Legal Issues for Autonomous Taxis: Drawing the Lines Between the Operator, Accident Liability and Remote Monitoring

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

A car with no one in the driver's seat goes to pick up a passenger and takes them to their destination. Behind the scenes, a manufacturer supplies the autonomous driving system, a taxi company undertakes the transportation, a remote monitoring company watches over many vehicles, and a ride-hailing app takes the bookings. Autonomous taxis are a business in which the person disappears from the driver's seat while the number of companies involved in operations increases considerably.

To think about liability when an accident occurs here, you must make clear who runs the passenger transportation business and who manages day-to-day operations. If a taxi company holds the license in name only and entrusts actual dispatching, operational decisions and remote monitoring entirely to other companies, the business operator envisaged by the Road Transportation Act and the actual operator drift apart. Only once you have determined who the operator is can you sort out the allocation of accident liability, the handling of personal information and the contractual relationships among the companies.

Japan's specified autonomous operation system, equivalent to Level 4, started in April 2023. In May 2025, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) published the Interim Summary of the Autonomous Driving Working Group (Japanese), which, aiming at the realization of autonomous taxis then expected around 2026, set out issues for consideration such as operational management, the role of ride-hailing platforms, certification standards, accident cause investigation and compensation for victims.

Running an autonomous vehicle on public roads and carrying passengers for payment are governed by different laws. Even if the vehicle and system meet the safety standards under the Road Transport Vehicle Act and you have obtained a specified autonomous operation permit under the Road Traffic Act, a business license and an operational management system under the Road Transportation Act are indispensable to operate as a taxi.

When moving from demonstration trials to paid passenger transportation, check, in addition to the business license, the procedures relating to fares and terms and conditions of carriage. Handling of refusals to carry passengers, retention of operation records and complaint handling are also built into operations. Where you receive funds from a local government, confirm whether they are subsidies or consideration for transportation; do not conclude across the board that no license is needed simply because no fare is collected from users. Review the contracts and safety management framework from the trial phase to match actual commercial operations.

Passenger Transportation Business License and the Business Operator

Article 3 of the Road Transportation Act (Japanese) defines a business that carries people by chartering, under a single contract, a vehicle with less than a certain passenger capacity as a "general passenger vehicle transportation business." Under Article 4 of the same Act, operating this business requires a license from the Minister of Land, Infrastructure, Transport and Tourism. The fact that the vehicle drives autonomously does not exempt the business from the license requirement.

"Operating" a business in the legal sense is not a word that refers only to owning vehicles. It is judged by the reality of who enters into the transportation contract with passengers, sets fares, puts vehicles into service and gives instructions regarding safety. Even when a ride-hailing app takes bookings, its legal position differs depending on whether it is merely relaying orders on behalf of the taxi company or whether the app company itself is the counterparty to the transportation contract.

When a taxi company outsources operational management, determine how far it can delegate and what responsibilities remain with it. MLIT's interim summary also discussed developing rules on outsourcing and allocation of responsibility, with in mind business models in which autonomous driving service companies without a license take on operational management. Where the arrangement constitutes outsourcing of management under Article 35 of the Road Transportation Act, a permit under that Article is required. The notice on outsourcing of management (Japanese) published by MLIT provides, for the duties of specified autonomous operation safety personnel and operation managers, that judgments and responses be determined in advance in plans, contracts and operating procedures. Outsourcing that follows the proper procedures is clearly distinguished from nominal outsourcing akin to lending one's name. The notice indicates a policy of leaving contractual responsibility toward passengers with the outsourcing party, and of providing in the contract that where both companies bear tort liability to accident victims, they bear that liability jointly.

On the ride-hailing app screens that users see, you also need to avoid presentations where only the app's name stands out and it is unclear who the actual operator is. At the booking stage, design the screen so that users can see at a glance who they are entering into the transportation contract with, the rules on fares and boarding and alighting, the fact that the vehicle is autonomous, and the emergency contact.

Specified Autonomous Operation and Tasks Handled Remotely

Article 75-12 of the Road Traffic Act (Japanese) requires anyone intending to conduct specified autonomous operation to obtain a permit from the prefectural public safety commission with jurisdiction over the place of operation. In the application, you submit the vehicles to be used, the routes and hours of operation, the plan for assigning specified autonomous operation supervisors and so on, and conform them to the standards.

