JAPAN Law and Practice Contributed by: Jumpei Osada, Masaaki Sasaki, Takuto Kobayashi and Hiroshi Ideyama, TMI Associates
8. Implications of Non- Performance, the IMO 2020, Trade Sanctions and the War in Ukraine 8.1 Force Majeure and Frustration Whilst Japanese law does not expressly stipu - late 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 commercial contracts are gener - ally recognised as valid and enforceable. Fur - ther, force majeure is logically interpreted 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 uncon - trolled for the parties involved. 8.2 Enforcement of the IMO 2020 Rule Relating to Limitation on the Sulphur Content of Fuel Oil IMO 2020 rules relating to a limitation on the sulphur content of fuel oil have been effective in Japanese territorial waters through domestic law (the Act on Prevention of Marine Pollution and Maritime Disaster, Articles 19-21), accord - ing to which the sulphur in the fuel oil used on board the vessel shall be less than 0.5%, and, in the specific designated area, the corresponding rate shall be less than 0.1%. For any violation of these rules, the vessel can be detained by the port state control and a fine of less than JPY10
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 arbi - tration procedure or public policy). One of the advantages of arbitration by the TOMAC in com - parison with court proceedings is that the suc - cessful party is entitled to recover, to a reason - able extent, its legal costs from the losing party upon application for recovery of those costs. 6.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses In the case that a claimant commences legal pro - ceedings in a court or arbitral tribunal in Japan, despite the relevant contract having a foreign jurisdiction or arbitration 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 agreement. Moreover, the defendant may be able to rely on a provisional court order prohibiting the com - mencement 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. 7. Ship-Owners’ Income Tax Relief 7.1 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. More - over, ship-owners may enjoy accelerated depre - ciation, as is seen in many countries worldwide.
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