Japanese government officials have issued a broad travel ban, expanded to include major trading partners such as the United States, all of China, and Great Britain. With no state of emergency or stay-at-home orders currently in effect, there are ways multinational companies can continue their business and transactions in Japan during the coronavirus (COVID-19) pandemic.
Effective April 3, Japan’s Ministry of Justice has imposed a much broader and comprehensive travel ban to stop the entry into Japan of all foreign nationals who have traveled to restricted countries and regions within 14 days prior to their arrival in Japan. In an announcement made on April 1, the Ministry of Justice added a host of new countries and regions to the prohibited list, including the United States, Canada, Britain, all of China including Hong Kong, all of South Korea, Taiwan, Singapore, Malaysia, Israel, Turkey, and Brazil, among others. Previously, the list of prohibited countries and regions was much shorter and did not include major countries and trading partners of Japan. The previous list did, however, include Iran, Italy, Spain, France, Belgium, Germany, and most other countries in Europe, as well as designated certain epicenters of the COVID-19 infection in China, the Hubei Province and Zhejiang Province, plus specific cities in South Korea such as Daegu.
Notably, even permanent residents and their spouses, spouses of Japanese citizens, and other long-term residents of Japan who have visas and other reentry permits to Japan are subject to this travel ban after April 3. Prime Minister Shinzo Abe announced that the travel ban would begin at 12:00 am on April 3 and continue until the end of April unless prolonged beyond the month of April depending on developments in the United States and Europe. The prime minister proclaimed the need for Japan to strengthen its policies to prevent entry of travelers from the United States and Europe because of the expected exponential rise in the rate of COVID-19 infections in those regions. He added that the Japanese government plans to forbid the arrival of flights into Japan from foreign countries.
The Minister of Foreign Affairs (MOFA) in Japan announced the latest travel policy preventing travel by Japanese nationals during a special press conference on March 31. First, regarding all travel from Japan, MOFA added 49 more countries and regions, including the United States, Canada, Britain, China including Hong Kong, Taiwan, South Korea, Singapore, Malaysia, Australia, Israel, Iran, Turkey, and Brazil, to Level 3 in terms of high infection risk. MOFA advised that no Japanese citizen may travel abroad to any Level 3 country or region.
With the addition of 49 new countries and regions to this category, there are now a total of 73 countries and regions designated as Level 3—representing more than one-third of the countries in the world. Second, for countries and regions that are not included in the 73 countries prohibited for travel, the minister warned that these countries and regions still present risks of infection, and disallowed nonessential travel to such destinations.
The foreign affairs minister also noted that, in collaboration with other government agencies, officials would consider further expanding the list of countries and regions prohibited for foreign travel as well as banning foreign nationals attempting to enter Japan from such prohibited countries and regions.
The expanded travel ban on foreign nationals presents various new challenges, albeit not insurmountable, for multinational companies with business interests in Japan. We offer various workarounds and solutions to these challenges and remain available to our clients and friends around the clock in addressing any business needs in Japan during the COVID-19 pandemic.
First, no business trips to Japan will be permitted during the effective period of the travel ban, which may be extended into May and possibly even June. Instead of face-to-face meetings, companies outside of Japan will need to hold video conferences or audio conference calls with their counterparts in Japan. Although this may present some difficulty in communicating effectively across different cultures and languages, in our experience, these conferences work well as long as bilingual participants are involved to intercede whenever miscommunication may occur. Time zone differences may force those outside Japan to work throughout the evening. Japan is a technologically advanced country with innovative communication technologies and infrastructure, and Japanese companies are well versed and experienced in utilizing and relying on these communication technologies.
Second, plans to incorporate a new subsidiary in Japan, acquire or invest in a company or business in Japan, or forge new strategic partnerships or alliances in Japan have suffered setbacks, but it is still possible for these plans to continue. For example, incorporating a new entity in Japan or negotiating transactions in Japan should be entirely feasible to the extent that multinational companies can rely on local legal counsel and other professionals in Japan. Since legal documents in Japan often are required to be executed and delivered in their original form, multinational companies will need to use overnight courier or international mail to exchange original documents and should account for more time to complete an incorporation or close a transaction in Japan.
As for strategic partnerships and alliances, relying on partners and colleagues on the ground in Japan is essential while the travel ban is in effect. While negotiating these deals may need to be done remotely, there is no reason why the partnerships and alliances cannot move forward, and building trust with partners and colleagues in Japan should pay dividends now and in the long run.
Finally, for those transactions and business matters that are in process, Japan upholds and honors the rule of law; not only are Japanese companies usually litigation averse, they take their contractual obligations seriously. Nevertheless, parties to contracts that have already been signed or transactions that are still pending and have not closed may decide to call a force majeure or material adverse change to seek forbearance on their contractual obligations or eschew the closing of a transaction.
Consulting legal counsel on these issues is of paramount importance, and whether such forbearance of a contractual obligation or termination of a transaction is legally defensible or viable would heavily depend on the applicable governing law set forth in the contract or transaction. In addition, it is imperative to negotiate international dispute resolution mechanisms up front to facilitate a mutually satisfactory process and outcome. In particular, multinational companies should insist on dispute resolution in the English language.
Prime Minister Shinzo Abe’s cabinet formed the New Coronavirus Infection Prevention Task Force in January to combat the spread of COVID-19. The task force, led by the prime minister, was convened pursuant to the Novel Influenza Prevention Measure Law promulgated in 2012. The cabinet amended the statute, effective March 14, 2020.
Under the amended statute, the prime minister has the authority to declare a state of emergency, which would empower the task force and local governments, including municipalities such as Tokyo, to formulate and put into effect emergency measures intended to prevent the proliferation of COVID-19 in Japan. As of the date of this article, the prime minister has not declared a state of emergency, meaning Japan has not experienced the lockdowns and “shelter in place” mandates seen in other countries and regions such as the United States, Italy, France, and China.
The prime minister’s cabinet has also been considering other measures to impede the spread of COVID-19 within Japan, such as closing off and demarcating “clusters” of people in a specific area where patients of the virus reside or where infections are uncertain. Other measures included in this proposal are self-quarantining and social distancing, which, combined with the “clustering,” is hoped to curtail the speed at which the virus would spread and avoid the overcrowding of hospitals and medical clinics.
On February 27, the prime minister directed that all elementary schools, junior high schools, and high schools as well as schools for special education temporarily shut down starting on March 2 until spring break, which customarily takes place in early April in Japan. There has been no official announcement to date on when schools might reopen.
Since the Japanese government has not yet issued any order to stay at home, local authorities such as the Tokyo municipality can only make legally nonbinding recommendations that people stay at home. Local governments do not have any legal authority to introduce any emergency measures. Even if the prime minister issues a state of emergency order, local governments can only request that their residents stay at home except to obtain medical care or procure groceries or other essentials, and such request is not legally mandatory.
The City of Tokyo, led by Governor Yuriko Koike, had previously formed the Tokyo New Coronavirus Infection Prevention Task Force on January 30, and has been primarily engaged on information dissemination regarding the COVID-19 pandemic and methods to avoid the further spread of the virus. The Tokyo government has been requesting the national government to declare the state of emergency, which would allow Tokyo to initiate appropriate measures for its residents.
The situation remains highly fluid in Japan, with new developments and policies in Japan announced almost daily. We are monitoring the situation closely and will have additional updates in the near future.
Law clerk Mizuna Sekine contributed to this article.
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If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Alan J. Neuwirth
Janice H. Logan
Robert J. Gaybrick
J. Clayton Everett, Jr.