JAPAN Law and Practice Contributed by: Shinichiro Yamashita and Naruku Okamoto, Hiratsuka & Co
1. Key Drivers and Resolution of Insurance Disputes
place with which the contract is most closely connect- ed at the time of its conclusion, which is presumed to be the law of the place of the habitual residence of the insurer or reinsurer is presumed. The parties may agree to change the governing law otherwise applicable to the insurance or reinsurance contract, but such change may not be asserted against a third party when it prejudices the rights of such third party. There are special provisions regarding the choice of law for consumer contracts. For example, even when the law applicable to the consumer contract as a result of a choice or a change of governing law is a law other than the law of the consumer’s habitual residence, if the consumer has manifested their inten- tion to the business operator that a specific manda- tory provision from within the law of the consumer’s habitual residence should be applied, such mandatory provision shall also apply to the matters stipulated by the mandatory provision with regard to the formation and effect of the consumer contract. Notwithstanding this general rule, in the absence of a choice of law with regard to the formation and effect of a consumer contract, such formation and effect shall be governed by the law of the consumer’s habitual residence. Party autonomy is generally respected, but it is modi- fied if the insurance contract is a consumer contract. 2.2 Jurisdiction and Forum Selection Under the Japanese rules regarding international juris- diction, parties to an insurance contract may agree a country in which they are permitted to file an action with the courts. Such agreement is not valid unless it is made regarding actions that are based on a specific legal relationship, and executed by means of a written document. If the agreement is made by means of elec- tronic or magnetic records, it should be deemed to have been executed by means of a written document. An agreement that an action may be filed only with the courts of a foreign country may not be invoked if those courts are unable to exercise jurisdiction by law or in fact. A jurisdiction agreement in which the parties agree exclusive jurisdiction of the court that has the jurisdiction over the head office of the defendant is, in principle, valid, unless the agreement is extremely unreasonable and against public policy
1.1 Common Triggers of Insurance Disputes As legal practitioners, we have a sense that the most frequent causes of insurance dispute are the inter- pretation and application of insurance policy, but no objective grounds can be found; there are no statistics in Japan that categorise insurance disputes by cause and show the number of cases for each. Furthermore, one insurance claim case sometimes contains sev- eral issues of coverage interpretation, policy wording ambiguity, etc. The area with the highest number of insurance dis- putes is motor insurance. This trend has not shifted for years. 1.2 Role of Policy Wording and Drafting Insurance disputes arise for various reasons. Unclear policy wording is one such reason, but it is difficult to state with certain grounds the extent that policy word- ing issues contribute to insurance disputes. There does not appear to be any recurring clause that typi- cally gives rise to contention that the policy wording is not clear. 1.3 Dispute Resolution Strategy and Outcomes In disputes between insurers and insureds, negotia- tion is initially adopted. If negotiation does not work well, mediation may well be used. If agreement is not reached through mediation, litigation or arbitra- tion may be commenced by insureds. This is a cost- effective approach, but the outcome depends on the strength of the argument and evidence rather than the method of approach. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts Under the conflict of law rules of Japan, the appli- cable law for an insurance or reinsurance contract is the law of the place chosen by the parties at the time of the conclusion of said contract. In the absence of any such explicit choice of law, an insurance or rein- surance contract shall be governed by the law of the
166 I NSURANCE L I T IGATI O N 2026
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