JAPAN Law and Practice Contributed by: Makoto Terazaki, Taku Matsumoto, Suguru Yokoi, Naoko Takasaki and Jun Suzuki, Anderson Mori & Tomotsune
subject to control under these multilateral export con - trol regimes are incorporated into Japan’s export and technology transfer controls under the FEFTA and its implementing regulations. Japan is also a State Party to the Arms Trade Treaty (ATT) and fulfils its obligations regarding the interna - tional transfer of conventional arms under the Treaty. In addition, sanctions adopted pursuant to United Nations Security Council resolutions are primarily implemented through the FEFTA and related legisla - tion. As Japan is neither a NATO nor an EU member state, it is not required to implement NATO collective defence obligations or EU defence-related legislation. 2. Procurement and Government Contracts in the Defence Sector 2.1 Defence Procurement Legislation Japan does not have a single standalone statute dedicated specifically to defence procurement. The procurement of the national government is generally governed by the Accounts Act (Act No 35 of 1947); the Cabinet Order concerning the Budget, Auditing and Accounting (Imperial Ordinance No 165 of 1947); the National Property Act (Act No 73 of 1948); and the Contract Management Regulations (Ministry of Finance Ministerial Ordinance No 52 of 1962). Pro - curement by local governments is generally governed by the Local Autonomy Act (Act No 67 of 1947) and the Local Autonomy Act Enforcement Ordinance (Government Ordinance No 16 of 1947). In practice, however, defence procurement is princi - pally conducted by the MOD and related central gov - ernment bodies. Local governments are not generally the primary actors in the defence procurement sphere. Many defence contracts are awarded at the discretion of the relevant government body rather than through competitive bidding, reflecting the limited supplier base, the need for advanced technology and security, and the special character of defence procurement. The practical operation of defence procurement is also shaped by internal rules and procedures with -
in the relevant authorities, including ministry-level rules and internal committees. A significant part of that operational framework is not found in legislation or other publicly available legal instruments, and is instead implemented through internal, and in some cases unpublished, administrative rules and practices. 2.2 Contracting Authorities and Entities Subject to Defence Procurement Rules Japan’s public procurement framework generally applies to national and local governments, and gov - ernment-affiliated organisations may operate inter - nal rules broadly aligned with the statutory regime. In the defence sector, however, the principal procur - ing authority is the Ministry of Defense and its related central government bodies, and many defence con - tracts are awarded at the discretion of the relevant government body because of the limited supplier base and the technical and security-sensitive nature of the subject matter. Historically, procurement for defence-related matters was carried out separately by MOD and its related agencies. In 2015, ATLA was established as the organisation responsible for the integrated develop - ment, acquisition and export of defence equipment, and procurement of defence equipment was central - ised within ATLA. By contrast, procurement of items other than defence equipment continues to be carried out by MOD itself and its related agencies. 2.3 Types of Contracts and Value Thresholds The contracts covered by Japanese public procure - ment rules are those that involve the transfer of eco - nomic value from a public entity to a private entity, and the typical contract types include supply contracts, service contracts, and works contracts. In the defence context, procurement is often structured around spe - cialised equipment, related services and works, with the practical focus falling less on the formal contract type than on the technical and security-sensitive nature of the subject matter. At the domestic level, there are no specific financial thresholds for determining contract coverage, other than the requirement that expenditure under each contract falls within the amount approved in the rel - evant budget. Accordingly, the applicability of the pro -
116 DEFENCE CONTRACTS 2026
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