The Sports Law Review: Japan
Organisation of sports clubs and sports governing bodies
i Organisational form
In Japan, non-professional sports clubs, professional sports clubs and sports governing bodies are typically organised in legal forms that are appropriate for their respective objectives and functions.
Non-professional sports clubs commonly take one of the following forms (depending on their size and objective):
- unincorporated associations;
- corporations (Kabushiki Kaisha); and
- non-profit corporations established under the special laws:
- general incorporated associations;
- general incorporated foundations;
- public interest incorporated associations;
- public interest incorporated foundations; or
- incorporated non-profit organisations.
A corporation is the usual form adopted by professional clubs that are operating with the objective of making profits from their sports related activities.
For example, the regulations of the Japan Professional Football League (the J. League) requires J1 or J2 division member clubs to be founded as a corporation or as a public interest incorporated association under Japanese law.2 As of the 2020 season, all 40 clubs in J1 and J2 leagues are organised as corporations.
On the other hand, sports governing bodies, including national sport federations such as Japan Football Association and organisations operating professional leagues such as Japan Football League, are commonly organised in the form of non-profit corporations because of their public characteristics.
ii Corporate governance
The Basic Act on Sport maps out the basic ideas pertaining to sports in Japan, and demands that sports organisations (which, under the Act, shall mean organisations whose main purpose is to carry out operations to promote sports) make effort in their operations to secure transparency in, and set a criteria for, its operations, and resolve sports related conflicts promptly and properly.3
In addition, the Japan Sports Agency set forth the Governance Code for National Sport Federation Members in June 2019, and the Governance Code for General Sport Organisations in August 2019.4
In accordance with the Governance Code for National Sport Federation Members, from 2020, each member sports organisation shall be required to explain and disclose the extent of their compliance to the 13 general rules (including the relevant reasons and details) as set forth in the Governance Code, such as the management of conflicts of interest. Member sports organisations shall also be subject to compliance audits by the organising body, which consists of Japan Sports Association, Japanese Olympic Committee, and Japanese Para-Sports Association.
Other general sports organisations are encouraged to adopt the Governance Code for General Sport Organisations and explain and disclose the extent of their compliance to the five general rules, such as fair and proper accounting process.
Apart from the above, subject to their respective characteristics, many National Sport Federations (NF) and sports organisations that operate a national league set forth and publish their internal rules or regulations to secure proper operation. For example, the Japan Football Association (the JFA) governs their organisation under their published rules and the J. League has published regulations regarding the governance of their own and member clubs. Among others, the J. League has set forth a rule regarding the issuance of the J. League club licence5, which is required for the participation in professional football leagues operated by the J. League.
iii Corporate liability
As described in Section I.i above, most sports organisations in Japan are formed as corporations or non-profit corporations, and the directors of these forms (such as torishimariyaku of corporations or riji of non-profit corporations) are generally subject to the same duties and liabilities as directors of typical corporations or non-profit corporations, such as the duty of care and duty of loyalty and potential liabilities to the corporation or a third party for damages.67
The dispute resolution system
i Access to courts
The forum for sports related disputes arising between a governing body and participants (e.g., clubs or athletes) or between two or more participants in that sport, is typically specified by the rules set by the relevant sport's governing body. Under some of the rules that govern certain sports in Japan, clubs or athletes are not allowed to lodge an appeal against a decision made by the governing body before an external judicial body outside the governing body. For example, the regulations of the J. League provides that the chairman's decision is final and binding against all member clubs and individuals that belong to the clubs, and that clubs and individuals cannot appeal to a court or any other third party.8
Therefore, clubs or athletes will typically have access to three kinds of dispute resolution bodies in Japan to resolve sports related disputes (excluding disputes that arises outside the rules of sports, such as commercial disputes between club and its sponsor), which are:
- national courts;
- the Japan Sports Arbitration Agency (JSAA); and
- dispute resolution bodies established by the relevant sport's governing organisations.
