Regulatory

Governance structure

What is the regulatory governance structure in professional sport in your jurisdiction?

The Japan Sports Agency exists as an administrative agency that oversees Japanese sports in general.

The responsibility for regulatory oversight over the Japanese professional football league is the Japan Professional Football League (the J.League), a public interest incorporated association. The J.League is under the jurisdiction of the Japan Football Association (JFA), a public interest incorporated foundation incorporated in Japan that manages the Japanese national team.

The responsibility for regulatory oversight of professional baseball in Japan is the Nippon Professional Baseball Organisation (NPB), a general incorporated association.

Protection from liability

To what extent are participants protected from liability for their on-field actions under civil and criminal law?

The perpetrator will not be held responsible for civil liability if the conduct is within reasonable bounds. Whether the conduct is within reasonable bounds is often judged by ‘whether the act is appropriate in general societal terms or not’. It depends comprehensively on (i) whether the manner and method of the misconduct were considerable in light of the rules of the sport, (ii) whether or not it remains within the range of injuries that can normally occur in the sport, and (iii) the degree of negligence of the party at fault. One may be held criminally responsible, especially if the act is considered malicious.

Doping regulation

What is the regulatory framework for doping matters in your jurisdiction? Is there also potential secondary liability for doping offences under civil or criminal law?

In Japan, the Japan Anti-Doping Agency (JADA) conducts doping inspections based on the Japan Anti-Doping Code. If an athlete tests positive, a hearing will be held at the Japan Anti-Doping Disciplinary Panel and sanctions (suspension of qualification, etc) will be decided. The decision may be appealed to the Japan Sports Arbitration Agency (JSAA) or the Court of Arbitration for Sports (CAS). Each sports organisation may also impose separate sanctions on the subjects for whom violations are recognised.

There is no provision for the imposition of criminal penalties on athletic doping. Prior to the enactment of the Act on Promotion of Doping Prevention Activities in Sports, there were discussions to introduce criminal punishment, but the enactment of the provisions on criminal punishment was suspended.

The NPB is not a member of JADA, and the NPB Anti-Doping Commission conducts its own doping inspection.

Financial controls

What financial controls exist for participant organisations within professional sport?

In the J.League, there are certain limitations on players’ salaries, according to their contract types. A salary cap of ¥6.7 million applies to Professional A contract players in their first year, but there is no cap from the second contract year. A salary cap of ¥4.6 million applies to Professional B and Professional C contract players regardless of their contract year. Furthermore, there are financial requirements for each club under the club licence system, such as the ‘do not fall into excess debt’ rule. However, there is no salary cap for the total salary of the club, nor a luxury tax rule.

In the NPB, there is a limitation on the first year’s salary for any new Japanese players, which is ¥100 million plus any incentive up to 50 per cent of the salary. This is the only financial control in place, and there is no salary cap for the total salary of the team nor a luxury tax.

Dispute resolution

Jurisdiction

Who has jurisdiction over the resolution of professional sport disputes in your jurisdiction, and how is this determined?

In the J.League, a chairman is placed as a representative and supervises J.League operations under the J.League rules. The chairman has the authority to render final decisions concerning the settlements of disputes, as well as sanctions for J.League-affiliated organisations and individuals.

In the NPB, a Japanese professional baseball organisation is established under the NPB’s Board of Directors, and a commissioner is placed in the baseball organisation, based on the NPB Constitution.

The commissioner can impose sanctions on stakeholders (see 'Enforcement').

Enforcement

How are decisions of domestic professional sports regulatory bodies enforced?

In the J.League, an advisory body to the chairman, known as an arbitration committee, has been established. The chairman can investigate the facts by himself or herself, or with the assistance of the consultative and mediatory committee or the standing committee. Generally, sanctions are decided by the chairman through advice of the consultative and mediatory committee. In cases where the parties to the dispute settle, there is a system in place to deem the content of the settlement as final when the consultative and mediatory committee accepts the details of the settlement to be reasonable.

In the NPB, the commissioner entrusts the investigation to the investigation committee for facts and the like that go against the Japanese professional baseball agreement, and receives a dispositive opinion on the result. Thereafter, the commissioner imposes sanctions on the relevant parties. There is also a mediation system that functions as a dispute resolution procedure regarding players’ remuneration.

