International legal services: overview

1. What to check when a problem arises in an overseas transaction

Separating out the problem

The outcome may be the same — payment has not arrived — but the legal questions and the steps to take differ according to the cause. What needs to be checked depends on whether the other party is refusing to pay on grounds of quality or delivery, whether a bank or a logistics company has stopped the transaction on regulatory or sanctions grounds, or whether the payment was directed to a falsified account.

You do not need to have completed this analysis before contacting us. The table below sets out which guide is likely to be useful, starting from the facts you already have.

The situation as you understand it	Where to look	The questions dealt with there
The other party is refusing to pay or to deliver, citing quality, delivery dates, quantity or the like	Recovering payment and handling quality disputes in international sales of goods	What can be claimed under the contract; which notices and records to check
A bank, a logistics company or a business partner has told you the transaction is suspended on regulatory or sanctions grounds	Section 4 of this page	What the reason for the suspension is; how it affects performance, termination and refunds
You have received notice of a change of remittance details, or the other party denies receiving a payment you have made	Initial response to business email compromise, and the allocation of loss	What to do about the funds, and how the obligation to pay the business partner stands
A claim has been made against you based on a foreign judgment or an arbitral award, or you wish to give effect to one in Japan	Recognition and enforcement of foreign judgments and arbitral awards in Japan	Whether it will be given effect in Japan; what to argue if it is contested
The cause is not yet clear	Section 7 below	Share the contract, the notices, the remittance records and the channels of communication, and we will work through them
Several problems overlap	Section 7 below	We set out the order in which to start, taking account of the deadlines and of the risk that harm will spread or evidence will be lost

What to check first

Where a problem arises in a transaction with a party abroad, the first points to establish are who the parties to the contract are, which countries are involved, how the problem came about, what notices have been received from the other party or from a third party, and whether a deadline for responding is attached to any of them.

The nationality or the location of the other party does not by itself determine which law applies or whom the response should be directed to. The entity that signed the contract and the entity that in fact places the orders and makes the payments are sometimes different. Checking both the parties to the contract and the trading relationship as it actually operates is the starting point.

Preserving evidence and meeting deadlines

We recommend preserving the contract, the order and shipping records, notices and emails exchanged with the other party, and the remittance records, in a form that allows the course of events to be traced. Where responsibility or the allocation of loss is later disputed, the channels of communication used at the time and the checks that were made can determine the outcome.

At the same time, there is no need to wait until the collection of materials is complete before dealing with deadlines. Where documents relating to court proceedings, arbitration or an authority arrive from abroad, first establish the body that issued them, the type of procedure, the date of receipt and the deadline for responding. Deadlines in foreign procedures are not the same as deadlines under Japanese law. Please avoid judging, by reference to Japanese practice, that there is still time in hand.

2. International transactions, English-language contracts and disputes over performance

That a contract is in English, and which law applies, are separate questions

The fact that a contract has been drawn up in English does not determine the law that applies to it. The understanding that English or American law applies because a contract is in English is not accurate. What has to be checked is how the governing law clause is drafted, and what the transaction actually involves.

When the formation and effect of a contract are examined from the standpoint of Japanese law, the Act on General Rules for Application of Laws provides the basic framework. It is a Japanese statute setting out which country's law applies to a private law relationship with a foreign element. Under it, the formation and effect of a juridical act are governed by the law of the place chosen by the parties at the time of the act, and, where there is no choice, by the law of the place with which the act is most closely connected. Where a dispute is contested before a foreign court or arbitral tribunal, the conflict of laws rules applied in that procedure are checked separately. The rules on exports and on investment, the rules on the handling of data, and the effect of jurisdiction agreements and arbitration agreements all have to be checked separately from the governing law of the contract.

