Investment treaty practice

Model BIT

Does the state have a model BIT?

Japan does not have a model of standard terms or language that it uses in its investment treaties. Accordingly, as to what types of protection are available and what conditions have to be satisfied under the investment treaty, the provisions of the relevant treaty must be carefully examined. However, the terms of the Japan-Cambodia BIT (2007) have been often adopted in subsequent BITs and, therefore, the Japan-Cambodia BIT may be considered to be somewhat of a de facto model BIT for Japan.

Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

Ratifications of treaties by the Japanese Diet are publicly recorded and promulgated in the Japanese government’s Official Gazette. In general, the Japanese government is not required to make diplomatic correspondence publicly available. However, the Ministry of Foreign Affairs generally discloses diplomatic correspondence voluntarily after 30 years have passed since the correspondence was made. Such disclosures can be found at:

Further, governmental documents and records of importance are transferred from various government ministries and agencies, as historical materials, and preserved and made available to the public by the National Archives of Japan.

Scope and coverage

What is the typical scope of coverage of investment treaties?

The scope of coverage varies from treaty to treaty. However, as mentioned in question 17, the Japan-Cambodia BIT (2007) is often considered to be a de facto model BIT for Japan.


Under the Japan-Cambodia BIT, ‘investment’ is defined as being every kind of asset owned or controlled, directly or indirectly, by an investor (and includes amounts derived from investments, such as profit, interest, capital gains, dividends, royalties and fees) such as:

  • an enterprise;
  • shares, stocks or other forms of equity participation in an enterprise, including rights derived therefrom;
  • bonds, debentures, loans and other forms of debt, including rights derived therefrom;
  • rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
  • claims to money and to any performance under contract having a financial value;
  • intellectual property rights;
  • rights conferred pursuant to laws and regulations or contracts; and
  • any other tangible and intangible, movable and immovable property, and any related property rights.

‘Investors’ are defined under the Japan-Cambodia BIT as:

  • natural persons having the nationality of a contracting party (ie, a contracting nation to the BIT); or
  • enterprises of a contracting party (excluding a branch of an enterprise of a non-contracting party, which is located in the area of a contracting party).

Under the Japan-Cambodia BIT, ‘an enterprise of a contracting party’ means any legal person or any other entity duly constituted or organised under the applicable laws and regulations of that contracting party, whether or not for profit, and whether or not it is private or government owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, organisation, company or branch.

Under the Japan-Cambodia BIT, an enterprise is ‘owned’ by an investor if more than 50 per cent of the equity interest in it is owned by the investor, and ‘controlled’ by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions.

Denial of benefits

Some of Japan’s BITs and FTAs (EPAs) include a denial of benefits clause. Under such provisions, either party may deny the benefits of the treaty to an enterprise of the other contracting party and to its investments if the enterprise is owned or controlled by an investor of a non-contracting party and:

  • the denying party does not maintain diplomatic relations with the non-contracting party;
  • the enterprise has no substantial business activities in the area of the other contracting party; or
  • the denying party adopts or maintains measures with respect to the non-contracting party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits were accorded to the enterprise or to its investments.

What substantive protections are typically available?

As stated in question 17, because Japan does not have a model of standard terms or language that it uses in its investment treaties, each BIT must be individually examined as to what types of protection are available and what conditions have to be satisfied under the investment treaty. However, the following substantive protections are typically available:

  • national treatment;
  • most-favoured-nation treatment;
  • fair and equitable treatment;
  • full protection and security;
  • obligation observance clause (umbrella clause);
  • expropriation;
  • protection from civil disturbance or strife;
  • performance requirements; and
  • guarantee of capital transfers.
Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

Almost all of Japan’s BITs and FTAs (EPAs) provide for arbitration in accordance with the ICSID Convention. The Japan-Russia BIT (1998) and most of the subsequent BITs and FTAs (EPAs) also allow investors to choose arbitration in accordance with the UNCITRAL Arbitration Rules. Few of Japan’s treaties give the investor the right to invoke arbitration outside the UNCITRAL or ICSID Rules.


Does the state have an established practice of requiring confidentiality in investment arbitration?

In general, there are no specific provisions in the investment treaties regarding confidentiality in investment arbitration.

Further, because there has been no case of Japan becoming a respondent country in investment arbitration, there is no established practice of requiring confidentiality.


Does the state have an investment insurance agency or programme?

In April 2001, Nippon Export and Investment Insurance (NEXI), an incorporated administrative agency, was created as a 100 per cent state-owned agency to efficiently manage the trade and investment insurance programme in unity with the government. On 1 April 2017, NEXI duly completed its transformation from an incorporated administrative agency into special stock company wholly owned by the government. NEXI’s investment insurance is not contingent on the existence of an investment treaty between Japan and the host state (target of the investment).