Court enforcement

Can the decisions of professional sports regulatory bodies be challenged or enforced in the national courts?

In the J.League, the decision made by the chairman is final, and all parties and individuals belonging to the party, as well as the J.League, are bound by it. Even if a party is dissatisfied with the decision of the chairman, it cannot appeal to the court or any other third party.

In the NPB, the commissioner’s orders, decisions, rulings and sanctions are said to be final decisions and it is stipulated that one cannot appeal to a judicial body.

However, the general theory is that legal disputes can be resolved by trial. For example, the court can resolve cases involving damages for sports accidents and disputes concerning contracts. On the other hand, disputes such as those concerning player selection, league and team management, and dispositions rendered by the league are regarded as having no applicable legal dispute and will be difficult for the court to resolve.

Moreover, athletes may file a petition for arbitration to the JSAA or the CAS on dispositions rendered by the sports organisation to the athletes based on an arbitration agreement made by the parties.

Sponsorship and image rights

Concept of image rights

Is the concept of an individual’s image right legally recognised in your jurisdiction?

An individual’s image is protected by way of ‘image rights’ and ‘publicity rights’ in Japan. There is no registration system for these rights, and no requirement that these rights be owned. The Supreme Court of Japan has held that publicity rights originate from personal rights and, therefore, are non-transferable and cannot be waived. However, publicity rights can be licensed or managed by a third party, as is often the case with professional athletes. Therefore, many athlete’s clubs, leagues and management companies generally manage and control the athletes’ image rights and publicity rights.

Commercialisation and protection

What are the key legal considerations for the commercialisation and protection of individuals’ image rights?

According to the Supreme Court of Japan, the unauthorised use of athletes’ images rises to the level of infringement when the use is recognised as being mainly for the purpose of exploiting such image in order to attract an audience or customers. For example, the following are examples of publicity rights infringement:

  • using one’s likeness itself as an object of appreciation;
  • putting one’s likeness on goods to differentiate them from other goods; and
  • using one’s likeness to advertise goods and services.

How are image rights used commercially by professional organisations within sport?

In general, an athlete’s image rights belong to the athlete. However, the professional player contract normally stipulates that the player must cooperate with the club whenever the club makes a request to commercially use the player’s image and give them licence to do so. It is also normally stipulated in the player contract that the player must get approval from his or her club when making appearances in media and advertisement.

In the J.League, it is also provided that not only the club but also the J.League can ask the players to cooperate regarding the commercial use of players' images without any fees or charges if several players’ images are used together.

Morality clauses

How can morality clauses be drafted, and are they enforceable?

The J.League rule provides that ‘[players] shall not conduct any activity that interferes with J.League’s objective achievement and that is contrary to the public order and morals’, and if the player violates this clause, the player can be sanctioned by the J.League. Player contracts also stipulate that if the player violates any criminal laws or corrupts the morals of his or her club, the club may sanction the player or terminate his or her contract.

The NPB rule provides that the ‘Club, Commissioner or both can impose fines, or suspend the player for a certain period of time due to any player’s misconduct’. However, in contrast to contracts in the J.League, there is generally no morality clause in individual player contracts.

These provisions are executed from time to time, and players have been sanctioned according to these clauses.

Restrictions

Are there any restrictions on sponsorship or marketing in professional sport?

There are no general legal restrictions on sponsorship or marketing in professional sports. However, the tobacco industry and the alcohol industry have developed self-imposed regulations providing that they should not sponsor any event targeted at minors or promote their products in such events. However, most professional sporting events are not considered as such events.

The J.League has its own rules providing that any pachinko company or slot machine company cannot be a J.League or club sponsor.

Brand management

Protecting brands

How can sports organisations protect their brand value?

Brand value is protected by the Trademark Act, the Unfair Competition Prevention Act, the Copyright Act, the Civil Code and other laws. Under the Trademark Act, sports organisations can protect the symbols of the brand (eg, names, logos) if they are registered in advance.

