So What Is A Gangster Clause In the Land of the Rising Sun?

| General

When a legal professional is reviewing the documentation for a client to enter into a contract they may be greeted by a gangster clause. But what is a gangster clause and how can legal professionals deal with them should they have a close encounter with the gangster clause kind? 

What are Gangster Clauses?

These clauses are found predominantly where there are contractual arrangements involving clients emanating from Japan. Now it would be all too easy for a legal professional to see the clause in a contract and descend into a blind panic accompanied by a cold sweat. But worry ye not. These clauses are known as ‘anti-social forces clauses’ or ‘gangster clauses’. These contractual provisions are fairly standard fare in contracts of this kind, particularly with Japanese clients.  

Who Are These Gangsters?

Many lay persons who may be unfamiliar with such clauses may not understand the reasoning behind such clauses and to whom these gangster clauses refer. To answer this question it is useful to consult the definition attributed to such persons by the Japanese governing authorities. This body defines such persons as categories of or singular persons whose actions inflict harm to target the economic interests of those in society. It has been observed that such persons aim to inflict this harm via the use of brutal measures, sharp practices, and tactics involving oppression.     

What Challenges Have Legal Professionals Faced With Gangster Clauses?

There are several major issues confronting a legal professional when faced with such clauses. They soon discover that clients emanating from Japan always insist that these so-called gangster clauses are to be incorporated in all contractual arrangements and related documentation.  For context, those persons emanating from the Japanese jurisdiction in most cases dig their heels in, refuse to negotiate, and will not consider diverging from inserting such a contractual provision into their agreements. 

Are Gangster Clauses This Popular in Japan?

Surprisingly these clauses are more popular than the reader would potentially think. Even the most seemingly innocuous gym membership Agreement to contracts related to vehemently complicated and decidedly troublesome real estate transactions.     

How Can Legal Professionals Deal With Such Clauses?

Legal professionals need to be aware of what they are dealing with when it comes to clauses of this nature. They need to be on their mettle and take the following steps about contractual arrangements of this nature: 

  • have a keen eye to recognize if the client emanates from another jurisdiction such as Japan

  • anticipate that such clauses may come out of the woodwork

  • be prepared to check if there is a jurisdiction clause in place and examine it

  • be alive to the potential for such a contract clause insisting on the laws of another jurisdiction such as Japan

  • encouraging the client to take a pragmatic approach by advising such persons to push back and insist on the law of England and Wales governing the contractual provisions and

  • if this fails and in all other cases put forward the strong recommendation that clients approach legal advisers in such jurisdictions for advice on such clauses as they will have a better insight into the particular clause and what can be done about it. It must be remembered that legal professionals operating in the jurisdiction of England and Wales are not qualified to advise on Japanese law and so this would be an extremely useful piece of advice and well worth the extra investment in terms of legal costs.  

Legal professionals electing to take this strategy will have a better chance of success than those who do not. 

ASSESSING FIRMS

#Allen&Overy #CliffordChance #HogalLovellsInternational #Latham&Watkins #LinklatersLLP #NortonRoseFulbright #Slaughter&May #AddleshawGoddard #Ashurst #BakerMcKenzie #Bird&BirdLLP #CMS #DeloitteLegal #DLA Piper #CMS

SOURCES USED WHEN WRITING THIS ARTICLE

[SOURCE 1] Verma, Vijita – The secret to Japanese Contract Negotiation: Patience, Pragmatism, and Polite Manners – 01 June 2018 – Association of Corporate Counsel - The Secret to Japanese Contract Negotiation: Patience, Pragmatism, and Polite Manners | Association of Corporate Counsel (ACC)

[SOURCE 2] Statement of Pledge regarding the Prevention of Antisocial Forces – Thompson Reuters - Statement of Pledge regarding the Prevention of Antisocial Forces - English (thomsonreuters.com)

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