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Prof. Hiroyuki Watanabe

Hiroyuki Watanabe is a Professor at the Faculty of Law at Waseda University in Japan (Tokyo) and has been in the current position since 2008. He has been engaged in research and educational activities in the fields of corporate law and capital market law, as well as in the areas of finance law and trust law. While he is interested in cutting-edge issues, he is also very interested in the legal ideas that underlie the events. Under the recent situation where the world is online, he has been actively publishing research results through SSRN (Social Science Research Network).

Pacta sunt servanda in the context of Japanese M&A law: the Sumitomo vs UFJ case

In May 2004, Sumitomo Trust and Banking (“Sumitomo”) announced its intention to acquire UFJ’s trust banking unit. Then Sumitomo and the UFJ concluded an interim agreement (letter of intent) which contained a clause with the obligation to negotiate in good faith but the agreement contained no penalty provisions for non-performance. In July 2004, UFJ unilaterally broke off merger talks with Sumitomo and entered into full merger talks with the Mitsubishi Tokyo Financial Group (“MTFG”). Ultimately, MTFG acquired the UFJ Group, including the UFJ Trust Bank. The important issues in this case are the legal effect of the interim agreement between the two parties regarding the merger plan and compensation for damages in the event of breach of the agreement where there was no provision regarding the amount of damages.