JAPAN Law and Practice Contributed by: Hiroki Aoyama, Yuki Matsuda and Shuhei Takaishi, Mori Hamada
8.2 Public-Private Partnership Transactions The most notable recent area of Japanese PPP trans- actions is airport concessions. Concession rights have been granted for some major airports, includ- ing Kansai airport, Osaka airport, Fukuoka airport and Shin-chitose (Sapporo) airport. The PFI Act and the Airport Concession Act are the most relevant pieces of legislation to airport con- cessions. Under these Acts, a public authority that administers public facilities confers the right to oper- ate the airport facilities on a concessionaire, who is then allowed to charge users fees for using the airport facilities. The ownership of the airport facilities and land is retained by the government. Since concessions are new in the market, the negotia- tion and documentation is less standardised. Private parties, together with government authorities, are working to establish new market practice. Airports are not the only type of facility that can be privatised by the concession method. Toll roads and water and sewage systems are hopeful areas, some of which have already been privatised by way of con- cession. 8.3 Governing Law The project documents are typically governed by Japanese law and the designated venue for dispute resolution would be the Japanese court as long as the project is located in Japan. However, transaction parties may choose another governing law (including English or New York law) or dispute resolution clause, including international arbitration. 8.4 Foreign Ownership Generally, there are no legal restrictions on the own- ership of real property in Japan by foreign entities, except that non-residents may be required to make a post-transaction filing pursuant to the Foreign Exchange and Foreign Trade Law. Generally, when a foreign investor acquires shares in a project company in Japan, only a post-transaction filing is required pursuant to the Foreign Exchange and Foreign Trade Law. However, when the project company is engaged in certain types of business,
est itself may not be avoided pursuant to the criteria above. This is to prevent the holder of a security inter- est that has been hidden for a long time from obtain- ing priority over general creditors after the borrower becomes financially distressed. The requirements of such avoidance include the perfection: • being made after the suspension of payments or the filing of an insolvency petition; and • not being made within 15 days of the creation of the security interest. Obtaining a guarantee or receiving a payment may become subject to the risk of avoidance under certain circumstances. Following the nuclear power crisis caused by the Great East Japan earthquake in 2011, the electricity industry has changed drastically. Renewable energy has drawn increasing attention as an alternative ener- gy source. The Japanese government accelerated this movement by introducing the feed-in tariff in 2012 and then announced its “Green Growth Strategy” in 2020 to speed up the development of the produc- tion of renewable energy to achieve carbon neutrality by 2050. Although the focus is shifting from photo- voltaic to other power sources (such as wind, hydro- gen, ammonia, geothermal, and biomass), renewable projects remain one of the highlights of the Japanese project finance market. Among regulatory updates, we see diversification in the operation of the projects – eg, corporate PPAs, where power producers enter into power purchase agreements directly with electricity users. A substantial portion of existing Japanese social infrastructure was constructed during the 1960s and 1970s. To meet the need to renovate and replace these facilities in the coming decades, the Japanese gov- ernment is facilitating the use of PPP/PFI structures, another trend that market participants are focusing on. 8. Project Finance 8.1 Recent Project Finance Activity
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