If there is an infringement of rights under such laws, sports organisations can demand an injunction and claim compensation for damage. In some cases, such acts of infringement of rights are subject to criminal charges.

Under the Civil Code, sports organisations can protect their brands against defamation by demanding injunctions against such actions and claiming compensation for damage.

How can individuals protect their brands?

See 'Protecting brands'. Individuals can also protect their brands by the same means.

In addition, a means of protection specific to individuals is the protection of publicity rights. See 'Concept of image rights' and 'Commercialisation and protection'.

Cybersquatting

How can sports brands and individuals prevent cybersquatting?

Cybersquatting is restricted under the Unfair Competition Prevention Act, and claims for damages and injunctions can be made under this Act.

In addition, by filing a claim to the Japan Intellectual Property Arbitration Centre, a request to transfer the domain name or to cancel its registration can be made under the Japan Domain Name Dispute Resolution Policy if the registrant does not have legitimate interests in the domain name, and the domain name is registered or used in bad faith.

Media coverage

How can individuals and organisations protect against adverse media coverage?

Individuals can make a claim for damages and injunctions based on defamation or infringement of privacy rights. Other measures, such as a request for an apology letter to restore honour and reputation, are also available.

However, as a result of freedom of expression, the requirements for an injunction are considered to be strict. It is therefore rare for an injunction to be granted.

Broadcasting

Regulations

Which broadcasting regulations are particularly relevant to professional sports?

There are no specific legal restrictions on the broadcasting of professional sports, including regulations similar to those based on the UK’s universal access rights.

Restriction of illegal broadcasting

What means are available to restrict illegal broadcasting of professional sports events?

In cases of illegal rebroadcasting or unauthorised public viewing, it is possible to seek damages or an injunction for copyright infringement or violation of neighbouring rights. In addition, if illegal broadcasting is done through an internet medium, the right holder can apply for deletion of the content from the medium.

As sports events and games themselves are not copyrightable, in cases where people illegally record sports events, an organisation cannot claim the copyright infringement or a violation of neighbouring rights. However, based on ownership or facility management rights, recording may be prohibited by the ticket agreement or other means, and legal action may be taken as a result of a violation thereof.

Event organisation

Regulation

What are the key regulatory issues for venue hire and event organisation?

Permission based on the Food Sanitation Act is necessary when providing food and drinks at an event. When installing a facility that uses fire, such as a gas stove, it is necessary to comply with the standards of the Fire Service Act. Furthermore, when outdoor advertisements are posted outside the venue, restrictions based on the Outdoor Advertisement Act and the Outdoor Advertisement Ordinance enacted by local government under the Act may also be imposed.

When an event organiser wishes to use a public facility for a long period (eg, when a football club uses a public stadium as its home stadium), the event organiser may be entrusted with management in accordance with the Local Autonomy Act.

Ambush marketing

What protections exist against ambush marketing for events?

Although the enactment of a special law against ambush marketing has been considered for major international sports events that will be held in Japan, there is no such special law at the time of writing (no special laws in relation to ambush marketing have been enacted for the Rugby World Cup 2019 in Japan). However, traditional intellectual property laws, including the Trademark Act, the Unfair Competition Prevention Act and the Copyright Act, offer some protection against ambushers. At the 2002 FIFA World Cup, there were no special laws in place, but ambushers were dealt with using existing legislation.

Ticket sale and resale

Can restrictions be imposed on ticket sale and resale?

Ticket resale of sporting events has become a social issue in Japan.

On 14 June 2019, the Act on Ensuring the Proper Distribution of Entertainment Event Tickets by Prohibiting the Unauthorised Resale of Specified Entertainment Event Tickets (the Anti-scalping Law) took effect. The Anti-scalping Law prohibits (i) unauthorised resale of entertainment (including sports) event tickets and (ii) acquisition of such tickets for the purpose of unauthorised resale (limited to tickets that specify a certain date and time, place and seat (or visitor)), at a price exceeding the sales price set by the promoter.

Even if the new law cannot be applied, event organisers typically prohibit resales by ticket agreements and any resale of such tickets may be considered to be in violation of the contract.