Specified autonomous operation refers to operation in which, under certain driving environment conditions, the automated operation device performs all of the driving and no driver is on board. That said, human involvement does not disappear completely. Under the Road Traffic Act, not only a remote monitoring method in which a supervisor is stationed at an equipped management location, but also a method in which the supervisor rides in the vehicle, is permitted. The supervisor conducting remote monitoring watches over the operating status of the system and, upon determining that it is not working properly, immediately takes measures to terminate autonomous operation. Responding to instructions from police officers after operation is terminated, reporting accidents and dispatching personnel to the scene are also the supervisor's role.

In passenger transportation, tasks other than driving that drivers used to perform remain, such as dealing with falls or sudden illness in the vehicle, checking for lost property, safety checks around the doors and evacuation guidance. The 2023 legislation established the system of specified autonomous operation safety personnel and provided that, where duties are performed remotely, cameras and sensors capable of capturing conditions inside and outside the vehicle be installed.

In a "1-to-N" operation where one monitor watches over multiple vehicles, put in place a system that can respond not only to on-screen monitoring in normal times but also to troubles occurring simultaneously in two or more vehicles. For communication outages, sensor malfunctions, passengers pressing the emergency stop button and dispatching field staff, translate into operating procedures who makes which decisions and acts at which stage, so that the statutory obligation to act "immediately" can be fulfilled. Relaxing the standard of a statutory obligation on grounds such as internal target times is not permitted. Even when remote monitoring is outsourced, separately confirm the statutory obligations imposed on the transportation operator and the person conducting specified autonomous operation.

Overlapping Liabilities in an Accident

When an accident causing personal injury occurs, first check Article 3 of the Act on Securing Compensation for Automobile Accidents (Japanese). This Article provides that a person who puts a vehicle into operation for their own benefit is, as a rule, liable for damages when that operation harms another person's life or body. To be exempted, the person must prove all three of the following: that they and the driver were not negligent, that the victim or a third party other than the driver acted intentionally or negligently, and that the vehicle had no structural defect or functional impairment.

The "operator for own benefit" who bears liability here is not limited to the person named on the vehicle inspection certificate, but is determined by the reality of who controls the operation and benefits from it. With autonomous taxis, because the vehicle owner, leasing company, taxi operator, remote monitoring company and others are separate, the question becomes who substantively controls the operation and benefits from it. Even if the parties agree in their contracts that "Company A bears all liability," this does not automatically bind the determination of legal liability for damages to victims.

Where defects in a vehicle or sensors cause harm to life, body or property, liability of manufacturers and others under Article 3 of the Product Liability Act (Japanese) also comes into view. However, damage confined to the vehicle itself falls outside the scope of that Article, and you also confirm the causal link between the defect and the damage and the exemptions under Article 4 of the same Act. The products covered by the Product Liability Act are "movables that have been manufactured or processed." Where a malfunction in software built into a vehicle impairs the safety of the vehicle as a whole, there is room for it to be treated as a defect in a product. On the other hand, software running in the cloud cannot itself be immediately treated as a movable. The liability of system development companies and operating companies is examined, including under the frameworks of default and tort under the Civil Code.

To identify where liability lies after an accident, it is essential to preserve vehicle driving logs, software versions, surveillance camera footage, and remote operation and maintenance histories aligned on the same timeline. If after an accident each company produces logs in different formats and you cannot reconstruct what was happening at the same moment, neither cause investigation nor recourse claims among the companies will make progress.

In-Vehicle Video and Audio, and Location Data

Remote monitoring systems collect road conditions and in-vehicle video and audio. The vehicle's current location and boarding and alighting records are also subject to review. Where a specific individual can be identified from facial images, voice or travel histories linked to booking information, this constitutes personal information under the Act on the Protection of Personal Information (APPI).

Define the purposes of use of data separately for items such as safe operation, emergency response, accident cause investigation and service improvement. Avoid accumulating long-term recordings or analyzing passenger behavior on the basis only of a vague expression like "to improve our services." Real-time monitoring to protect operational safety and secondary use for AI training or marketing are managed separately in both purpose and retention period.

Inside the vehicle, not only the person who made the booking but also fellow passengers, passersby who happen to be captured and third parties who come to help are recorded. Rather than assuming only the booker who agreed to the app's terms, it is important to combine stickers inside the vehicle, notices at the time of booking and explanations on the website. Where microphones record in-vehicle audio constantly, the privacy impact is even greater than with video, so limit the scope of recording and set permissions so that recordings cannot be played back from the management screen except in emergencies.

