Shipping 2026

JAPAN Law and Practice Contributed by: Jumpei Osada, Masaaki Sasaki, Takuto Kobayashi and Hiroshi Ideyama, TMI Associates

ally be awarded or judged by foreign arbitration or courts, is legally enforced in Japan. 7.5 Domestic Arbitration Institutes The Tokyo Maritime Arbitration Commission (TOMAC), which is located in the Japan Shipping Exchange (JSE), is the only arbitral tribunal in Japan for resolving shipping disputes. It has a long history and a prestig - ious reputation, in particular with regard to disputes relating to the NIPPONSALE contract. The TOMAC is recognised as being the most popular choice for dealing with shipping issues. The TOMAC has drawn up three types of arbitration rules: • Ordinary Rules; • Simplified Rules (claims up to JPY20 million); and • Small Claims Arbitration Procedure (SCAP) Rules (claims up to JPY5 million). These rules all have a basic concept that, the smaller the claim amount is, the lower the costs that will be borne by the arbitration and the quicker the arbitra - tion proceedings are resolved. The average length of arbitration proceedings is about 13 months under the Ordinary Rules, three to five months under the Sim - plified Rules and five to ten weeks under the SCAP Rules. An arbitral award has the same effect as a final and binding judgment and an appeal to the court to set aside the arbitral award is allowed only on narrow grounds (such as violation of the arbitration procedure or public policy). One of the advantages of arbitration by the TOMAC in comparison with court proceedings is that the successful party is entitled to recover, to a reasonable extent, its legal costs from the losing party upon application for recovery of those costs. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses In the case that a claimant commences legal proceed - ings in a court or arbitral tribunal in Japan, despite the relevant contract having a foreign jurisdiction or arbi - tration clause, a defendant can simply seek to dismiss the claim in the court proceedings and to dismiss the

petition for an arbitral award, based on the defence of lack of jurisdiction or lack of valid arbitration agree - ment. Moreover, the defendant may be able to rely on a provisional court order prohibiting the commence - ment of legal proceedings in Japan on the ground that the claimant ignores the foreign jurisdiction or arbitration clause, resulting in a breach of the contract. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies In Japan, owners or operators of Japanese-flagged ships, or owners or operators who run a business in Japan with other countries’ flagged ships, may enjoy the tonnage tax scheme. Moreover, ship-owners may enjoy accelerated depreciation, as is seen in many countries worldwide. 9. Implications of Non-Performance, IMO 2020, Trade Sanctions and International Conflict 9.1 Force Majeure and Frustration Whilst Japanese law does not expressly stipulate either “force majeure” or “frustration” in the Civil Code or any other Code, the force majeure clauses agreed by contractual parities in both shipping and commer - cial contracts are generally recognised as valid and enforceable. Further, force majeure is logically inter - preted as “an event or circumstance caused by an external cause beyond the parties’ control” and, in the case of the occurrence of a force majeure event, the parties are likely to be released from their liabilities under the contracts by relying on the no-fault defence. It is difficult to state clearly what circumstances would justify non-performance of a shipping contract, such as late delivery or non-arrival of a chartered vessel, as a force majeure/exemption of liability. However, one of the key factors must be whether the circumstances in question can be considered to be unforeseeable and uncontrolled for the parties involved.

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