Purchasing tickets with the intention of reselling or reselling tickets at ‘public places’ is prohibited under the Ordinance to Prevent Public Nuisances.

In addition, permission under the Second-hand Articles Dealer Act is necessary when conducting business as a resale dealer, and resales are forbidden without such permission.

In recent years, there have been criminal cases in which fraud charges were applied owing to actions involving resale intent when purchasing tickets.

Immigration

Work permits and visas

What is the process for clubs to obtain work permits or visas for foreign professional athletes, and coaching and administrative staff?

It is desirable for Japanese clubs to apply for and obtain a Certificate of Eligibility (COE) for foreign professional athletes (and coaching and administrative staff), whereby the Minister of Justice certifies conformance with their status of residence in advance of their arrival in Japan. This would allow them to obtain visas and pass through immigration and passport control inspections smoothly.

After the COE is issued, the athlete must apply for a visa in person at the Consulate-General of Japan closest to his or her residence and receive a seal of verification on his or her passport.

The athlete must bring the COE and his or her valid passport with the visa to Japan and undergo standard immigration and passport inspections at the port of entry. When he or she is permitted to enter Japan, the immigration inspector affixes a seal of verification for entrance in his or her passport that specifies his or her status of residence and period of stay. If his or her period of stay is longer than three months, he or she will receive a residence card. The athlete must carry either his or her passport or residence card on his or her person at all times.

The athlete must notify the local city, ward or town office within 14 days of establishing a residence. If a notification of residence is not made within 90 days of entering Japan, it will become a reason to cancel his or her residence status.

What is the position regarding work permits or visas for foreign professional athletes, and coaching and administrative staff, temporarily competing in your jurisdiction?

The athlete’s status of residence is ‘entertainer’ - the same as actors, performers, singers and dancers. His or her period of stay can be three years, one year, six months, three months or 15 days, depending on the term of the player contract, as well as the content and form of the entertainment activities.

Coaches and trainers are viewed as being connected to the athletes and share the same entertainer status.

Residency requirements

What residency requirements must foreign professional athletes, and coaching and administrative staff, satisfy to remain in your jurisdiction long term or permanently?

If foreign professional athletes wish to stay permanently, they must apply to the Ministry of Justice for permission to obtain ‘permanent residence’. The Ministry may grant permission only when it finds that (i) the athlete’s behaviour and conduct are good, (ii) the athlete has sufficient assets or skills to make an independent living, and (iii) the athlete’s permanent residence will be in accordance with the interests of Japan. In principle, athletes must stay in Japan continuously for more than 10 years, but there are exceptions.

Once permanent residence is granted, none of the residence activities or the period of stay are restricted.

Do the family members of foreign professional athletes, and coaching and administrative staff, legally resident in your jurisdiction have the same residency rights?

A spouse or child supported by athletes staying in Japan with ‘entertainer’ residence status will be granted the status of residence as a ‘dependant’ for the same term as the athlete.

Sports unions

Incorporation and regulation

How are professional sporting unions incorporated and regulated?

Generally, professional sporting unions are incorporated by sports and are regulated by the Labour Union Act. The term ‘workers’ in that Act is defined as ‘those persons who live on their wages, salaries, or other equivalent income, regardless of the kind of occupation’, and both professional football players and baseball players are included under this definition. The Japan Professional Baseball Players Association was certified as a union by the Tokyo Labour Relations Commission in 1985, and the Japan Pro-Footballers Association was certified in 2011.

Membership

Can professional sports bodies and clubs restrict union membership?

If professional athletes are recognised as workers under the Labour Union Act, clubs and teams cannot restrict union membership. This is because article 7 of the Labour Union Act prohibits, as an unfair labour practice, an employer (club or team) from ‘[making] it a condition of employment that the worker shall not join or shall withdraw from a labor union’.

Strike action

Are there any restrictions on professional sports unions taking strike action?

See 'Court enforcement'. If a professional athlete is considered to be a worker under the Labour Union Act, since the right of collective action is recognised, there is no legal restriction on the strike as long as its legitimacy is recognised, and legal protections such as civil exemptions, criminal exemptions and protections from prejudicial treatment resulting from going on strike are available.

