Anderson Mori & Tomotsune, Japan’s second-largest law firm, has established a risk advisory team to assist clients impacted by fast-moving geopolitical situations.
The team is led by six partners, including Hiroshige Nakagawa and Taku Matsumoto. They say that while Russia’s ongoing invasion of Ukraine has underscored the need of having a risk advisory practice, the team’s focus is much broader.
“Against the backdrop of recent U.S.-China trade disputes, the COVID-19 pandemic, Russia's invasion of Ukraine, and technological innovation in cutting-edge fields such as artificial intelligence and quantum computing, we have formed a team consists of experts in various fields to collect and provide information and offer client services on legal affairs involving economic security as a one-stop service,” they say.
Since before the Ukraine crisis, AMT has received many inquiries related to investment and import/export regulations under the Foreign Exchange and Foreign Trade Control Act, data and cybersecurity-related matters, and supply chain-related matters. “But now, there are more inquiries about the details and impact of the Economic Security Promotion Act, has passed last week the current Diet session. In addition, we have been handling a number of cases relating to investment and trade issues concerning the trade friction between the U.S. and China for several years, and many cases this year relating to economic sanctions and transactions with Russian companies triggered by Russia's invasion of Ukraine,” Nakagawa and Matsumoto note.
A key focus at the moment, however, is the fallout of Russia’s invasion of Ukraine. Partner Eiji Kobayashi and special counsel Kie Matsushima say that the crisis’ impact on Japanese companies is not negligible. “Our view is there are business ties between Japan and Russia to a degree and that a certain number of Japanese companies have established a presence in Russia,” they say.
The two lawyers cite trade statistics, which show Japan's exports to Russia on a customs clearance basis in 2021 were approximately 821.8 billion yen ($6.45 billion) and imports from Russia were approximately 1,644.2 billion yen ($12.9 billion).
“Although smaller in scale than those with China and the United States, there are trade transactions between Japan and Russia that are commensurate with these figures. Also, according to JETRO, there are 180 member companies of the Japanese Business Club in Moscow and 54 member companies of the Japanese Business Club in St. Petersburg. In addition to those, there are non-member companies conducting commercial transactions with Russia that don’t have local subsidiaries etc., therefore a certain number of Japanese companies are presumably doing business in Russia,” note Kobayashi and Matshushima.
What is especially important is the fact that Russia boasts rich natural resources. “In addition to fossil fuels such as crude oil, coal, and, most notably, natural gas, of which Russia has the world's largest export volume. Russia also has a large market share in several metal resources. As a result, not only direct impact on companies with interests in Russian natural resources projects but also an increase in international prices for natural resources in which Russia enjoys a high market share are expected,” they observe.
“At present, we are receiving many inquiries regarding economic sanctions and the like from Japanese companies that have subsidiaries in Russia or do business with Russian companies, but as the dispute drags on, we expect related consultation cases to grow in number (from companies that have no direct business with Russia),” they add.
