SAKURA Law Office | Legal Update by Managing Partner Kenshiro Michishita

September 24, 2026 (fully revised October 5, 2026)

SAKURA Law Office | Kenshiro Michishita, Managing Partner

SAKURA Law Office has fully revised Legal Update No. 16 by Managing Partner Kenshiro Michishita, “Legal Responses to Breaches of Representations and Warranties in Japanese M&A — Claims Strategy, Indemnification, Loss Quantification, Buyer Knowledge, Disclosure, W&I Insurance and Dispute Resolution (2026).” Following No. 13 on acquiring a Japanese company, No. 14 on legal due diligence and No. 15 on key SPA terms, this edition addresses the point at which negotiated risk allocation becomes an actual post-signing or post-closing claim.

For international deal teams, the central point is that a Japanese-law representation-and-warranty dispute should not be reduced to the question whether a statement in the SPA was inaccurate. A viable claim requires a coherent chain: the relevant representation, the time at which it was given, the facts then existing, any materiality or knowledge qualifier, the disclosure regime, buyer knowledge, the contractual indemnity, notice and claim periods, liability limitations, causation, recoverable Loss, W&I insurance and the selected dispute-resolution mechanism. Each element can change the commercial outcome.

The issue is particularly current because the SME Agency’s contract materials, current as of December 15, 2025, now address not only indemnity caps, thresholds and contractual claim periods but also both anti-sandbagging and pro-sandbagging drafting. Japanese practice therefore provides no sound basis for assuming a universal rule that buyer knowledge always defeats a claim—or that a written warranty always survives buyer knowledge. The SPA and the evidentiary record remain decisive.

This Legal Update reflects Japanese law and official materials available as of October 5, 2026, including the Japanese Civil Code, the SME Agency’s current M&A Guidelines and model documents, and the Tokyo District Court judgment of January 17, 2006 (Heisei 16 (Wa) No. 8241). It is written for buyers, sellers, General Counsel, private equity sponsors, portfolio companies, foreign headquarters and external advisers managing claims under Japanese-law SPAs.

Executive Summary

A representation-and-warranty claim is not complete merely because a statement was inaccurate. The claimant must identify the contractual statement and its relevant date, establish the inconsistent fact at that time, address disclosure and knowledge, satisfy the SPA’s indemnity and notice mechanics, and connect the breach to a category of Loss that is recoverable after applying causation, mitigation, thresholds, caps and other limitations. The seller’s defence should be built by testing each link in that chain rather than treating “breach” as a binary issue.

Where a Japanese-law SPA contains a negotiated indemnity regime, the contract is ordinarily the first and most important source of rights and limitations. Articles 415 and 416 of the Japanese Civil Code provide the general framework for contractual damages, but sophisticated SPAs commonly define Loss, exclude categories of damages, impose de minimis thresholds and baskets, cap liability, carve out specific indemnities or fraud, establish contractual claim periods and sometimes make indemnification the exclusive remedy. The contractual architecture must therefore be analyzed before general-law remedies are assumed.

Buyer knowledge, disclosure and sandbagging require particular care. In the January 17, 2006 Tokyo District Court decision, the court stated that there may be circumstances in which a buyer’s gross negligence in failing to discover a warranty breach could be treated like actual knowledge, while also emphasizing that M&A due diligence is a buyer’s right rather than a legal duty and rejecting gross negligence on the facts, which included deliberate concealment by the sellers. The decision should not be converted into a universal anti-sandbagging rule. Current SME Agency model materials expressly illustrate both anti-sandbagging and pro-sandbagging approaches.

Loss quantification is an economic as well as legal exercise. A hidden target liability does not automatically equal the buyer’s recoverable loss. The analysis may require a distinction between diminution in share value, an additional target liability, remediation costs, third-party claims, professional fees and other categories; the relationship to purchase-price methodology; tax effects; insurance and other recoveries; mitigation; and the impact of the buyer’s post-closing conduct. Large claims often require lawyers, accountants and valuation experts to work from one chronology and one set of financial assumptions.