What has to be checked turns on the type of transaction

Cross-border transactions are not only sales of goods. In distributorship and agency agreements, termination and refusal to renew can raise questions under local regulation. In services agreements and licenses, the ownership of deliverables and intellectual property, whether the work may be subcontracted, and the payment terms are the points in issue. In a continuing supply relationship, the question is whether suspending shipments amounts to a breach of contract.

For sales of goods, the United Nations Convention on Contracts for the International Sale of Goods (the CISG) may apply where the parties have their places of business in different countries. Japan is a contracting state. Choosing Japanese law as the governing law does not by itself exclude the CISG. Where it is to be excluded, it is useful to provide for its exclusion in the contract so that the intention is clear.

Provisions on notice, termination and payment

Where a contract contains provisions on notice, termination or payment, their effect still has to be checked against the applicable law. Giving notice in the manner set out in the contract does not by itself make a suspension of the transaction or a termination of the contract valid.

Ordinary disputes over performance, the application of the CISG and its rules on examination and notice, and the recovery of payment are covered in Recovering payment and handling quality disputes in international sales of goods. Suspension on regulatory grounds is dealt with in section 4 below.

3. Establishing operations overseas, and cross-border M&A

Setting up a base overseas

Where a subsidiary or a branch is set up abroad, or a local company is acquired, the entry restrictions in the target country, the licenses required, the corporate forms available and the conditions for operating there have to be checked country by country. Expectations formed on the basis of the Japanese company law system do not carry across as they are. We carry out the analysis under Japanese law, set out the points on which local law needs to be checked, and divide the work with specialists in that country.

Investment in Japanese companies by foreign investors

The Foreign Exchange and Foreign Trade Act defines what a foreign investor is. As well as individuals who are non-residents and corporations established under the law of a foreign country, the definition extends to Japanese companies and other entities in which such persons hold at least a specified proportion of the total voting rights. The understanding that investing through a Japanese entity necessarily places the investment outside the rules is not accurate.

Where inward direct investment falls within the categories designated by cabinet order, prior notification must be given to the Minister of Finance and the minister with jurisdiction over the business concerned. Prior notification is not required for all inward direct investment. In addition, where a foreign investor acquires shares in an unlisted Japanese company from another foreign investor, the transaction may need to be examined as a "specified acquisition," separately from inward direct investment, to establish whether notification is required. It cannot be concluded that the Japanese rules do not reach the transaction merely because the seller is also a foreign investor. The waiting period and its shortening, the exemptions from notification, and post-transaction reporting are covered in the guide on regulatory requirements in cross-border M&A.

Effect on the transaction timetable

In cross-border M&A, alongside the investment rules, the business-specific legislation governing the target's operations, merger control under competition law, and the rules on transfers of data affect not only whether the transaction can be completed but also the conditions for completion and the timetable. It is useful to establish at an early stage which rules apply, at which point in the process, and how long each is likely to take.

4. Export controls, economic sanctions and the suspension of transactions

Export of goods and provision of technology

The Foreign Exchange and Foreign Trade Act provides that a person seeking to export specified kinds of goods to specified regions designated by cabinet order, as destinations recognized as such that the export would impede the maintenance of international peace and security, must obtain the permission of the Minister of Economy, Trade and Industry.

As regards the provision of technology, transactions for the purpose of providing specified technology designated by cabinet order in specified foreign countries are subject to a permission requirement imposed on the Minister's authority, applying to residents and non-residents within the scope set by legislation. Transactions by a resident for the purpose of providing such technology to a non-resident of a specified country may also be covered. It cannot be concluded that a transaction falls outside the rules merely because the provision takes place in Japan, or because it is between residents. That provision taking place within Japan may still be covered is a point that is easily overlooked.

The export of goods and the provision of technology are separate sets of rules. Whether permission is required is not determined by the name of the goods alone: the answer can differ according to the specifications, the destination, the end user, the end use and the point in time at which the assessment is made. For goods and technology that do not fall within the list-based controls, the catch-all controls that apply according to destination, end use and end user are checked as well. For the provision of technology to certain residents who are subject to strong influence from a non-resident abroad, the "deemed export" controls have to be checked. The rules are not determined by nationality alone.

