JAPAN Law and Practice Contributed by: Makoto Terazaki, Taku Matsumoto, Suguru Yokoi, Naoko Takasaki and Jun Suzuki, Anderson Mori & Tomotsune
7. Investigations and Litigation in the Defence Sector 7.1 Principal Investigative Authorities Japan does not have a single investigative authority for defence-related regulatory breaches; jurisdiction depends on the applicable regulatory regime. MOD and ATLA oversee defence procurement and may supervise and inspect the performance of govern - ment contracts, including through contractual audit and information-access rights. METI investigates potential export-control violations and may require reports, conduct on-site inspections, examine records and question relevant persons. MOF exercises similar investigative powers in relation to financial sanctions within its jurisdiction. Suspected criminal offences may additionally be investigated by the police and public prosecutors, including through court-author - ised searches and seizures. 7.2 Triggers for Investigation Regulatory investigations in the defence sector may be triggered by whistle-blower reports, voluntary dis - closures, information obtained from other authorities or customs, irregularities identified through audits or contractual inspections, or routine regulatory reviews. In the export-control context, METI accepts volun - tary reports from exporters concerning suspected unlicensed exports, unlicensed technology transfers or other potential FEFTA violations and may conduct a post-shipment review to establish the facts, causes and remedial measures. Defence procurement con - tracts may also impose specific reporting obliga - tions, for example, in relation to information-security incidents, depending on the applicable contractual provisions. However, there is no general statutory obligation requiring all defence-sector companies to self-disclose every suspected regulatory or con - tractual breach; any mandatory reporting obligation depends on the relevant law, regulation or contract. 7.3 Investigative Powers and Procedures The investigative powers available in the defence sector depend on the applicable regulatory regime. MOD and ATLA do not have general statutory inves - tigative powers over private defence companies as such; rather, their powers primarily arise in the context of defence procurement contracts, including super -
and the outflow of critical technology and information overseas, and is characterised by its use in combina - tion with public financial support. 6.8 Joint Ventures in the Defence Sector The FEFTA captures the establishment of joint ven - ture (JV) companies and subsidiaries as inward direct investments, so JVs involving foreign partners may be subject to review depending on the ownership per - centage and nature of the business. In practice, the key issues are the attributes of the investor, the nature of the target business and the management of access to non-public technical information, so the drafting of the JV agreement should address board composition, information access, voting rights and proposal rights from the outset. There is no FEFTA-specific regime governing tech - nology transfer or IP ownership in JVs. These issues should instead be addressed through individual con - tractual arrangements and by reference to export con - trol rules, the Unfair Competition Prevention Act and other relevant laws. 6.9 Interaction with Competition/Antitrust Review FDI and national security review are conducted by MOF and the ministry having jurisdiction over the business, whereas merger control and competition law review are separate procedures conducted by the Japan Fair Trade Commission (JFTC) under the Anti-Monopoly Act. There is no express statutory co- ordination mechanism between the two regimes. Nev - ertheless, METI, the Ministry of Land, Infrastructure, Transport and Tourism, and the JFTC have published a case collection concerning areas where economic security and competition law overlap, and the JFTC’s merger guidelines are also being revised to reflect economic security considerations, including the improvement or maintenance of supply stability as a potential pro-competitive effect.
131 DEFENCE CONTRACTS 2026
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