For each dispute resolution avenue, there are certain requirements or conditions to be fulfilled to utilise them. For example, an arbitration agreement between parties would prevent any party from bringing a case before national courts. Further, to utilise the procedure in national courts, a dispute must be recognised as a 'legal dispute' on which the courts should adjudicate.
ii Sports arbitration
The JSAA is a specialised dispute resolution body that administers arbitration and mediation for sports related disputes in Japan. The Sports Arbitration Rules governs the arbitration procedure in the JSAA in respect of appeals by participants (such as athletes, managers, coaches, doctors and clubs) against decisions by sports governing bodies; provided, however, disputes relating to doping are governed by a separate regulation under the JSAA, namely the Sports Arbitration Rules for Doping Disputes. The most common disputes that are appealed under the JSAA are disputes over decisions by NF to not select an athlete for sports competition and disputes over sanctions rendered to athletes or clubs by sports governing organisation.
The Sports Arbitration Rules provides that an arbitration agreement must be executed in writing or in any other form that clearly indicates the intent of both parties.9 With regard to an arbitration agreement, as set forth in the Governance Code for National Sport Federation Members, many NFs and other sports governing bodies in Japan (e.g., most of the member organisations of JOC) have adopted provisions in their rules providing that any appeals against their decision shall be resolved through arbitration under the JSAA, and such provision shall be recognised as an arbitration agreement between the particular sports governing body and the participants thereof.
The Sports Arbitration Rules also provides that the sports arbitration panels may, at the request of a claimant, order temporary measures if the panel finds it is particularly necessary for the purpose of the arbitration.10
Disciplinary sanctions decided by sports governing bodies, such as fines or suspensions, will be enforced by themselves (typically by their disciplinary committee) in accordance with their rules.
In court cases, a party is able to use enforcement power that are available to litigants when enforcing court orders.
An arbitral award shall have the same effect as a final and binding judgment by a court, and enforcement requires an execution order by a court.11
Organisation of sports events
i Relationship between organiser and spectator
The legal relationship between an organiser and a spectator is primarily defined by the ticket agreement between the parties. Although the contents of the ticket agreement will vary depending on the particular sporting event, event organisers or ticketing agencies, the ticket agreement typically contains the following terms and conditions:
- prohibition of ticket resale without prior consent of an organiser;
- prohibition of bringing dangerous items into a venue;
- prohibition of dangerous behaviour (such as barging into, or throwing something to, a pitch field) in or around a venue; and
- disclaimers or limitation of liability provisions in respect of damages suffered by ticket holders or other third parties.
The Nippon Professional Baseball Organization (NPB) prepares the Terms and Conditions for Watching Games12 which applies to an organiser and a spectator for professional baseball games.
In addition to the ticket agreement, the relevant legislation, such as the Civil Code,13 the Consumer Contract Act14 and the Anti-scalping Law (as defined in Section VIII, iv), will govern the legal relationship between the parties. For regulations regarding ticket resales, please see Section VIII, iv.
ii Relationship between organiser and athletes or clubs
For major football competitions in Japan, the governing body (i.e., the JFA) will act as an event organiser. The JFA forms a pyramid structure of football organisations in Japan and stipulates the rules and regulations that clubs and players in Japan shall follow. Pursuant to the rules of the JFA, for professional football leagues in Japan (i.e., the J. League), the event organiser is a separate organisation from the governing body and the J. League sets its own rules and regulations that govern itself and member clubs and athletes. For example, member clubs must maintain their J. League club licence to participate in the J. League.
Based on these rules and regulations by the JFA and the J. League, clubs and players are required to obey the stipulated regulations of the organiser and contract with the players on a uniform set of terms to govern the rights and obligations between the organiser and athletes or clubs in respect of, among others, the use of image rights of a player.
iii Liability of the organiser
In Section III, iii, iv and v, we describe the general liability of a relevant party with regard to sports related accidents, which shall mean an accidental injury or death of a person that occurs in the course of playing sports.
An event organiser may be liable to its contractual counterparty (e.g., spectator, club or athlete) for damages occurred by a breach of its contractual obligation (such as duty of care, safety considerations obligation).
Further, an event organiser may be liable not only to its contractual counterpart but also to a third party for damages arising from an intentional act or negligence under the general rule of tort law of the Civil Code. When an event organiser is a facility manager as well, it may also be liable, as a possessor of the facility, for damages to others arising from the defect in the installation or preservation of facility on land.