Measures on payments and capital transactions

The same Act provides that the competent minister may impose an obligation to obtain permission in respect of payments and similar transactions, where this is found necessary in order to perform treaties and other international agreements in good faith, or to contribute, as Japan's part, to international efforts for international peace. Equivalent provision is made for capital transactions. Asset freezes and restrictions on remittances under economic sanctions are imposed within this framework. The individual designations are to be checked against the materials published by the ministry with jurisdiction.

Separating the reason for the suspension from the effect under the contract

Where a bank has stopped a remittance, it is necessary to distinguish between a restriction imposed by legislation and the bank's own screening or handling policy. A decision by a bank is not the same as a prohibition under legislation. Whether a foreign country's sanctions legislation reaches the company's own transactions is a question of that country's law, and is checked separately from the Japanese rules.

Further, an inability to obtain export permission, or the fact that the other party has become subject to sanctions, does not of itself bring about termination of the contract, extinguish an obligation, or release a party from liability in damages. Where a force majeure clause or a sanctions clause has been included, the obligation to perform and liability in damages are still examined separately, against the wording of the clause and the applicable law. When you contact us, it helps if you can share the specifications, destination, end user, end use and parties in relation to the goods or technology concerned, together with the identity of the party that notified the suspension and the reason given.

5. Cross-border transfers of data, and personal information

Provision to a third party in a foreign country

Japan's Act on the Protection of Personal Information requires a business handling personal information, as a general rule, to obtain in advance the consent of the individual to the provision of personal data to a third party in a foreign country. That consent is not required where the provision falls within one of the exceptions the Act lists: provision to a third party in a foreign country designated by legislation as having a system of an equivalent standard to Japan's, provision to a party that has put in place arrangements meeting the prescribed standards, or provision on a basis provided for by legislation. The fact that a transfer is by way of entrustment or joint use does not by itself remove the requirement for that consent.

Where the provision is to a country designated as having a system of an equivalent standard, or to a party that has put in place arrangements meeting the standards, no special consent to provision outside Japan is required. The general rules on provision to a third party still apply, however, and the requirements for consent, or for entrustment or joint use, have to be checked. On the other hand, where personal data is provided on the basis of consent to provision to a third party in a foreign country, the scheme does not require a further, separate consent under the general rules on provision to a third party.

Where a cloud service based abroad is used, one of the points to check is whether the service provider handles the personal data at all. Even where there is no provision to a third party in a foreign country, that does not remove the need to consider security control measures in the light of the handling that takes place abroad. The physical location of the server is not by itself decisive.

The basis for the transfer, and what follows

Where the provision is made on the basis of the individual's consent, information must be provided in accordance with the requirements of the legislation, before the consent is obtained, on matters including the name of the country concerned, that country's system for the protection of personal information, and the protective measures taken by the recipient.

Where personal data is provided on the basis that the recipient has put in place arrangements meeting the prescribed standards, the provider must take the measures necessary to secure the continued implementation of equivalent measures by the recipient, and must provide information about them at the request of the individual. Putting the arrangements in place does not bring the obligations to an end. For sharing within a group of companies, and for sharing during the examination of an acquisition, the domestic analysis of entrustment and joint use cannot simply be carried across to a situation that crosses a border.

Where a leak is suspected

Where a leak or an unauthorized use of data is suspected, the question whether the cross-border provision was lawful has to be considered separately from whether a report and a notification to the individuals concerned are required, and separately again from whether to seek an injunction against further use of the information. The events that trigger a report under the legislation include not only a leak that has occurred but also a case where a leak may have occurred.

