a petition for an insolvency proceeding. There are no material restrictions on the re-export of the aircraft or sale of the aircraft following the termina - tion of the lease. The aircraft does not have to be in Japan at the time of termination or sale. 2.6.2 Lessor Taking Possession of the Aircraft If a lease is validly terminated, the lessor has a right to take physical possession of the aircraft without the lessee’s consent. However, since self-help is not per - mitted under Japanese law, the lessor must obtain a court order or judgment if the lessee does not sur - render the aircraft to the lessor. 2.6.3 Specific Courts for Aviation Disputes There are no specific courts competent to decide aviation disputes. 2.6.4 Summary Judgment or Other Relief A lessor seeking a judgment to order the lessee to deliver the aircraft to the lessor may apply to the court for an order of provisional disposition prohibiting the transfer of possession. The lessor must post a bond in the amount designated by the court. In general (not
(rent claims) are not considered to be claims secured by the aircraft or engine. Claims for rent are consid - ered to be unsecured ordinary claims. On the other hand, the lessor’s interest in the aircraft or engine is not considered to be a security interest but is considered to be an absolute ownership inter - est. 2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies In general, it is not mandatory for owners or operators of aircraft registered in Japan to place insurance with domestic insurance companies. From a regulatory perspective, the Insurance Busi - ness Act (Act No 105 of 7 June 1995) prohibits a foreign insurer without a branch office in Japan from executing an insurance contract pertaining to aircraft with Japanese nationality in principle. However, an insurance contract that covers Japanese registered aircraft used for commercial flights, cargo transported internationally by such aircraft and obligations arising from them is an exception. If the insurance with respect to the aircraft in question does not fall under such an exception, it would not be practical for the owner or operator to find a for - eign insurance company that would underwrite such insurance. 2.5.2 Mandatory Insurance Coverage Requirements In order to operate air transport services or aerial work services in Japan, a licence from the MLIT is neces - sary, pursuant to the Civil Aeronautics Act. The MLIT requires applicants for such licences to ensure that an appropriate insurance policy is in place to cover the damages in the event of an aviation accident. 2.5.3 Placement of Insurance Outside of Jurisdiction A reinsurance contract is also an exception to the restriction explained in 2.5.1 Requirement to Engage Domestic Insurance Companies , so reinsurance can be placed outside of Japan up to 100% coverage.
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