The first days matter. Deal teams should identify the earliest contractual and insurance deadlines, preserve the SPA, disclosure materials, VDR archive, DD Q&A, negotiation history and relevant corporate records, control interviews, consider whether a protective notice is required, and take reasonable steps to stop loss from expanding. A claim with strong substantive merits can be materially weakened by poor notice, missing evidence, avoidable loss growth or late insurer notification.

1. A Warranty Claim Starts with the SPA’s Allocation of Risk, Not with the Discovery of a Problem

Representations and warranties in a Japanese-law SPA are best understood as negotiated contractual statements allocating specified risks at defined times. The fact that a problem emerges after closing does not, by itself, establish a breach. Counsel should identify the precise representation, whether it was given at signing, closing or both, and the effect of materiality thresholds, knowledge qualifiers, exceptions and disclosure. The core factual question is what was true at the relevant warranty date, not simply what is known today.

A post-closing tax audit, for example, does not itself prove a breach of a tax warranty. The analysis asks whether the underlying tax position or liability existed at the relevant date, whether it fell within the warranty’s wording and whether it had been effectively disclosed. A customer terminating a contract after closing likewise does not necessarily establish that the customer-contract warranty was false unless the termination right, notice, breach or other relevant circumstance already existed when the warranty was given.

Where signing and closing are separated, bring-down mechanics must be treated separately from a post-closing indemnity claim. If a representation was accurate at signing but becomes inaccurate before closing, the issue may concern satisfaction of a closing condition, waiver, remediation, price renegotiation or termination rather than a later damages claim. A minor inaccuracy does not automatically permit a buyer to refuse to close; the SPA’s materiality standard, MAC provisions and termination architecture matter.

Known risks identified during diligence may be governed by a specific indemnity rather than the general warranty regime. Tax, litigation, employment, IP, licensing and other identified exposures can be subject to separate caps, periods and claims procedures. The right starting point is therefore not a single warranty clause but the SPA as an integrated risk-allocation system.

In practice, sophisticated claims teams map the relevant representation, indemnity, liability limitations, disclosure standard, notice mechanics, claim period, specific indemnity, W&I policy, escrow or holdback, governing law and dispute-resolution clause in one claims matrix. The enforceable value of a warranty depends on how those provisions interact.

2. The First Response: Preserve Rights, Evidence, Insurance Coverage and Mitigation at the Same Time

The first objective after a potential breach is identified is not to send the strongest possible accusation. It is to avoid losing rights or evidence. The team should record who identified the issue, when and from what source; identify the earliest SPA notice and claim deadlines; review third-party claim procedures; and separately check any W&I insurer notice obligations. A contractual claim period and a statutory limitation period are different concepts and should be calendared independently.

Preservation should focus first on material that may disappear or become difficult to reconstruct: the executed SPA, disclosure letter and schedules, the VDR index and authorized archive, DD Q&A, diligence reports, LOI and valuation materials, deal drafts and negotiation comments, closing bible, board materials, accounting and tax records, and relevant email and collaboration-platform communications. A closed VDR can become a critical evidentiary gap if no proper archive was retained.

Interviews should be sequenced rather than improvised. Premature questioning can align recollections, create inconsistent accounts or cause records to be altered. Counsel should first identify objective documents, the relevant Knowledge Group and the disclosure-preparation process, then decide whom to interview and in what order. In cross-border matters, document-sharing and confidentiality protocols should be coordinated with counsel in relevant jurisdictions because U.S.-style or other foreign privilege concepts do not map automatically onto Japanese civil procedure.

Mitigation runs in parallel with claim preparation. Tax, employment, licensing, data, cyber or IP issues may require the target to remediate, engage regulators, notify customers or make other business decisions before the seller dispute is resolved. A claimant that allows an avoidable loss to grow may strengthen causation and mitigation defences. Where a third-party claim has arisen, the SPA may also regulate defence control, counsel selection, settlement consent and cooperation.