Where trade secrets of a person carrying on business in Japan are managed in Japan, it may in certain cases be possible to bring proceedings in a Japanese court and apply the Unfair Competition Prevention Act to certain acts committed outside Japan. There are conditions, including as to the types of wrongful act covered, and trade secrets used exclusively for a business outside Japan are excluded from this special rule. Whether the special rule applies, and whether the matter can be contested in Japan under other provisions, are considered separately. This is dealt with in more detail in Where a departing employee is suspected of taking information.

6. International dispute resolution procedures

Jurisdiction and arbitration agreements

Where a dispute is to be contested is a separate question from the choice of governing law. The Code of Civil Procedure provides that the parties may agree on the courts of a particular country in which an action may be brought, and that such an agreement takes effect only if it relates to actions based on a specified legal relationship and is made in writing. An agreement recorded in an electromagnetic record is treated as an agreement in writing. Where there is no agreement, jurisdiction depends on the statutory grounds; where there is one, its validity and whether it is exclusive both fall to be examined.

Where there is an arbitration agreement, its effect, the scope of the disputes covered, the arbitral institution and the seat of the arbitration are checked. An arbitration agreement does not mean that an action brought before a Japanese court is automatically dismissed. A defendant seeking dismissal on the ground of an arbitration agreement must make that application before presenting oral argument on the merits or making statements in preparatory proceedings. Dismissal on that ground is also not available where the arbitration agreement is not effective, or where arbitral proceedings under it cannot be conducted.

Service abroad

Where a document is to be served abroad in proceedings before a Japanese court, service is effected by the presiding judge commissioning the competent authority of that country, or the Japanese ambassador, minister or consul stationed there. Which route is in fact used depends on Japan's treaty relations and arrangements with the country concerned, and the requirements as to translations are checked at the same time. For service in proceedings before a foreign court, the law of that country and the applicable treaties are checked. Notice under a contract and service in court proceedings are different things.

Evidence located abroad

Japan is not a contracting state to the Hague Evidence Convention. For evidence located abroad, a distinction is drawn between the taking of evidence commissioned by a court to the competent authority of a foreign country and the voluntary collection of materials by the parties. Japan's treaty relations with the country concerned and any restrictions under local law are checked, and the methods available are considered on that basis.

Cost and duration

Cost and duration vary according to whether the matter goes to court or to arbitration, the country in which it takes place, and where enforcement is sought. Where an arbitral institution is used, its administrative fees and the arbitrators' fees are also considered. With enforcement abroad in view, arbitration can be an option because of the treaty machinery for recognition and enforcement, but the comparison is made in the light of where the other party's assets are, which courts are available, whether there is an arbitration agreement, and the amount claimed.

After a decision is obtained, or received

A final and binding judgment of a foreign court has effect only where it satisfies all of the requirements set out in the Code of Civil Procedure. For compulsory execution, a final execution judgment is required in the case of a foreign judgment, and a final execution decision in the case of an arbitral award. This is dealt with in Recognition and enforcement of foreign judgments and arbitral awards in Japan.

7. How we assist, and what to share when you contact us

Our work centers on the analysis under Japanese law: drafting and negotiating contracts, checking the applicable rules, and responding where a dispute arises. Where the content of local law will determine the outcome, we set out the points that need to be checked and divide the work with specialists in that country.

When you contact us, it is enough to share what you have on the parties, the countries involved, how the problem came about, any deadline for responding, and the materials already in hand. There is no need to wait until the contract has been translated or a full set of documents assembled, and no need to have settled the classification of the problem beforehand. If a deadline is near, please say so.

Frequently asked questions

Q1. Our contract says that the governing law is Japanese law. Is it enough to check Japanese law alone?

A choice of governing law determines the law that applies to the formation and effect of the contract. In a sale of goods, the CISG may apply even where Japanese law has been chosen, and the rules on export controls and on transfers of data apply separately from the governing law of the contract. Where the dispute is to be contested depends, if there is a jurisdiction or arbitration agreement, on its validity and scope, and, if there is none, on the statutory grounds of jurisdiction.

