Litigation & Dispute Resolution

Construction Disputes in Japan

This page outlines our approach to construction disputes in Japan under Japanese law. We advise principally companies and other organizations that commission construction work, and general contractors and subcontractors. Based on an inspection of the site and the preservation of records, we work toward resolving issues such as defective work, additional or varied work, the value of work done, delays and non-payment of the contract price, and support negotiations, conciliation, mediation and arbitration, and litigation from the client's position.

Our attorneys include lawyers well versed in corporate crisis management and initial response and in disputes between businesses, as well as a former judge who presided over construction disputes in a court division specializing in such cases.

View our attorneys' backgrounds and practice areas →

Reviewed by Keishi Yoshikawa, Attorney at Law and Patent Attorney (Dai-Ichi Tokyo Bar Association)

Last updated: September 10, 2026

What to Check First

The condition of the defective work and the preservation of records — Can the location, extent and severity of the defective work, and when it arose and how it has changed, be confirmed? Have photographs, video and measurements been recorded in a way that can be matched to positions on the drawings?
The state of the work and the value of work done before suspension or handover — Can completed and uncompleted work be distinguished? Can the trade, location and quantities, and the condition of parts where follow-on work will be carried out, be confirmed?
Whether an expert survey of the current condition or preservation of evidence is needed — Is a survey of the current condition by an outside architect or engineer needed? Have the surveyor's field of expertise and any involvement in or interest in the project been checked? Should court-ordered preservation of evidence be considered?
Where construction and inspection records and photographs are kept — Who holds the daily site reports, inspection records, site photographs and repair history, and where? Do the originals or source data, and information confirming the date and place of photographs, still exist?
The contract drawings and the history of additions and variations — Are the contract and general conditions, drawings, specifications, estimates and schedule available? Are instructions for and approvals of additional or varied work, and agreements on price and time, documented?
The roles and authority of the parties — What are the contractual relationships and areas of responsibility of the owner, the general contractor, subcontractors, the designer and the construction supervisor? Who must be consulted about access to the site, surveys and changes to the work?
Deadlines for completion, payment and notices — Are any deadlines imminent for completion and delivery, payment of the contract price, or responses? Can the contract price, the amounts of additions and variations, and amounts paid and unpaid be distinguished?

Give priority to measures needed to ensure safety and prevent further damage, and record the state of the work and related conditions where possible. You are welcome to consult us before expert surveys or the collection of documents have been completed. If repair or removal work has already been carried out, we work from what can be confirmed from the remaining records.

How we can helpSite inspection / Claims and defenses on defective work, additional or varied work, the value of work done and the contract price / Conciliation, mediation and arbitration, and litigation

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Contents

1. Common Construction Disputes
2. Inspecting the Site and Initial Steps Before Repair or Removal
3. Key Issues: Contract, Liability and Claims
4. Choosing a Procedure: Negotiation, Conciliation, Mediation and Arbitration, and Litigation
5. Contracts and Site Management That Prevent Disputes
6. How We Can Help
Frequently Asked Questions

1. Common Construction Disputes

The construction disputes we are consulted on include the following.

Defective work (non-conformity with the contract) — the completed building or installation is defective, and repair, a reduction of the price, damages or termination of the contract is in issue.
Additional and varied work — whether payment for the addition or variation, or an extension of time, was agreed for work beyond the original scope is disputed.
Delay — completion and delivery are late, and the cause of the delay and who bears the resulting loss are in issue.
Non-payment of the contract price or design and supervision fees — payment for construction work or for design and supervision services is withheld, and the grounds for withholding are disputed.
Termination and settlement of work done — the work is stopped or the contract terminated, and liability under the contract, the settlement of completed work and the handover of the remaining work are in issue.
Design and supervision liability — the division of responsibility between the designer or construction supervisor and the contractor is in issue.
Neighbors — noise, vibration or effects on adjoining land require a response to neighboring owners and residents.

These issues rarely arise in isolation. A dispute over defects, for example, may develop into questions of non-payment of the contract price, termination and the settlement of work done. The key points for each are set out in Chapter 3.

2. Inspecting the Site and Initial Steps Before Repair or Removal

2-1. Record the condition before and after the site changes

Before repair, removal or follow-on work changes the state of the site, record the location, extent and severity of the defects. Photographs and video should be linked to positions on the drawings, the date and time, and dimensions and measurements, and consideration should be given to retaining removed components or samples where appropriate. Record the condition before and after any repair, as far as possible.

2-2. Confirm completed and uncompleted work and the value of work done

Where the work is to be suspended or handed over, confirm the state of the work at that point by trade, location and quantity. Distinguishing work within the original contract scope from additional and varied work will help when payment and claims are later settled. Recording the current condition and valuing the work done in monetary terms are separate exercises; the first step is to preserve a verifiable record of the condition.

