Question

You have recently been appointed as contract manager of a new Japanese airline, 新しいサニー航空 (in Japanese : The New Sunny Airline). This company is opening new destinations and is interested to contract with General Sales Agents in a few countries. Those countries include at the moment : France, Bhutan, Afghanistan, Venezuela and Iran.

A) A major question arises : which legal system to regulate the contract to choose ? Where to sue and which may be the applicable law ? Details in length the various possibilities, taking into account all the possible paths, pros and cons, advantages and disadvantages of all systems. Take into account the various countries where you are supposed to operate.

B) A second question : when drafting a series of contracts for the above transaction (NDA, MOU and final agreement), is it advisable for me to choose different jurisdiction options in each document ?

Answer 1

Answer 1:

Which legal system to regulate the contract to choose?

The Governing Laws for the company incorporated in Japan should be the Laws of Japan. Because a Japanese country entering into a contract with any international party it would be easier for the Japanese company to interpret the terms and conditions of the contract based on the law of Japan itself.

Where to sue and the applicable law?

The Jurisdiction to sue in case of any legal action arising anywhere should be in the Courts of Japan and the applicable law should be of Japan itself. Because it will not be a feasible mechanism for the Japanese Airline company if any dispute arises anywhere in the world. Moreover, it will be dealt with in the Jurisdiction of Japan as there are cultural and language differences while dealing with international countries.

Advantages for the New Japanese Airline Company of picking laws and courts of Japan is as follows:

1. Location of headquarter of Airlines is Japan.
2. The transaction will flow from Japan to any other country.
3. An easier approach for the Japanese Company.
4. Statutory Requirement ( Company is incorporated in Japan)
5. Place of Origin

Disadvantages of choosing any other country’s governing law or jurisdiction:

1. The increased burden for the Japanese Airlines Company in case of any litigation in a foreign country.
2. The legislation prohibits other jurisdiction and governing law
3. Hiring lawyers in foreign countries.

Answer 2:

While drafting the agreements related to the above-discussed business transaction, the Jurisdiction of Courts of Japan should be chosen in all the agreements. Because, as explained above it is feasible for the Japanese Company to handle litigation in the courts of their own country than handling litigation in foreign countries and hiring lawyers.

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