A seller receiving a claim notice should likewise avoid an immediate concession or blanket denial. Notice validity, claim timing, the warranty wording, disclosure, buyer knowledge, causation, post-closing management decisions, mitigation, baskets, caps and insurance recoveries should be tested separately. The purpose of the early phase is to create a reliable record that can support negotiation, litigation or arbitration later.

3. Buyer Knowledge, Disclosure and Sandbagging under Japanese Law

Where a warranty is qualified “to the Seller’s Knowledge” or by similar language, the SPA should be reviewed for whose knowledge counts and what level of inquiry is required. The Knowledge Group may include founders, directors, the CFO, legal, HR or business heads. The standard may be actual knowledge only or may extend to information that would have been learned after a specified level of reasonable inquiry. Contemporaneous emails, internal reports and management materials often become central evidence.

Disclosure is equally contract-specific. Some SPAs require a matter to be fairly disclosed in enough detail to identify its nature and scope. Others use broader deemed-disclosure concepts for VDR materials. The fact that a document existed somewhere in a data room does not necessarily establish effective disclosure under the contract; conversely, a carefully drafted deemed-disclosure regime can materially narrow buyer protection. The closing record should preserve the exact disclosure package and VDR contents that existed when the SPA was signed.

The Tokyo District Court’s January 17, 2006 decision remains an important Japanese primary source. The court stated that there may be room to treat a buyer’s gross negligence in failing to know of a warranty breach as equivalent to actual knowledge for fairness purposes. It nevertheless rejected gross negligence on the facts, emphasizing that due diligence in an acquisition is a buyer’s right rather than a legal duty and giving significant weight to the sellers’ deliberate concealment. The court also rejected the argument that delivery of raw data, by itself, constituted disclosure of the relevant accounting treatment.

The decision therefore does not establish a universal rule that buyer knowledge always bars recovery. Nor does it support the opposite proposition that a written warranty always overrides buyer knowledge. The SME Agency’s current model SPA materials make the drafting choice explicit: they discuss an anti-sandbagging approach under which buyer knowledge can support seller protection and a pro-sandbagging clause under which buyer knowledge does not affect the seller’s liability.

For buyers, the drafting question is whether a diligence finding should be reflected in price, carved out of the warranty, addressed through a specific indemnity or left claimable under pro-sandbagging language. For sellers, disclosure should be connected expressly to the warranties and indemnity rather than assumed to have automatic legal effect. In cross-border SPAs, foreign governing law may produce a different sandbagging result, so Japanese assumptions should not be transplanted without a choice-of-law analysis.

4. Indemnification and Loss Quantification: Build One Legal and Economic Model

Japanese SPAs commonly contain contractual indemnities for losses arising out of or relating to breaches of representations, warranties and covenants. Where that regime applies, the contract’s conditions, Loss definition and limitations should be analyzed first. Articles 415 and 416 of the Japanese Civil Code remain important general rules on damages for non-performance, but an M&A indemnity often defines recoverable loss and risk allocation more specifically. It is therefore unsafe to assume that every inaccurate representation produces a general-law damages claim in the same amount.

The definition of Loss can be outcome-determinative. Some SPAs include reasonable legal and accounting fees, investigation costs, remediation expenses and third-party payments; others exclude lost profits, indirect or consequential damages or other categories. Even where a category is included, the claimant must address causation, necessity and reasonableness, mitigation, and deductions for insurance, tax benefits or other recoveries to prevent double recovery.

Diminution in share value is conceptually different from the target’s underlying liability. A JPY 100 million undisclosed liability does not necessarily equal JPY 100 million of buyer loss. The transaction may have used an enterprise-value/equity-value bridge, a multiple-based valuation or another pricing methodology; the issue may have tax effects or may already have been reflected in negotiations. A credible claim must show how the breach affected the economic position the buyer bargained for.