The criminal liability of an event organiser with regard to sports related accidents will generally comprise of criminal negligence, such as the offence of causing injury through negligence; offence of causing death through negligence; and offence of causing death or injury through negligence in the pursuit of social activities under the Penal Code.15
iv Liability of the athletes
Athletes who accidentally cause injury or death to another person (such as another athlete or spectator) while playing sports, may be subject to criminal liability under the Penal Code (typically the offence of criminal negligence, as described in Section III, iii). Although this is rare, where the prosecution is able to prove an intention to commit the criminal act, the accused athlete may be subject to criminal liability for crimes involving intention (such as assault, injury or injury causing death) under the Penal Code.16
Athletes may also be subject to general civil liability to compensate others for damages arising from their negligence (or intentional act) under the general rule of tort law of the Civil Code.
However, it is commonly accepted by court cases that playing sports will, to some extent, result in injury and the rules of each sport are generally sufficiently sophisticated to address the danger inherent in sports. Accordingly, in most cases, a person who participates in a sports activity will be recognised to have accepted a certain degree of danger that is inherent in the sport. Therefore, as long as a player conducts himself or herself within the socially reasonable limits according to the playing rules of the sport, a player is unlikely to be held liable for his or her actions in the course of playing the sport; provided, however, that this is subject to a case by case analysis, taking into consideration several factors (such as the purpose of playing the sport, the playing level of players, the degree of control over danger, and the danger of the sport itself).
v Liability of the spectators
Depending on the particular circumstances, spectators, who do not participate in the sport, may be subject to general criminal liability under the Penal Code (such as the offence of assault, injury or damage to property) or the Anti-Nuisance Ordinance set by each prefectural government. Spectators may also be subject to general civil liability to compensate others for damages arising from their intentional act or negligence under the general rule of tort law of the Civil Code.
Further, spectators that violate their contractual obligations under the ticket agreement may be liable to an event organiser for damages arising from by its violation. Please see Section III, i for the matters that are commonly prohibited under the ticketing terms and condition.
vi Riot prevention
There are no sport-specific national laws in Japan to prevent riots.
In a professional football league, for example, the regulations of the J. League provide that a home club (which operates an official home game) shall be obliged to secure the safety of everyone in the venue.17 Accordingly, there are certain requirements to be fulfilled in the issuance of the J. League club licence, such as ensuring that the stadium has a police and firefighting command room, appointing a security officer of the club, and engaging a security guard for home games.18
Commercialisation of sports events
i Types of and ownership in rights
The key sports-related rights that can be exploited in Japan are broadcasting, merchandising, sponsorship and ticketing rights.
Japanese law does not provide for any specific laws that govern the broadcasting rights of a sports event and broadcasting rights are generally set out in the facility management rights of the owner of the venue at which the sports event is held. Therefore, a party who has the facility management rights of the venue will primarily have the broadcasting right. However, to increase the profits of a sports competition or league as a whole, some sports governing bodies or event organisers will implement rules in their regulations that provide that the broadcasting rights of all games or matches in that competition or league shall be owned only by the governing body or organiser. For example, the J. League owns the broadcasting rights of all the official games under the regulations of the J. League and grants licences to other broadcasting companies to broadcast the official games.
Sponsorship rights generally encompasses a wide variety of different rights depending on the content of sponsorship agreements.
Other important rights relating to merchandising, such as image rights of individuals and copyrights, are derived from Japanese case law and the relevant intellectual property laws.
ii Rights protection
In general, the Trademark Act,19 the Copyright Act,20 the Unfair Competition Prevention Act21 and other intellectual property laws set out regulations for the protection and enforcement of intellectual property rights, such as trademarks and copyrights, and image rights and publicity rights of individuals are recognised and protected by case law.
The following is the outline of protection and enforcement mechanism of the above-mentioned rights in Japan.
An owner of a trademark can apply to the Japan Patent Office to register its trademark (such as a logo, character image, or other brand indicators) as well as the designated goods or services for which the trademark will be used so as to acquire ownership in the trademark.
A trademark right is an exclusive right given to a registered trademark used for goods or services, and its effect extends not only to the same trademark but also to similar trademarks. If an identical or similar trademark as the registered trademark is used without permission in respect of goods and services that are identical or similar to the designated goods or services, a trademark owner can claim against the unauthorised user for, among others, the suspension of use, disposal of goods, and compensation for damages.22
Copyright is the right to protect a 'work', which shall mean creatively produced expressions of thoughts or sentiments that falls within the literary, academic, artistic, or musical domain. Copyright arises automatically upon the creation of a work and subsists for basically 70 years after the death of the author.23 In principle, the unauthorised use of a person's copyright work (such as copying of work or manufacturing of counterfeit products) constitutes an infringement of copyright. An author of the copyright work can bring a claim against an infringement of copyright for, among others, the suspension of use and compensation for damages.24
Image rights and publicity rights
In Japan, an individual's image is protected by image rights and publicity rights, both of which are recognised by case law.