Legitimacy as used herein is generally said to be judged from four aspects: (i) subject, (ii) object, (iii) procedure and (iv) means. For example, strikes (i) by individuals who cannot become parties to collective bargaining, (ii) not for the purpose of collective bargaining, such as for working conditions, (iii) not conducted through the process of collective bargaining, and (iv) that use violence, are each denied legitimacy.

Employment

Transfers

What is the legal framework for individual transfers? What restrictions can be placed on individuals moving between clubs?

In the J.League, under the JFA's Regulations on contracts, registration and transfer of professional football players, when a player transfers within the J.League before the contract term expires, an agreement on transfer compensation with both the original club and the new club is required. If a player transfers without reaching this agreement, a prohibition on additional player registrations for a certain period may be imposed on the new club. The player may also face suspension for up to six months.

Players can only register during registration windows, which occur twice per year.

In the NPB, the ‘reserve system’ prohibits the transfer of players. As a result, players cannot negotiate contracts, or otherwise participate in practices designed to result in the transfer to other teams, regardless of whether the new team is a domestic team or one based in a foreign country. An exception to this system is the free agent (FA) system. There are domestic FAs and foreign FAs, and each can transfer to a domestic or foreign team by satisfying certain entrance conditions. If a player is transferred under the FA system, the original team may request monetary compensation or compensation in human resources from the new team. There is also a posting system based on the United States-Japanese Player Contract Agreement, agreed to by the MLB and the NPB, which is a system that allows players who do not meet the conditions of foreign FA rights to be transferred to the United States.

On 17 June 2019, the Japan Fair Trade Commission published a public report titled 'Transfer Restricting Rules in the Sports Industry from the Perspective of the Antitrust Act'. This report states that 'there are many transfer restricting rules in the sports industry and whether or not specific rules violate the Antitrust Act shall be determined on a case by case basis', while it also asserts that 'at the very least, rules that restrict transfers or occupational changes indefinitely (for example, rules that forbid transfers entirely, forbid transfers without the current team’s consent indefinitely, forbid participation in any league or competition held by the governing body even if transfers themselves are allowed)' may be considered to be violations of the Antitrust Act.

Ending contractual obligations

Can individuals buy their way out of their contractual obligations to professional sports clubs?

If an individual player becomes a party to a contract with the club, the player is bound by the contract.

Regarding transfers, there is a reserve system in the NPB, and once a contract with a team is concluded, the player cannot, in principle, negotiate a contract with another team. The only exception is the FA system, whereby a player can exercise the FA right and negotiate a contract with another team if certain requirements are met. However, in order to exercise the FA right and transfer to another team, the other team is required to pay certain FA compensation to the original team. (See 'Transfers'.)

There is no such reserve system in the J.League, and players can freely negotiate transfers with other teams from six months prior to the expiration of the contract with the original club. However, players cannot transfer in the middle of the contract term, unless an agreement on penalty is made between the original club and the new club.

Welfare obligations

What are the key athlete welfare obligations for employers?

Since professional athletes are not recognised as workers under the Labour Standards Act, clubs and teams are not obliged to subscribe to workers’ accident insurance, employment insurance, health insurance and other employment-related insurance.

However, a team or club may have certain contractual obligations regarding welfare benefits. For example, in the player contracts for the J.League and professional baseball, obligations to bear medical costs are set forth for teams and clubs for when players suffer injuries or illness. In addition, in such contract for professional baseball, the team is obliged to pay disability compensation if the player suffers a physical impairment, and in the J.League player contract, there are provisions concerning their own welfare programmes, such as ‘relief games’ for the purpose of relieving promising athletes who become unable to play because of injury or illness from economically dire conditions.

Young athletes

Are there restrictions on the employment and transfer of young athletes?

In the J.League, young athletes cannot become professional athletes until they are 16. In addition, a player who is under 20 must obtain the consent of a legal representative to enter into a contract. Furthermore, there is a cap on his or her annual salary. Regarding transfers, there are no original regulations of the J.League, and it follows the applicable FIFA regulations.

