Governing law, jurisdiction and arbitration clauses
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Governing law, jurisdiction and arbitration clauses sit at the end of a contract and get correspondingly little attention during review, right up until a dispute actually happens. At that point they decide which country's law applies and where the fight takes place, and for cross-border, SaaS and license agreements the stakes are considerably higher than the clause's placement suggests.
Choosing governing law
For a purely domestic relationship, Japanese law is the natural choice; for a cross-border contract, the counterparty's home law or a third country's law are both realistic alternatives, and the choice should reflect where the counterparty is based, where performance actually happens, and how recoverable a judgment would be, not simply a preference for familiar law.
Jurisdiction and choice of court
A Japanese domestic contract commonly names the Tokyo District Court as the exclusive court of first instance, though the actual choice varies with where the parties are based. Review should confirm whether the clause is exclusive or merely additional jurisdiction, whether it is limited to the first instance, whether the court is correctly identified, and, as a practical matter, whether litigating there is realistic given the counterparty's assets and the size of the transaction, since jurisdiction determines the real cost of a dispute more than it looks on paper.
Arbitration
Arbitration is common in international deals for its enforceability across borders, confidentiality and neutral venue, though it can also be expensive and depends heavily on how the procedure is set up. Review should check the arbitration institution, seat, rules, number of arbitrators, language, how arbitration interacts with the governing law clause, and cost allocation. Accepting a counterparty's standard arbitration clause without checking these details can make a future dispute considerably heavier than expected.
Matching law, forum and language
Governing law and jurisdiction should be reviewed together, since a mismatch (Japanese law paired with a foreign court, for instance) is not necessarily unworkable but tends to raise proof and expert costs. The same applies to contract language against procedural language, the counterparty's actual location of assets, and whether a judgment or award is actually enforceable where it matters. These are questions worth answering before the deal, not after a dispute starts.
Watching for bias in a counterparty's template
Foreign counterparties' templates commonly name their own home state's law and courts as exclusive, and even a modest deal can generate real foreign counsel fees, translation costs and time-zone friction once a dispute actually happens. These points are easy to miss because the clause sits at the very end of the document, but consequential enough to weigh against the deal's actual size and risk.
When the point can't be negotiated away
Where a counterparty's governing-law or jurisdiction clause cannot be moved, documenting the risk that was accepted (in an internal approval record or contract review file) matters more than continuing to argue the point, and revisiting the clause at the next renewal, once the relationship or transaction volume has changed, is often more productive than trying to win it at signing. Where several related contracts are signed together, as in M&A or a business alliance, it is also worth checking that governing law and dispute resolution are consistent across all of them, so a single dispute does not end up running through separate procedures.