According to the Supreme Court of Japan,25 'image right' is derived from a personal right and each individual has the right to not have his or her image used or published without his or her authorisation, and the 'publicity right', which is the right to exclusively utilise an image commercially is based on the commercial value of the image itself and is also derived from a personal right.
According to the Supreme Court of Japan,26 where the unauthorised use of an images is carried out mainly for the purpose of exploiting the image to attract consumers, the use of the image constitutes an infringement of publicity rights. In such case, a right holder can claim for the suspension of the use of the image and compensation for damages.
iii Contractual provisions for exploitation of rights
The form of the contractual provisions will depend on the negotiating position of the parties. Many contracts will have provisions that are typically found in a commercial contract.
However, as some governing bodies or event organisers have stipulated rules on broadcasting, merchandising and ticketing rights, a future contractual party should review the regulations relating to the sporting event and confirm whether, and to what extent, the counterparty of the transaction has the authority to grant such rights.
Professional sports and labour law
i Mandatory provisions
In Japan, whether an individual is recognised as a 'worker' shall be judged on a case by case basis, taking in consideration various elements regarding working conditions and the purpose of the relevant labour laws such as the Labour Standards Act27 and the Labour Union Act.28
An individual who falls under the definition of a 'worker' under the Labour Standards Act is required to be provided with mandatory minimum standards of employment conditions. In comparison with other jurisdictions, workers in Japan are afforded strong protection under the Labour Standards Act. However, while this may be controversial depending on the underlying facts, a professional athlete is in some cases not recognised as a worker under the Labour Standards Act.
Provided, however, professional athletes may form a labour union of their own in order to increase their bargaining power with clubs or leagues, as they would usually be recognised as workers under the Labour Union Act. For example, the Japan Pro-Footballers Association and the Japan Professional Baseball Players Association are recognised as a labour union by the Bureau of Labour Relations Commission, Tokyo Metropolitan Government.
ii Free movement of athletes
There are many restrictions on the transfer of players in Japan. For example, in the J. League, the general principle is that players can be transferred only during the two terms of the 'registration window' each year (i.e., during a 12-week term in summer and a four-week term in winter as decided by the JFA). A professional football player can freely conclude a contract with another professional club only if his contract with the current club has expired or is due to expire within six months.29
As another example, in the NPB, a 'reserved player' whose contract will be renewed by his existing club for another term is basically precluded from negotiating with any other club and precluded from participating in other baseball related activities that may result in his transfer to another club, with the exception of the free agent system.30
Further, limitations on the number of foreign athletes are commonly included in the rules of each sports league and competition. For example, the J. League has imposed limitations on the number of foreign players although there has been a gradual easing of these limitations.
iii Application of employment rules of sports governing bodies
As described in Section V, i above, in practice, it is not completely clear whether a professional athlete is recognised as worker under the Labour Standards Act in Japan. In many professional team sports in Japan such as professional football or professional baseball, the player's contract is usually based on a standard form contract.
In the context of a labour union of professional athletes, the Labour Union Act would apply to relevant clubs or leagues.
Sports and antitrust law
Recently, the Japan Fair Trade Commission conducted surveys on the practices of the rules of transfer restriction in the sports industry from the perspective of the Japanese Antimonopoly Act and recognised that there are many transfer restriction rules (i.e., the rules that impose certain restrictions to, or conditions on, the transfer or occupational change of athletes between clubs) in the sports industry, some of which may not have sufficiently taken into consideration the legitimacy and necessity in light of fair and free competition among teams for acquiring athletes.