In the January 17, 2006 Tokyo District Court case, the court treated the relevant accounting treatment as having inflated the share purchase price and, on the specific SPA and facts, also recognized system-remediation costs, certain expert costs and reasonable legal fees. The case is useful because it links the contract, the price mechanism and downstream costs. It should not be read as a general rule that remediation and professional costs are always recoverable.

Causation often becomes the central factual battle where the target underperforms after closing. The parties may dispute whether deterioration resulted from the pre-closing warranty breach, market conditions, competitive changes, interest rates, customer loss unrelated to the breach or the buyer’s own integration and management decisions. For significant claims, legal counsel and valuation or accounting experts should use a shared chronology, common data and explicit counterfactual assumptions.

De minimis thresholds, baskets and caps are not mere arithmetic adjustments at the end. They influence which claims should be investigated and how claims are aggregated. Deductible and tipping baskets have different economics, while fundamental warranties, tax claims, specific indemnities, fraud or wilful misconduct may sit outside general limitations. The hierarchy of the SPA should be mapped before a demand is quantified.

5. Notice, Contractual Claim Periods, W&I Insurance and Practical Recoverability

Notice and contractual claim periods can determine the result even where the underlying breach is strong. An SPA may condition indemnification on written notice within a defined period and may require identification of the breached provision, relevant facts and an amount or reasonable estimate. Statutory prescription under Japanese law is a separate issue. The legal effect of a contractual deadline depends on the clause and governing law, so the safest practice is to act by reference to the earliest potentially operative date.

An incomplete investigation does not stop the contractual clock. Depending on the SPA, counsel may need to consider a protective notice describing the known facts, the provisions potentially breached and the current loss position, followed by supplementation. A generic reservation of all rights may not satisfy a detailed notice clause. Notice should be drafted to preserve the claim without overstating facts or quantum that remain under investigation.

W&I insurance creates a second claims framework rather than replacing the SPA. Policy notice, known-matter exclusions, under-diligenced areas, forward-looking matters, specific tax or cyber exclusions, retention, loss definitions and insurer cooperation rights may differ from the SPA. The SME Agency’s guidance recognizes that W&I insurance can facilitate negotiations over warranties and indemnities while also noting that underwriting generally involves review of diligence materials.

Buyer-side W&I structures may make the insurer the primary economic recovery source while leaving seller exposure for fraud, specific indemnities, retention or other negotiated exceptions. Subrogation and insurer recourse must also be considered. The claims team should therefore analyze the SPA and policy together rather than assuming that “insured” means “seller liability is irrelevant.”

Finally, legal entitlement and collectability are different. Where the seller is a PE acquisition or divestment vehicle expected to distribute sale proceeds, escrow, holdback, guarantees or other credit support may be critical. Once a claim emerges, counsel should consider escrow balances, seller solvency, guarantees, insurance and potential asset movements in parallel with the merits of the claim.

6. Rescission, Fraud, Negotiation and Formal Dispute Resolution

A serious post-closing warranty breach does not automatically unwind an acquisition. SPAs frequently make indemnification the exclusive remedy or confine termination rights to the pre-closing period. After closing, changes in ownership, management, employees, financing and third-party relationships can also make restoration commercially complex. If statutory cancellation under Articles 541 and following of the Civil Code is considered, the SPA’s remedy provisions, materiality, notice requirements and feasibility of restoration must be analyzed together.

Where deliberate misstatement or concealment is suspected, the analysis may extend beyond ordinary indemnity to a fraud carve-out, rescission for fraud under Article 96 of the Civil Code, tort or other legal theories. Fraud should not, however, be used as a conclusory label to bypass caps or exclusive-remedy provisions. The claimant must establish who knew what, what was said or concealed, the relevant intent, and how the conduct affected the transactional decision.

Many claims are negotiated before litigation or arbitration begins, but settlement discussions should be conducted on a record that can withstand formal proceedings. Buyers should avoid turning early estimates into irreversible admissions about final quantum; sellers should avoid blanket denials before document review. In international cases, counsel should also consider how negotiation communications may be treated under each relevant legal system rather than assuming a universal “without prejudice” protection.

