This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.

Freshfields TQ

Technology quotient - the ability of an individual, team or organization to harness the power of technology

| 4 minutes read

Autonomous driving in Japan – part 3: liabilities

Autonomous driving will shift our traditional understanding of driver responsibility as decisions behind the wheel will be heavily dictated by technology, rather than the driver’s skill and responsiveness.

Several governments are considering re-shaping existing liability regimes to accommodate the novel technology. There is no indication that the Japanese government has any immediate plans to overhaul existing legislation. Given the forthcoming debut of Japan’s first 'eyes off' (or 'Level 3') autonomous vehicle (see part 1 of this blog series), it is important to understand how the existing liability law regime works.

For example: 

  • Person A is the owner of a Level 3 vehicle manufactured by an original equipment manufacturer (OEM).
  • The owner purchased the vehicle from an autonomous vehicle dealer.
  • With the owner’s permission, the owner’s son was driving the vehicle to go to the son's office.
  • The handling function (controlled by artificial intelligence) malfunctioned. The driver was warned by the vehicle of the malfunction but was distracted and therefore failed to take over control.
  • The vehicle collided with another.
  • The victim controlling the other vehicle was faultless, suffering personal injury and property damage.
  • The driver did not suffer personal injury, but some minor property damage.

This example opens up several liability issues. We focus on one scenario with a couple of key potential liabilities to give a snapshot of just how complex this area is. We do not, for example, discuss scenarios involving a cyber-hack, a faulty road or insurance coverage issues. We will analyse the latter in our next blog post.

What are the applicable laws?

The applicable laws in Japan are:

  • general tort law under the Civil Code;
  • the Act on Securing Compensation for Automobile Accidents (ASCAA); and
  • Product Liability Act (PLA).

Potential liabilities of the owner

Victim against the driver/owner

The strongest claim that the victim would have against both the owner and the driver of the Level 3 car would be under the ASCAA

Currently, the ASCAA imposes semi-strict liability on a person who puts a vehicle into operational use for that person’s own benefit, referred to as the 'vehicle operator' under the ASCAA. This is typically the owner of a vehicle but would also include the driver in our scenario. To fend off liability successfully, the owner and the driver would have to be able to prove all three of the following in order to argue that the ASCAA does not apply:

  1. The owner and driver exercised due care in connection with the operation of the vehicle.
  2. The victim acted intentionally or negligently.
  3. There was no defect in the automotive structure or function.

In our scenario, the owner and the driver would be unable to prove the third limb as the vehicle was defective (and the driver would be unable to prove the first criteria as well). As such, the owner and the driver may both face liability for the victim's personal injury. The scope of the ASCAA is limited to personal injury and does not cover property damage.

The owner and the driver may also be liable for the victim’s personal injury and property damage under general Japanese tort law. This would require that the owner or the driver, as the case may be, breached their duty of care to the victim. Unless the owner let the driver use the owner's vehicle knowing that the vehicle was defective, it is unlikely that the owner breached such a duty. 

On the other hand, as the driver was warned of the malfunctioning and given the opportunity to take over the control of the vehicle (as expected in Level 3 driving situations), it is likely that the driver breached the duty of care. Consequently, the victim could pursue a tortious claim against the driver to recover both personal injury and property damage.

Tortious claims and claims under the ASCAA do not exclude each other. Therefore, in practice, the victim would pursue both types of claims, not least because of the stricter liability under the ASCAA, which can provide coverage in cases where the victim fails to establish a tortious claims.

Victim against the OEM/dealer

The victim could possibly pursue claims against the OEM under the PLA if the relevant defect existed at the time of transfer of the vehicle from the OEM to the dealer.

The victim could only pursue a claim against the dealer under the PLA if the vehicle was imported from abroad by the dealer and the defect existed at the time the dealer handed the vehicle over to the owner.

There are no precedents that would directly address the issue of how the driver's (or the owner's) negligence impacts the liability of the OEM and the dealer towards the victim. The OEM/dealer may be fully liable to the victim despite the driver's negligence, although this would depend on the court's interpretation of the severity of the driver's negligence. If the court discards the driver's negligence in the proceedings between the victim and the OEM/dealer, the OEM/dealer may also be prevented from taking recourse against the driver/owner.

Owner/driver against the OEM/dealer

Similarly, the owner and the driver could take recourse against the OEM and the dealer under the PLA.

The OEM and the dealer would be jointly and severally liable to the owner and driver under the PLA. The agreement between the OEM and the dealer will determine the extent to which joint and several liability would be apportioned between the two.

In addition, the owner could also pursue a breach of contract claim for damages against the dealer on the basis that the dealer delivered a defective product or, if applicable, did not explain the features of the autonomous function properly.

Damages covered by the contractual or PLA claims against the OEM and the dealer include liability to the victim (to the extent the victim successfully asserts such claims against the owner or the driver) as well as repair costs, replacement costs and loss of value (as the case may be) with regard to the owner’s vehicle.

Under the so-called comparative negligence rule, the OEM and dealer would likely succeed in arguing that the amount of their contractual or PLA liabilities towards the owner/driver is reduced to the extent that the driver's negligence contributed to the damage of the victim, the owner and the driver.

What’s next?

The liabilities regime in Japan is set to evolve as a result of developments in autonomous vehicle technology. Not only are we likely to see changes to existing statutes, but also the novel technologies are set to lead to a flurry of a new type of accident claim, resulting in the need for both legislators and insurers to adapt quickly.


asia, automotive, regulation