JAPAN Law and Practice Contributed by: Shinichiro Yamashita and Naruku Okamoto, Hiratsuka & Co
point in individual cases and to reach a judgment by taking the overall structure of the policy into account, including relevant provisions on insurance payments and exclusions. In cases of ambiguous insurance policy wording, the so-called “drafter’s disadvantage” principle is not explicitly stipulated in the Insurance Act, but is referred to in a supplementary opinion in Supreme Court judgments. Exclusion clauses are not inter- preted particularly strictly, simply because they are exclusions. Endorsements are interpreted in the same way as general clauses, and are not interpreted more strictly simply because they are special clauses. 4.3 Cyber and Technology-Related Coverage Issues No court judgments are made public in Japan regard- ing insurance coverage disputes arising in relation to cyber-risks, systemic events and technology failures, so it is impossible to describe how policy terms are responding to these exposures. 4.4 Aggregation and Limits of Liability There are very few court precedents in Japan, but there was a case involving a solar power sta- tion where approximately 100,000 solar panels had been installed, of which approximately 16,000 were damaged. The insured claimed insurance under an assembly insurance policy. The policy terms stipu- lated that the “amount of loss to be compensated by the insurer shall, for each single accident, be the bal- ance remaining after deducting the insured’s excess, as stated in the insurance policy, from the amount of loss calculated in accordance with the provisions of the preceding clause, subject to the limit of the sum insured”. The preceding clause provided that “[w]here damage for which the insurer is liable to compensate has occurred, the amount of such damage shall be the repair costs directly required to restore the insured subject matter to the condition it was in immediately prior to the occurrence of the damage, together with the costs of any inspections or examinations neces- sary for such repairs”. The insured argued that, as there had been a func- tional decline across the entire power station, a single “accident” had occurred, affecting the entire facility.
The insurer argued that damage had occurred dur- ing the installation of each individual module; con- sequently, a “single accident” had occurred for each module, and as the restoration costs for each module were less than the excess, there were no damages to be compensated. The court held, in essence, that: • the term “a single accident” encompasses a series of accidents arising from a single cause, but it is necessary that the damage caused by each accident has a sufficient causal link to that single cause; and • in the present case, the cause of the damage to the modules was negligence arising from a breach of the duty of care to ensure that the mounting frame did not come into contact with and damage the back sheet on the rear of the modules during installation. Consequently, the occurrence of each individual instance of damage constitutes a “single accident” in itself, and the damage to the power station as a whole, as claimed by the insured, cannot be said to have arisen from a single cause according to generally accepted social norms. This appears to be the only published court precedent on this matter. 4.5 Sanctions and Illegality Issues No Japanese court precedents can be found in which economic sanctions, illegality or public policy consid- erations have affected claims for insurance payments or an insurers’ ability to pay insurance claims. A case that comes close to this involved a dispute over the validity (and the lawfulness of the insured interest) of a cargo insurance contract concluded in relation to the export of Iranian-made carpets from Japan to the United States, which was prohibited under United States law. The judgment at first instance held that, as US law carried criminal penalties and the interest in question was contrary to public policy, the insured interest could not be recognised. However, the appeal court ruled that, since the US regulation was a tem- porary administrative enforcement measure and no criminal penalties had in fact been imposed in relation to the import of the goods in question, the interest was not contrary to public policy under Japanese law,
168 I NSURANCE L I T IGATI O N 2026
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