The SPA determines whether the dispute proceeds in Japanese courts or arbitration. Court litigation requires analysis of jurisdiction, evidence, interim measures and eventual enforcement. Arbitration requires review of the institution, seat, language, tribunal structure, emergency or interim mechanisms and award enforcement. Cross-border teams should integrate the chosen governing law under Japan’s conflict-of-laws framework, the jurisdiction or arbitration agreement, and the location of the counterparty’s assets from the outset.

Representation-and-warranty disputes often require a combined legal and financial expert team. The role of experts is not simply to maximize damages; it is to produce a reproducible explanation of the breach’s economic effect using defensible data, valuation methodology and counterfactual assumptions. Expert models that do not align with the legal theory or the SPA’s Loss definition can weaken an otherwise credible claim.

7. Use the Dispute to Improve the Next Deal: Claims Management as M&A Governance

Representation-and-warranty disputes rarely originate only after closing. They often expose earlier discontinuities: a diligence issue that was not allocated to price, disclosure or a specific indemnity; a disclosure letter disconnected from the VDR; an undefined Knowledge Group; or notice and insurance deadlines that were not handed over from the deal team to the post-closing organization. Claims experience should therefore feed directly back into the next transaction’s DD and SPA design.

Buyers can reduce future uncertainty by preserving a closing claims matrix, the final VDR archive, disclosure materials, DD Q&A, pricing assumptions, specific indemnities, the W&I policy and all contractual deadlines. Sellers should preserve the disclosure process, knowledge confirmations, materials provided to the buyer and the commercial rationale for liability limitations. Good records reduce the space for later disputes about what the parties knew and intended.

For boards and General Counsel, a significant warranty claim is not merely an M&A legal workstream. It can affect financial reporting, auditors, insurance, PMI, regulatory matters, reputational risk and continuing relationships with sellers or management. Governance should align the legal merits, business remediation, accounting impact, recoverability and external communications on one factual foundation.

SAKURA Law Office and Managing Partner Kenshiro Michishita approach representation-and-warranty disputes as integrated claims-management matters involving SPA interpretation, evidence preservation, internal investigation, loss quantification, W&I insurance, negotiation, litigation or international arbitration and future contract design. Whether acting for a buyer or seller, the objective is to build one coherent theory: which provision was breached, by what fact and at what time, what Loss followed, and how much can be recovered—or resisted—under the agreed allocation of risk.

Frequently Asked Questions

Q1. Does every inaccurate representation automatically create a recoverable claim?

No. The relevant representation and date, disclosure, buyer knowledge, indemnity wording, notice and claim periods, baskets, caps, causation and the definition of Loss must be analyzed together. A breach and a recoverable quantum are separate questions.

Q2. If a document was in the VDR, is the seller automatically protected?

No. The effect depends on the SPA’s disclosure standard. Some agreements require fair disclosure of the nature and scope of the matter; others use broader deemed-disclosure concepts. The 2006 Tokyo District Court decision also rejected, on its facts, an argument that delivery of raw data alone disclosed the relevant accounting treatment.

Q3. Can a buyer recover if it knew about the breach before signing?

It depends on the SPA and facts. Japanese law should not be summarized as having a universal sandbagging rule. The 2006 Tokyo District Court decision, and any pro- or anti-sandbagging clause in the SPA, must be considered. The SME Agency’s current model materials expressly discuss both approaches.

Q4. Is the buyer’s loss equal to the amount of an undisclosed target liability?

Not necessarily. The analysis may require purchase-price mechanics, share-value impact, tax effects, whether the risk was already priced, the SPA’s Loss definition, causation and other recoveries. Material claims often require accounting or valuation evidence.

Q5. Must the buyer quantify the entire loss before giving notice?

That depends on the notice clause. The contractual clock may continue while investigation is ongoing, so counsel should consider whether a protective notice based on known facts and a reasonable current estimate is required. A generic reservation of rights may not satisfy a detailed notice provision.