2-3. Consider an expert survey or opinion, and court-ordered preservation of evidence

Where the cause or extent of the defects calls for technical judgment, consider a survey of the current condition, or a written opinion, by an outside architect or engineer.

Preservation of evidence is a court procedure for taking evidence in advance of proceedings. Whether the condition should be recorded through preservation of evidence before it changes depends on the construction schedule and the state of discussions between the parties.

2-4. Arrange opportunities for inspection and the conditions for continuing work

Whether to give the other party an opportunity to inspect the current condition depends on urgency, rights of access to the site and the schedule. If repair or continuing work is to proceed, agreeing in advance on its scope, how it will be recorded and who bears the cost helps prevent a dispute from arising later. Contractual notice and response deadlines should be checked in parallel with any survey.

3. Key Issues: Contract, Liability and Claims

3-1. Defective work (non-conformity), and repair, price reduction, damages and termination

Where a completed building or installation does not conform to the contract, the owner may consider demanding cure (such as repair), a reduction of the price, damages, or termination of the contract. Each has different legal requirements, and the contract itself often sets out how defective work is to be dealt with. What the "contract" required is determined not only from the contract document but from the drawings, specifications and the parties' discussions. The period for giving notice after discovering the non-conformity, the limitation period, and any liability period set out in the contract must each be checked separately.

This page is based principally on the Civil Code as amended with effect from April 1, 2020. Depending on when the contract was concluded, warranty liability for defects under the Civil Code before amendment may apply instead.

Special rules for new residential construction

For the construction of new housing, special rules under the Housing Quality Assurance Act may apply even where the owner is a company. For certain defects in the parts of the structure that bear principal loads and the parts that prevent the ingress of rainwater, the Act provides for a ten-year warranty liability from delivery. Not every defect or renovation project is covered, and the notice periods must also be checked separately.

3-2. Additional and varied work and changes in construction cost

Whether payment can be claimed for additional or varied work depends on the original scope of the contract, the authority of the person who instructed or approved the change, and whether the price and time were agreed. Even without a formal variation agreement, an agreement may be established from estimates, emails, meeting records and construction records. Additional and varied work should be considered separately from increases in cost caused by changes in material prices or labor costs (price-adjustment or hardship clauses), as the legal basis differs.

3-3. Delay, extensions of time and loss

For delay, compare the contractual schedule with actual progress and confirm whether the cause lies with the owner or the contractor, and whether several causes overlap. Any agreement on or notice of an extension of time, the effect on the completion date, the loss caused by the delay, and whether the contract contains a liquidated-damages clause should be organized.

3-4. Unpaid contract price or fees and withholding of payment

In disputes over payment of the contract price or design and supervision fees, confirm the state of performance, the relationship between completion, delivery and inspection and the payment terms, and the amounts already paid. The existence of defects does not necessarily entitle the owner to withhold the whole of the outstanding balance; the basis for and the amount of any withholding or set-off must be considered.

3-5. Termination, suspension and settlement of work done

Where the contract is terminated or the work stopped part-way through, confirm the legal grounds and the procedure for termination. Liability under the contract, the valuation of completed work (the value of work done), and settlement against amounts already paid must be organized. Where the work is handed over to another contractor, the record of the site's condition before handover (Chapter 2) is an important basis for the settlement.

3-6. Allocation of responsibility for design and supervision, and neighbors

Which party is liable, and to what extent, depends on whether the cause of a defect lies in the design, the construction or the construction supervision, and on how responsibility was divided between the general contractor and subcontractors. Effects of the work on neighbors should be considered by distinguishing liability between the contracting parties from liability to neighbors as third parties.

4. Choosing a Procedure: Negotiation, Conciliation, Mediation and Arbitration, and Litigation

4-1. Negotiated resolution

The parties may resolve the method of repair, continuation of the work, price and time, and settlement through discussion. It is important to separate a final resolution from interim arrangements needed to keep the work moving, and to record which points have been agreed and which remain in dispute.

4-2. Construction Work Dispute Boards (conciliation, mediation and arbitration)

The Construction Work Dispute Boards are public alternative dispute resolution bodies that conduct conciliation, mediation and arbitration of disputes between the direct parties to a construction contract. There is no requirement to use a Board before commencing litigation.

Conciliation and mediation aim at a resolution by agreement; arbitration is a procedure in which the Board decides the dispute on the basis of an arbitration agreement. If conciliation or mediation fails, the matter does not proceed to arbitration unless there is an arbitration agreement. Disputes concerning only a design or supervision contract, and disputes with neighbors, fall outside the Boards' remit.