Based on the survey above, in June 2019, the Japan Fair Trade Commission published a guideline regarding the rules of transfer restriction in the sports industry from the perspective of the Antimonopoly Act31 to promote a voluntary review, and potential revision, of the transfer restriction rules by the sports governing organisations. Under the guideline above:
- For teams that conduct economic activities through sports and compete with each other as business operators under the Antimonopoly Act, it is, in principle, a violation of the Antimonopoly Act for competitors to jointly agree to the restriction on the transfer of human resources. The rules of transfer restriction could prevent or restrict competition in the acquisition of players, which could prevent or restrict competition in the sport business by utilising the players, and could hinder the entry of new teams that cannot secure the necessary players.
- On the other hand, the rules of transfer restriction in the sports industry could have pro-competitive aspects to promote the training of players in the expectation of obtaining training compensations from transfers and to maintain and enhance the attraction of sports competitions itself by balancing team forces.
- Therefore, the legitimacy and necessity of rules of transfer restriction in the sports industry in light of the Antimonopoly Act is to be judged on a case by case basis by balancing the pro-competitive aspects against the anticompetitive aspects above, according to the particular circumstances and actual conditions thereof. The Japan Fair Trade Commission has set out the relevant factors and considerations to be taken into consideration.
- The Japan Fair Trade Commission, at the very least, also recognised the lack of legitimacy and necessity in respect of rules that restrict transfers or occupational changes indefinitely i.e., rules that prohibit transfers entirely; prohibit transfers indefinitely unless the current team approves such transfers; or prohibit the participation in sports leagues or competitions (held by a sports governing organisation) indefinitely, even though the transfer itself is possible.
Sports and taxation
The following is an outline of the tax obligations of non-resident athletes or foreign clubs in Japan.
i Non-resident athletes
If an athlete who does not have a permanent establishment in Japan, has participated in a sporting event in Japan, and provided services and received remuneration or prize money from an event organiser in Japan for his or her services in accordance with a contract between them, any such remuneration or prize money shall be regarded as consideration for the provision of personal services and shall, in principle, be subject to withholding tax at a rate of 20.42 per cent under the Japanese tax laws.32 Where there is an applicable tax treaty (such as the Convention between Japan and the United States),33 a partial exemption of tax may be available.
ii Foreign clubs
If a foreign club, has participated in a sporting event in Japan, and provided services and received remuneration or prize money from an event organiser in Japan for its services in accordance with a contract between them, any such remuneration or prize money shall be regarded as consideration for the provision of personal services and shall, in principle, be subject to withholding tax at a rate of 20.42 per cent under the Japanese tax laws.34 Further, if a foreign club has a permanent establishment in Japan under the Japanese tax laws and tax treaties, the foreign club shall be required to file a corporate tax return to the relevant tax authority in Japan.
Specific sports issues
The national anti-doping organisation in Japan is the Japan Anti-Doping Agency (JADA), which is a public interest incorporated foundation. The JADA conducts doping inspection in accordance with the Japan Anti-Doping Code,35 which was prepared based on the World Anti-Doping Code.
Japanese law does not provide for any anti-doping national laws to criminalise doping. Doping, per se, is not a criminal offence in Japan. However, some of the substances on the Prohibited List issued by the World Anti-Doping Agency,36 such as stimulant drugs, cocaine, morphine, cannabis or narcotic, are prohibited and criminalised in Japan under a series of special acts that control addictive drugs.
As a recent update, in October 2018, the Act on Promotion of Doping Prevention Activities in Sports37 became effective. Although there were discussions (in the course of enacting the Act) on whether to implement criminal penalties against athletes guilty of doping, criminal penalties were ultimately not included in the Act.
In general, gambling is prohibited in Japan under the Penal Code (Article 185 to 187), with the exception of betting a thing for momentary amusement or betting that is permitted under the special laws.38 The following form of gambling activities relating to sports are permitted, although licences (which are granted only to local governments or government-related entities) are required to operate them:
- betting on the following four public sports: horse racing, bicycle racing, powerboat racing and motor cycle racing; and
- sports promotional lotteries, which are run on professional football games.
Article 185 of the Penal Code prescribes that a person who gambles shall be punished by a fine of not more than ¥500,000 or a petty fine, unless the person placed a bet for momentary amusement. Further, provision 1 of Article 186 of the Penal Code provides that a person who habitually gambles shall be punished by imprisonment with work for not more than three years. Provision 2 of Article 186 of the Penal Code also provides that a person who, for the purpose of profit, runs a place for gambling or organises a group of habitual gamblers shall be punished by imprisonment with work for not less than three years but not more than five years.
