Construction—Japan—Q&A guide
Construction—Japan—Q&A guide

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Construction—Japan—Q&A guide
  • 1. If a foreign designer or contractor wanted to set up an operation to pursue the local market, what are the key concerns they should consider before taking such a step?
  • 2. Must foreign designers and contractors be licensed locally to work and, if so, what are the consequences of working without a licence?
  • 3. Do local laws provide any advantage to domestic contractors in competition with foreign contractors?
  • 4. What legal protections exist to ensure fair and open competition to secure contracts with public entities, and to prevent bid rigging or other anticompetitive behaviour?
  • 5. If a contractor has illegally obtained the award of a contract, for example by bribery, will the contract be enforceable? Are bribe-givers and bribe-takers prosecuted and, if so, what are the penalties they face? Are facilitation payments allowable under local law?
  • 6. Under local law, must employees of the project team members report suspicion or knowledge of bribery of government employees and, if so, what are the penalties for failure to report?
  • 7. Is the making of political contributions part of doing business? If so, are there laws that restrict the ability of contractors or design professionals to work for public agencies because of their financial support for political candidates or parties?
  • 8. Is a construction manager or other construction professional acting as a public entity’s representative or agent on a project (and its employees) subject to the same anti-corruption and compliance as government employees?
  • 9. Are there any other important legal issues that may present obstacles to a foreign contractor attempting to do business in your jurisdiction?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to construction rights in Japan published as part of the Lexology Getting the Deal Through series by Law Business Research (published: August 2020).

Authors: Anderson Mori & Tomotsune—Makoto Terazaki; Masahiro Yano; Hiroaki Nakano

1. If a foreign designer or contractor wanted to set up an operation to pursue the local market, what are the key concerns they should consider before taking such a step?

A foreign designer or contractor can set up a subsidiary or branch for its continuous business pursuant to the Companies Act (86/2005).

The subsidiary of a foreign contractor or a foreign contractor itself (with a branch) must obtain a licence to operate a construction business. Licence requirements include the placement of a full-time manager and an engineer with practical experience and the appropriate qualification in Japan. The experience and the qualification in a foreign country can fulfil such requirements, provided that those are certified as equivalent by the Minister of Land, Infrastructure, Transport and Tourism. However, such certification is rarely used. Therefore, practically speaking, it is more or less a requirement to employ a Japanese individual for such purposes.

In addition, the language barrier should be considered, as almost all relevant documents (eg, contracts, specifications and drawings) are written in Japanese.

Licensing issues can become a key concern for a foreign designer. In practice, there may be a

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