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February 28, 2020

Tokyo Dispute Resolution & Crisis Management Newsletter – February 2020 Special Edition


On behalf of the King & Spalding Tokyo team, we hope that you, your loved ones and colleagues remain healthy and free of the spreading COVID-19 virus. With Prime Minister Abe’s announcement yesterday that schools nationwide will close through to early April, the Japanese efforts to contain the virus have moved into a new phase.

Sustained Period of Instability

It has unquestionably been a sustained period on instability over recent months with, amongst many others, the anti-China demonstrations and disturbances in Hong Kong, the manner of the Trump administration’s engagement with other nation states through sanctions and trade measures, the realization of Brexit and the United Kingdom’s withdrawal from the European Union, the increased shareholder activism targeting major Japanese corporates and now the COVID-19 concerns which are gripping the world with the major Asian economies of China, South Korea, Japan, Singapore and Hong Kong all impacted, and an increasing number of cases in Europe, the Middle East and the United States.

Commercial Consequences & Recommendations

The commercial consequences are already being realized with the movement of goods and people restricted and transportation demand collapsing; factory closures, supply chain shortfalls, enforced remote working and ‘voluntary’ unpaid leave; stock and commodity price volatility; and an anticipated downturn in financial performance from national to corporate level. In these difficult times, it should be anticipated that even trusted commercial counterparties may have no option other than to exercise or defend contractual rights to protect their own short-term financial interests. We are witnessing attempts to reduce volumes, defer deliveries, renegotiate pricing and even suspend or terminate contracts.

It is therefore critical that you protect your contractual rights at this time. Despite the time pressures upon you, maintaining written contemporaneous record of your discussions with your contractual counterparties is essential. Required notices must be delivered in a timely and contractually compliant manner. Other timelines must be closely observed, e.g. for required disclosures under insurance contracts. Before exercising rights, evidence should be gathered to demonstrate that the right has arisen with an expectation that your action will be challenged as wrongful. Of course, obtaining expert legal advice is recommended.

Support & Available Know-How

We are monitoring the situation closely and advising clients on a wide range of issues that are being faced. With current travel restrictions, the King & Spalding Tokyo team is on-the-ground in Japan and available to you at any time. If you are at an early stage of assessment, we also have a library of know-how material available to assist you internally. By way of example, on the issue of force majeure, the following hyperlinked articles may be of interest:

Returning to the opening theme, we hope that you, your loved ones and colleagues stay healthy, and that a return normality is not far away. In the meantime, we remain on hand to assist with any issues which you may face from the most minor to business critical.