As described in Section VIII, ii above, betting on sports in Japan is generally illegal, with the exception of betting on the above-mentioned four public sports and professional football games, which are regulated by special laws and administered by local governments or government-related entities. Therefore, match fixing in these four public sports or professional football games is criminalised under the respective special laws. Further, even in other sports, a person who is involved in match fixing could be accused of being complicit in the offence of gambling or fraud under the Penal Code depending on the surrounding facts.
In addition to the above criminal offences, a person (e.g., athlete, coach, manager, referee or officer) who is involved in match fixing (whether it is involved in a public sport or professional football or other sports) may be subject to sanctions under the internal rules of leagues or sports governing organisations.
iv Grey market sales
As described in Section III, i, the ticketing terms and conditions usually provide that a ticket purchase is for private use only and prohibits a ticket resale without the prior consent of the event organiser.
Further, there are several regulatory laws regarding ticket resales. In addition to the Anti-Nuisance Ordinance set by each prefectural government, the Prices Control Ordinance39 and the Second-hand Articles Dealer Act, in June 2019, the Act on Ensuring the Proper Distribution of Show and Event Tickets by Prohibiting the Unauthorized Resale of Specified Show and Event Tickets (the Anti-scalping Law) became effective. Under the Anti-scalping Law, the 'unauthorised resale' of tickets for certain entertainment events (including sports events) and the acquisition of such tickets for the purpose of 'unauthorised resale' is prohibited.40 The 'unauthorised resale' shall mean a transfer for value of such tickets at a price that exceeds an authorised seller's sale price that is conducted on a regular basis, without the prior consent of the event organiser.
The year in review
In recent years, government authorities have proactively set forth national laws, guideline or governmental opinion regarding sports in Japan, including the following:
- the Act on Promotion of Doping Prevention Activities in Sports (effective from October 2018);
- the Act on Ensuring the Proper Distribution of Show and Event Tickets by Prohibiting the Unauthorized Resale of Specified Show and Event Tickets (effective from June 2019);
- the Governance Code for National Sport Federations and the Governance Code for General Sport Organisations (published in June and August 2019); and
- the guideline regarding the rules of transfer restriction in the sports industry from the perspective of the Antimonopoly Act by the Japan Fair Trade Commission (published in June 2019).
There may be changes in practices and operations of sports organisations based on these new laws or rules over the coming years.
Outlook and conclusions
On 24 March 2020, the Tokyo 2020 Organising Committee of the Olympic and Paralympic Games announced the postponement of the 32nd Olympic Games and Tokyo 2020 Paralympic Games (the Tokyo Olympics) owing to the covid-19 pandemic. As of July 2020, the Tokyo Olympics is expected to be held in July and August 2021 with the necessary infectious disease measures implemented.
On 3 June 2020, the JFA announced that the new professional women's football league named WE League (i.e., Women Empowerment League) will officially kick off in autumn 2021. The WE League will be positioned as the top women's football league in Japan, (i.e., the upper division of the current women's football league named Nadeshiko League) and will consist of six to 10 professional clubs. The WE League is the first ever women's professional league in Japan.
Finally, interests in e-sports are steadily and rapidly growing in Japan in recent years. For example, in 2019, the national prefectural e-sports championship 2019 IBARAKI was included as a programme in the National Athletics Competition (which is one of the Japan's biggest sports competitions) for the first time.
1 Shigeru Nakayama is a partner and Masakatsu Nagashima is a senior associate at TMI Associates.
5 For example, a regulation regarding prize money is progressing, as stated in announcements by the Consumer Affairs Agency on 5 August and 3 September of 2019. See https://www.caa.go.jp/law/nal/pdf/info_nal_190805_0001.pdf and https://www.caa.go.jp/law/nal/pdf/info_nal_190903_0002.pdf.
7 League of Legends is a multiplayer online battle arena video game developed and published by Riot Games for PC. This is one of the most popular e-sports titles in the world. See https://na.leagueoflegends.com/en/.
8 Article 19(1)(ii) of the Immigration Act.
9 Article 19(1)(i) and Article 19-3(i)(d) of the Regulation for Enforcement of the Immigration Control and Refugee Recognition Act.
10 See the latest information about visa exemption: https://www.mofa.go.jp/j_info/visit/visa/short/novisa.html.