Young athletes interested in playing in the NPB cannot become professional athletes until they reach the end of compulsory education (ie, junior high school graduation). In addition, a player who is under the age of 20 must obtain the consent of a legal representative to enter into a contract.

What are the key child protection rules and safeguarding considerations?

In both the J.League and the NPB, the requirement of the consent of a legal representative is intended to ensure that players who are minors are protected from unreasonable contracts.

There are also regulations concerning the lower limit of age-related eligibility, as referenced in 'Young athletes'. These regulations are intended to protect children by preventing them from becoming professional athletes while their minds and bodies are still developing. There are also regulations that limit the amount of control an organi­sation can have over a young athlete. For example, in the J.League, players under the age of 18 can only enter into a contract for a maximum period of three years.

The length of practice and other associated activities are not restricted according to age. Activities in these areas are left to the discretion of the contracting organisations.

Club and country representation

What employment relationship issues arise when athletes represent both club and country?

With regard to compensation in cases where a national representative player becomes injured or sick in an international match, the JFA has established an accident insurance system and an income compensation system. Further, the JFA paid approximately ¥120 million to the players based on the income compensation system for about 15 years, and the clubs also received compensation until the players returned.

Selection and eligibility

How are selection and eligibility disputes dealt with by national bodies?

See 'Court enforcement'.

What are the key taxation issues for foreign athletes competing in your jurisdiction to be aware of?

If a non-resident foreign athlete participating in a competition, such as a golf or tennis tournament or boxing event, receives remuneration for participating or a supplementary prize, such as a car or a watch, from an organiser in Japan, any such compensation is considered as ‘compen­sation for the provision of personal services’ under the Income Tax Law, and is subject to separate tax withholding at the source at a rate of 20.42 per cent.

If a tax treaty exists between Japan and the country where the foreign athlete resides, tax exemptions may be available. Therefore, it is necessary to confirm the relevant tax treaty in force. For example, there is an exemption in the Convention Between Japan and the US for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. Specifically, there is no withholding tax if the total income from his or her activities as an athlete received in the tax year is less than US$10,000. On the other hand, there is no provision for reduction or exemption of tax liability under the tax treaty between Japan and the United Kingdom, and taxes should be withheld by the organiser at a rate of 20.42 per cent.

If the supplementary prize is a product, such as an automobile or a watch, it is valued at 60 per cent of the retail price for tax purposes.

In cases where a sporting event organiser withholds income tax from remuneration, the tax liability will be limited to such withholding, and foreign athletes do not need to file a tax return.

In cases where a non-resident foreign athlete signs a contract with a Japanese club or team and the contract provides for remuneration for the player, the athlete’s remuneration is also considered as ‘compensation for the provision of personal services’ under the Income Tax Law. Therefore, the club or team will withhold income tax, and these foreign athletes do not need to file a final return as explained above.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in your jurisdiction?

Hot topics37 Are there any emerging trends or hot topics in your jurisdiction?UNIVAS

The governing body of university sports in Japan, the Japan Association for University Athletics and Sport (UNIVAS), was established as a general corporation in March 2019. As of July 2019, 220 universities and 34 sports organisations are members of UNIVAS.

The primary income source of UNIVAS is sponsorship. UNIVAS plans to operate with an approach centred on (i) academic fulfilment for student-athletes, (ii) safety and relief for student-athletes, and (iii) development and promotion of university sports. It is preparing various guidelines and help desks for matters including harassment and abuse. UNIVAS has already started online distribution of some of the matches of each university sports and it has been putting great effort into promoting university sports.

Sports Governance Code

In June 2019, the Japan Sports Agency set forth a Governance Code for National Sport Federation members. Each member is required to declare whether or not it is complying with the principles provided in the Governance Code and explain either how the principles are being complied or why the principles are not being complied with (with reasons and in detail) depending on the situation. An organisation’s compliance with the Governance Code, which is evaluated by the Japan Olympic Committee, the Japan Sport Association and the Japan Para-Sport Association, may affect its eligibility as a member. Furthermore, a separate governance code for other general sports organisations, including professional sports organisations, was established in August 2019.

The authors would like to thank Shun Maruyama and Gaku Shikata of TMI Associates for their contributions to this chapter.