Q6. Does W&I insurance eliminate the need to consider seller liability?

No. The policy and SPA do not necessarily cover the same matters. Known issues, retention, exclusions, specific indemnities, fraud and subrogation can leave seller exposure or affect the recovery path. The SPA and insurance policy should be analyzed together.

Q7. Can a buyer refuse to close if a warranty becomes inaccurate before closing?

Not automatically. The answer depends on the bring-down condition, materiality standard, MAC and termination provisions, waiver rights and remediation mechanics. Depending on the SPA, the buyer may consider refusing to close, renegotiating, requiring cure or shifting the issue to an indemnity.

Q8. Can a buyer rescind the SPA after closing for a serious warranty breach?

Not automatically. Exclusive-remedy provisions, contractual termination rights, Articles 541 and following of the Civil Code, materiality and the feasibility of restoration all matter. If fraudulent inducement or concealment is alleged, Article 96 and other legal theories may also require separate analysis.

Q9. What evidence should be preserved first?

The SPA and disclosure materials, VDR archive, DD Q&A, diligence reports, pricing materials, draft history, closing bible, emails and chats, accounting and tax data, and board materials are common priorities. Materials that may disappear after closing should be secured first.

Q10. Can a foreign buyer or seller apply the same Japanese analysis to a foreign-law SPA?

No. Representations and warranties, indemnification, sandbagging, damages, privilege, limitation clauses and dispute-resolution rules can differ materially by governing law. Cross-border claims should be coordinated with counsel in the relevant jurisdictions and with any W&I insurer from the beginning.

About the Legal Update Series by Kenshiro Michishita

SAKURA Law Office publishes the Legal Update series through the profile of Managing Partner Kenshiro Michishita, covering M&A, corporate law, cross-border transactions, international disputes, financial regulation, Web3 and crypto, AI and technology, data protection, intellectual property, employment, crisis management and internal investigations. This fully revised No. 16 follows the M&A sequence in Nos. 13 to 15 and addresses the point at which contractual risk allocation in an SPA becomes an actual claim after signing or closing.

SAKURA Law Office official website https://sakura-lawyers.jp/en/

Kenshiro Michishita, Managing Partner — Profile https://sakura-lawyers.jp/en/lawyer/michishita-kenshiro/

How SAKURA Law Office Can Assist

SAKURA Law Office advises buyers, sellers, listed and private companies, private equity sponsors, founders, overseas companies and other transaction parties on post-M&A breaches of representations and warranties, indemnity claims, specific indemnities, buyer knowledge, disclosure and sandbagging, loss quantification, W&I insurance, escrow and holdback, third-party claims, SPA interpretation, evidence preservation, internal investigations, negotiation, litigation and international arbitration. In cross-border matters, we can coordinate in English with overseas headquarters, General Counsel, foreign counsel, accounting, tax and valuation experts and insurers so that Japanese-law claims strategy is integrated into the wider dispute and recovery plan.

Contact

For advice concerning M&A, breaches of representations and warranties, indemnification claims, SPAs, legal due diligence, W&I insurance or cross-border M&A disputes in Japan, please contact SAKURA Law Office.

SAKURA Law Office
4F Ark Hills South Tower, 4-5 Roppongi 1-chome, Minato-ku, Tokyo 106-0032, Japan
Kenshiro Michishita, Managing Partner

Web: https://sakura-lawyers.jp/en/

Principal References

1 Civil Code — e-Gov Laws (official Japanese text; including Articles 96, 166, 415, 416 and 541 et seq.) — https://laws.e-gov.go.jp/law/129AC0000000089

2 Civil Code — Japanese Law Translation (English; Articles 415 and 416 among others) — https://www.japaneselawtranslation.go.jp/ja/laws/download/4314/09/m29Aa000890502en15.0_r3A37.pdf

3 Tokyo District Court, January 17, 2006, Heisei 16 (Wa) No. 8241 — official judgment PDF — https://www.courts.go.jp/app/files/hanrei_jp/444/005444_hanrei.pdf