4-3. Court litigation

In court litigation, the arguments are matched to the evidence (design drawings, construction records, expert opinions and the like) and the case is pleaded and proved on that basis. In the court divisions specializing in construction disputes, the issues are organized using a schedule of non-conformities, experts holding qualifications such as first-class architect take part in the proceedings as expert commissioners or mediation committee members, and the state of the work is inspected on site at progress conferences held there, so that technical expertise is applied to resolving the dispute. With a lawyer who has experience of hearing construction cases in such a division, we handle construction litigation that requires a high degree of specialist knowledge.

4-4. Where there is an arbitration agreement

If the contract contains an arbitration clause, confirm its validity, the scope of disputes it covers and the designated arbitral institution. If litigation is commenced over a dispute covered by a valid arbitration agreement, the action may be dismissed on the other party's application. The effect of an arbitral award, the procedure for an enforcement order, and the relationship with provisional remedies such as provisional attachment should also be considered in advance.

5. Contracts and Site Management That Prevent Disputes

Many construction disputes arise because the work proceeds while the scope of work, the relationship between the contract drawings, the procedure and authority for variations, the method of adjusting price and time, and the terms for inspection, delivery and payment remain unclear. These matters are best defined clearly at the contract stage. Deciding in advance who keeps site records and where they are stored makes the initial response more reliable when a dispute arises.

6. How We Can Help

Analysis of issues and evidence informed by experience of hearing construction cases

In construction disputes, it is important to connect the technical questions with the contractual and legal issues. Drawing also on experience of hearing cases in a court division specializing in construction disputes, we consider what should be confirmed in a survey of the site, and how the contract drawings, construction records and expert opinions relate to the arguments to be made.

View our attorneys' backgrounds and practice areas →

From the initial response through resolution to reviewing contracts and practices

We help identify what should be checked before repair or removal work, decide what to ask an expert to survey, review the contract and evidence, and prepare claims, responses and notices. Taking into account whether the work will continue or stop and the effect on your business, we consider the course of action from the client's position.

We handle negotiations with the other party, proceedings before the Construction Work Dispute Boards, court litigation and arbitration, and we also support the review of contract documents and site-management practices in light of the issues the dispute has revealed.

The lawyers assigned and the scope of their involvement are determined for each matter according to its nature.

Frequently Asked Questions

Q1. Can we consult you before the cause of the defect has been identified?

Yes. You are welcome to consult us before the investigation of the cause is complete. We will ask about the condition of the defect, the history to date and any planned repair or removal work, and identify what should be confirmed before the site changes. We also consider, in light of the purpose and the circumstances, whether an expert survey or opinion is needed.

Q2. Can we claim payment for additional work without a written variation agreement?

The absence of a variation agreement does not by itself decide whether a claim can be made. We confirm the original scope of the contract, the instructions for and approval of the additional work, the authority of the individuals involved, and any agreement on price, from estimates, emails, meeting minutes, construction records and similar documents.

Q3. If there are defects, can we withhold the outstanding balance?

The existence of defects does not necessarily entitle you to withhold the whole of the outstanding balance. We confirm the payment terms of the contract, the state of performance, the nature of the defects, and the relationship with any claim for repair or damages. Taking into account the risk of being in default yourself if payment is withheld, we consider the basis for, and the amount of, any withholding or set-off.

Q4. Can we negotiate over costs and liability while continuing the work?

One approach is to define the scope and conditions on which the work will continue and to conduct discussions on costs and liability in parallel. Safety, the schedule, price and payment terms, and the method of approving additional work should be confirmed, and the points agreed and those still in dispute recorded separately. It is important to make the interim arrangements clear so that the parties do not later disagree about what continuing the work meant.

Q5. What should we check before repair work or a handover to another contractor?

While giving priority to safety, confirm the defects before repair, the completed and uncompleted work, and the value of work done, and record them with photographs, video, drawings and quantity documents. Consider whether to give the other party an opportunity to inspect the current condition, and whether a survey by an outside expert is needed.

Where the work is handed over to another contractor, organize the treatment of the existing contract, the condition at handover, and the scope and cost of the remaining work. If urgent repairs are necessary, record the condition before and after the repairs as far as possible.

Q6. Must we go through a Construction Work Dispute Board before we can sue?

No. There is no requirement to go through a Board first. Negotiation, a Board procedure and court proceedings are considered in light of the issues and the parties' intentions.

However, if litigation is commenced over a dispute covered by a valid arbitration agreement and the defendant applies at the prescribed stage, the action will in principle be dismissed. Before choosing litigation, the arbitration clause in the contract must be checked.

Contact

Consultations on Construction Disputes

When contacting us, please tell us, as far as you can, your position, the parties involved, the status of the work and any imminent deadlines.

You are welcome to consult us even before all documents are available. In some cases, such as where a conflict of interest exists, we may be unable to accept a consultation or engagement.

This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.