Q2. An overseas business partner is not paying. Should we start proceedings in that country straight away?

Before choosing a procedure, we recommend checking the basis of the claim under the contract, whether a notice is required and by when, and where the other party's assets are. Where there is an arbitration agreement, resolution through the courts may be restricted, and where assets are in Japan, provisional remedies in Japan may be available. The cost and the time that proceedings in the other country would take are also points to check.

Q3. Our bank says it cannot make a remittance because of sanctions. Does our obligation to pay fall away?

That a remittance cannot be carried out and that the obligation to pay under the contract is extinguished are separate questions. The first step is to establish whether the suspension arises from a restriction imposed by legislation or from the bank's own handling policy. On that basis, the obligation to perform and liability in damages are examined in the light of any force majeure or sanctions clause and of the applicable law.

Q4. We share a customer list with our overseas subsidiary. Is the individual's consent required?

Whether this amounts to provision to a third party in a foreign country, and whether consent to such provision is required, depend on who is providing the data, who receives it, and what is done with it. Where the recipient is in a country designated as having a system of an equivalent standard, or has put in place arrangements meeting the prescribed standards, the requirements for consent, or for entrustment or joint use, are checked under the general rules on provision to a third party. Otherwise, apart from the exceptions such as provision on a basis provided for by legislation, consent to provision to a third party in a foreign country is required. Where consent is the basis, information must also be provided before the consent is obtained. Where arrangements meeting the standards are the basis, continuing obligations follow.

Q5. A document that looks like a claim form has arrived from a court abroad. Can we leave it?

We recommend not leaving it. Receiving a judgment without having taken part in the proceedings does not by itself mean that recognition and enforcement in Japan will be refused. On recognition in Japan, whether the defendant received service of the summons or order necessary for the commencement of the action, or, without receiving it, appeared, is examined together with the other requirements. Service by publication and similar forms of service are excluded from what counts as service for this purpose. As a first step, establish the body that issued the document, the type of procedure, the date of receipt and the deadline for responding.

Q6. We are in negotiations with a party abroad. Can we set deadlines aside while talks continue?

Continuing to negotiate does not of itself stop a notice period running or suspend a limitation period. Contractual notice periods, the periods for giving notice or exercising rights under the applicable law, and limitation periods each have to be checked separately. Where foreign law applies, its content falls to be checked as well.

Related guides

Recovering payment and handling quality disputes in international sales of goods / Recognition and enforcement of foreign judgments and arbitral awards in Japan / Initial response to business email compromise, and the allocation of loss / Where a departing employee is suspected of taking information / regulatory requirements in cross-border M&A / Responding to Regulatory Investigations and Dawn Raids / responding to cyberattacks and information leaks

Key legislation and official sources

English translations of legislation are provided for reference. The Japanese texts are authoritative.

Where it appears	Legislation	Source type
The law applying to the formation and effect of a contract (section 2)	Act on General Rules for Application of Laws（法の適用に関する通則法）	Japanese legislation
Application to international sales of goods, and its exclusion (section 2)	United Nations Convention on Contracts for the International Sale of Goods（国際物品売買契約に関する国際連合条約）	Treaty
Foreign investors and inward direct investment; export of goods and provision of technology; measures on payments and capital transactions (sections 3, 4)	Foreign Exchange and Foreign Trade Act（外国為替及び外国貿易法）	Japanese legislation
Provision of personal data to a third party in a foreign country, information to be provided, and reporting a leak (section 5)	Act on the Protection of Personal Information（個人情報の保護に関する法律）	Japanese legislation
Jurisdiction agreements, service abroad, and the requirements for recognition of a foreign judgment (section 6)	Code of Civil Procedure（民事訴訟法）	Japanese legislation
Arbitration agreements, dismissal of an action, and execution decisions (section 6)	Arbitration Act（仲裁法）	Japanese legislation

Legal information reviewed: 2026-09-18

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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.