Japan - Chapter 7 - Force Majeure and Hardship in the Asia-Pacific Region
Yoko Maeda is a Partner at City-Yuwa Partners in Tokyo, Japan.
Satoko Fukui is an Associate at City-Yuwa Partners in Japan.
Originally from Force Majeure and Hardship in the Asia-Pacific Region
I. Force majeure
A. Background and definition of force majeure in Japan
1. Does Japan recognize force majeure or any other legal concept similar to force majeure such as frustration, etc. (in the following: “force majeure”)? Are there any statutory provisions or is there any case law setting forth the definition of force majeure?
(1) General Rules on exemption of liabilities on the grounds of “force majeure”
Force majeure is generally construed as “an event or circumstance caused by an external cause beyond the parties’ control that cannot be prevented even with due care to prevent it.”
Under the Civil Code of Japan, the term “force majeure” is not defined. Nor does the Civil Code stipulate general rules on the exemption of liabilities on the ground of "force majeure". However, in order to claim for damages and/or to terminate a contract based on default, the default must be "attributable to the obligor” (Articles 415, 541 and 543 of the Old Civil Code (as defined below)).
Article 415 If an obligor fails to perform consistent with the purpose of its obligation, the obligee shall be entitled to demand damages arising from such failure. The same shall apply in cases it has become impossible to perform due to reasons attributable to the obligor.
Article 541 In cases where one of the parties does not perform his/her obligations, if the other party demands performance of the obligations, specifying a reasonable period and no performance is tendered during that period, the other party may cancel the contract.
Article 543 If performance has become impossible, in whole or in part, the obligee may cancel the contract; provided, however, that this shall not apply if the failure to perform the obligation is due to reasons not attributable to the obligor.
As commonly understood, default caused by force majeure cannot be “attributable to the obligor"; therefore, the general rule is that the obligor is released from its liabilities for damages and the obligee cannot terminate the contract except in the case of monetary obligation.
In this respect, under Japanese law, “force majeure” should be considered as a sub-category of the event which is not “attributable to the obligor”. Force majeure is not provided as an independent ground for exemption from contractual liability.
(2) Amended Civil Code
The Japanese Civil Code was amended recently and took effect on April 1, 2020. This amended Civil Code (“Amended Civil Code”) generally applies to contracts entered into on or after April 1, 2020. (The Civil Code before this amendment is referred to as the “Old Civil Code”, and collectively with the Amended Civil Code, is called “Civil Code”.) Under Article 415, paragraph 1 of the Amended Civil Code, there is no change from Old Civil Code in the requirement that the default must be “attributable to the obligor” for the obligor to become liable for compensation for damages. However, under the Amended Civil Code, the obligor’s negligence is no longer required to terminate a contract when the obligor is in default.
Therefore, even if the default is caused by force majeure, the obligee may terminate a contract that it entered into on or after April 1, 2020.