When sending data to an external monitoring center or overseas cloud servers, agree on who can access it, in which region it is stored and whether it will be securely deleted when the contract ends. Supervision when outsourcing the handling of personal data, and confirmation under Article 28 of the APPI when providing data to a third party in a foreign country, are also essential. Except in cases where the cloud provider can be evaluated as not handling the data itself, the application of the law is not determined solely by the fact that the storage location is overseas. By separating data that should be retained for a long period for accident investigation from data to be promptly deleted once daily operations end, you can reasonably achieve both preservation of evidence in case of emergency and protection of personal information.

Fixing Roles Ahead of Commercial Operation

When structuring an autonomous taxi business, go beyond the technical check of whether the vehicles work properly and allocate ordinary operational duties and emergency decision-making authority to each company.

Role	Duties in normal times	Matters decided in abnormal situations
Passenger transportation operator	Transportation contracts, fares, operational management, passenger handling	Suspension of operation, alternative transportation, handling of victims
Person conducting specified autonomous operation	Operation in line with the permit plan, assignment of supervisors	Dealing with police, stopping operation, on-site measures
Remote monitoring and safety duties	Monitoring inside and outside the vehicle, communication, records	Priorities for simultaneous abnormalities, on-site dispatch
Vehicle and system provider	Vehicles, software, updates, maintenance	Cause analysis, suspension of updates, recalls, etc.
Ride-hailing platform	Bookings, display, payment, relaying inquiries	User notifications, refunds, closing operating areas

Even where one company performs multiple roles, set out the responsible persons and response procedures separately within the company. Decide who judges whether a vehicle may depart and who decides on remote emergency stops. Make dispatching staff to the site, evacuating passengers and reporting to police and fire services a single sequence, and make clear who is responsible for public announcements. Also decide in advance who provides backup when troubles occur simultaneously in multiple vehicles.

In contracts between companies, set out rules on cost allocation and recourse separately from how legal liability is allocated. Starting from the obligation to cooperate in accident investigations and the format and period for retaining logs, align everything through advance notice of software updates, caps on damages and the application of insurance, and the point of contact when claims are received from third parties. Where an update changes the areas in which vehicles can operate or how they behave, also decide in advance which of the following must be reviewed: changes to the permit plan, recertification under safety standards, the terms and conditions of carriage and the explanations in the app.

Field training before launching a commercial service should cover not only normal operation but also abnormal scenarios such as communication loss, simultaneous stops of multiple vehicles, sudden illness of passengers and cyberattacks. Reflect in the manuals any hesitation in judgment or gaps in communication revealed during training, and reconcile the content of permit applications submitted to the authorities with practice on the ground.

Contract Design Working Backward From Abnormal-Situation Response

For autonomous taxis, review the contracts for vehicle supply and system provision in connection with the outsourcing agreements for operational management and remote monitoring. Including the terms of use of the ride-hailing app and the scope of insurance coverage, confirm that there are no gaps in emergency response or the allocation of responsibility. At LegalAgent, after sorting out the legal business operator, we confirm that the clauses of each contract connect consistently with on-the-ground accident response and data management procedures. For related support, please see Mobility and Automotive Law, IT, SaaS and System Development Law, Data and Privacy and Legal Outsourcing.

Frequently asked questions

Is a license under the Road Transportation Act required to operate autonomous taxis commercially?

Even if the vehicle is autonomous, a license from the Minister of Land, Infrastructure, Transport and Tourism under the Road Transportation Act is required. This is because, even if the standards of the Road Traffic Act and other laws are met, carrying passengers for a fare requires a license for a general passenger vehicle transportation business and an operational management system. Whether a license is required is likely judged not only by who owns the vehicle but by the reality of who concludes the transportation contracts, sets the fares and gives safety instructions.

If an accident causing personal injury occurs with an autonomous taxi, who is liable for damages?

The operator for own benefit, meaning the person who substantively controls the operation and benefits from it, is as a rule liable for damages under the Act on Securing Compensation for Automobile Accidents. This is because the liable party is not limited to the registered holder but is determined by the reality of operational control and operational benefit. Even if a contract between businesses provides that only one party bears liability, this is likely not to automatically bind legal liability for damages to victims.

What is required in a remote monitoring system in which one monitor watches over multiple vehicles?

An operating system is required that can immediately take measures such as terminating operation even when abnormalities occur in multiple vehicles at the same time. This is because a specified autonomous operation supervisor under the Road Traffic Act is obligated to immediately terminate operation and respond at the scene when an abnormality occurs. For responses to communication outages and emergency stops, it is likely necessary to put in place procedures for making decisions and acting quickly, without relaxing statutory obligations on grounds such as internal target times.