4 SME Agency — SME M&A Guidelines official page (including current model contracts as of December 15, 2025) — https://www.chusho.meti.go.jp/zaimu/shoukei/m_and_a_guideline.html

5 SME Agency — SME M&A Guidelines (3rd edition) — https://www.chusho.meti.go.jp/zaimu/shoukei/download/m_and_a_guideline.pdf

6 SME Agency — Model Share Purchase Agreement (indemnity, caps, thresholds, claim periods and sandbagging commentary) — https://www.chusho.meti.go.jp/zaimu/shoukei/m_and_a_guideline/reference/007_02.pdf

7 SME Agency — Model Share Purchase Agreement, Schedule 1: Seller Representations and Warranties — https://www.chusho.meti.go.jp/zaimu/shoukei/m_and_a_guideline/reference/007_01.pdf

8 SME Agency — Sample Explanation of Risks in Definitive M&A Agreements — https://www.chusho.meti.go.jp/zaimu/shoukei/download/m_and_a_guideline_s01.pdf

9 SME Agency — M&A Professional Knowledge and Skills Map (including warranties, indemnities and W&I insurance) — https://www.chusho.meti.go.jp/zaimu/shoukei/m_and_a_guideline/skills-map.pdf

10 SME Agency — 2021 White Paper on Small and Medium Enterprises, section on M&A and W&I insurance — https://www.chusho.meti.go.jp/pamflet/hakusyo/2021/chusho/b2_3_2.html

11 METI — Overseas M&A resources — https://www.meti.go.jp/policy/external_economy/toshi/kaigaima/index.html

12 METI — “Nine Actions” for Using Overseas M&A in Management — https://www.meti.go.jp/policy/external_economy/toshi/kaigaima/kanren/committeema.html

13 METI — Supplement to the “Nine Actions” on the roles of CFOs, legal executives and outside directors — https://www.meti.go.jp/policy/external_economy/toshi/kaigaima/kanren/nineactions.html

14 Act on General Rules for Application of Laws — Japanese Law Translation (English) — https://www.japaneselawtranslation.go.jp/ja/laws/download/3783/09/h18Aa000780301en14.0.pdf

15 Code of Civil Procedure — Japanese Law Translation (English) — https://www.japaneselawtranslation.go.jp/en/laws/download/4797/09/h08Aa001090704en16.0_r4A48.pdf

16 Arbitration Act — Japanese Law Translation (English) — https://www.japaneselawtranslation.go.jp/en/laws/download/4440/09/h15Aa001380304en16.0_r5A15.pdf

17 Japan Commercial Arbitration Association — Arbitration Rules — https://www.jcaa.or.jp/en/arbitration/rules.html

18 Japan Commercial Arbitration Association — Commercial Arbitration Rules (2021) — https://www.jcaa.or.jp/common/pdf/arbitration/Commercial_Arbitration_Rules2021_en.pdf

19 SAKURA Law Office — Official Website — https://sakura-lawyers.jp/en/

20 SAKURA Law Office — Kenshiro Michishita, Managing Partner — https://sakura-lawyers.jp/en/lawyer/michishita-kenshiro/

Disclaimer

This article provides general information based on Japanese law, published court decisions, official materials and general M&A practice available as of October 5, 2026. It does not constitute legal advice or a legal opinion concerning any specific transaction, representation-and-warranty breach, indemnity claim, insurance claim or dispute. Whether a breach has occurred; whether indemnification is available; the effect of buyer knowledge, disclosure or sandbagging; the operation of contractual notice and claim periods, liability limitations and Loss definitions; causation and recoverable quantum; W&I insurance coverage; rescission, fraud or other remedies; governing law, jurisdiction or arbitration; and practical recoverability depend on the wording of the SPA and policy, the governing law, diligence and disclosure record, transaction pricing, underlying facts, timing of discovery, party knowledge, development of loss and other case-specific circumstances. Specific matters should be assessed under the laws, contractual documents and evidence in force and available at the relevant time.