Editor’s note: Yuri Yagi is a sports lawyer involved in Sports Federations and Japanese Sports Organizations including the Japan Equestrian Federation (JEF), the International Equestrian Federation (FEI), the Japanese Olympic Committee (JOC), the Japan Sports Council (JSC) and the All-Japan High School Equestrian Federation.
1. Introduction
Japan has held three Olympic Games since the inception of the modern Olympics;Tokyo Summer Olympic Games in 1964, Sapporo Winter Olympic Games in 1972, and Nagano Winter Olympic Games in 1998. Therefore, the Tokyo 2020 Olympic Games (Tokyo 2020) are supposed to be the fourth to be held in Japan, the second for Tokyo. Tokyo 2020 were originally scheduled for 24 July 2020 to 9 August 2020. Interestingly, the word ‘postpone’ or ‘postponement’ does not appear in the Host City Contract (HCC).
However, the International Olympic Committee (IOC), the Tokyo Metropolitan Government (TMG), the Japanese Olympic Committee (JOC), and the Tokyo Organising Committee of the Olympic and Paralympic Games (TOCOG) decided on 24 March 2020 that Tokyo 2020 would be postponed because of the pandemic of COVID-19. Later on, the exact dates were fixed ‘from 23 July 2021 (date of the Opening Ceremony) to 8 August 2021 (date of the Closing Ceremony).
The process of the decision is stipulated in the ‘ADDENDUM N° 4’ signed by IOC, TMG, JOC and TOCOG.
This paper provides an overview of the current situation, along with legal and other issues in Japan that have arisen due to the postponement of Tokyo 2020 due to COVID-19. The overview is offered from the perspective of a citizen of the host city and includes a consideration of national polls, the torch relay, vaccination, training camps, ever increasing costs, and the related provisions in the Candidature File and the Host City Contract.
2. The Situation of COVID-19 in Japan
According to the Government, the first COVID-19 case in Japan was confirmed on 16 January 2020. On 24 March 2020, when the postponement of Tokyo 2020 was decided, the reported number of new COVID-19 positive cases in Japan was 64 (Japanese population is around 126 million). As a comparison, reported cases in Japan on 28 May 2021 was 3,706.
3. National State of Emergency
Since the start of the pandemic, National states of emergency have been issued three times in Tokyo, the first time was from 7 April 2020 (the reported number of positive cases on that day in Tokyo was 87) to 25 May 2020 (8 cases), the second time was from 8 January 2021 (2,459 cases) to 21 March 2021 (256 cases), and the third began on 25 April 2021 (635 cases) and is still in effect (539 cases as of 29 May 2021). A national state of emergency is not similar to the lockdowns issued in several other countries. It is basically the government’s request that people stay at home. Under National states of emergency, the Government asked businesses, especially restaurants and bars, to close earlier than usual or completely.
4. National Poll as to Olympic Games
According to a national poll carried out by Japan Broadcasting Corporation (NHK, which is Japan’s only public media organization) and published on 10 March 2020, 14 days prior to the decision of the postponement, 40% of respondents answered that they believe the Olympics will be held as scheduled. Conversely, 45% answered that they do not.
The telephone survey of 1,300 Japanese residents carried out by NHK and published on 23 July 2020 showed that 35% said that Tokyo 2020 should be postponed further, 31% said that they should be cancelled, and 26% said that they should be held as scheduled.
In the national poll published by NHK in May 2021, 49% answered Tokyo 2020 should be cancelled, 23% answered they should be held without spectators, 2% answered they should be held as usual.
In addition, people who demanded the cancellation of Tokyo 2020 collected more than 350,000 signatures in an online petition.
5. Torch Relay
The Olympic Flame was lit in Greece on 12 March 2020 and arrived in Japan on 20 March 2020, just prior to the decision to postpone. However, most related ceremonies were cancelled or downsized and there was less excitement among Japanese citizens than originally expected.
The postponed torch relay started on 26 March 2021 in Fukushima Prefecture, which was severely damaged by a tsunami following The Great East Japan Earthquake in 2011. The torch relay is still ongoing and is live streaming every day on the internet. However in many places, the torch relay has been replaced with stage events instead of running on public roads. Japanese citizens have been asked to not attend the torch relay or the events. As a result, the torch relay has turned out to be totally different from what was expected.
6. Slow Rollout of Vaccine
COVID-19 vaccination started in Japan on 17 February 2021, first for frontline workers, and at the time of this article (31 May 2021), they are mainly being administered for elderly people over 65 years old. It is a relatively late start and a slow rollout compared to other developed countries (for example vaccination started in December 2020 in the US, the UK, Itally, France, Germaney, and other countries). As of 30 May 2021, only 0.25% of residents in Japan have been fully vaccinated (twice) and 3.67% have be vaccinated once.
Japanese Prime Minister Yoshihide Suga announced that IOC had struck a deal with Pfizer to provide vaccines for all Tokyo 2020 participants. Accordingly, JOC announced that about 1,600 athletes and other members of Japan’s potential delegation to Tokyo 2020 will be vaccinated from 1 June 2021.
7. Pre-Event Training Camps and Games-Related Events
COVID-19 has also had an effect on Games-related plans such as pre-event training camps and cultural programs planned by local governments. As of 18 May 2021, training camps and Games-related cultural exchange events have reportedly been cancelled in many local governments (reported number was 54) because of the infection risks and the delays of the qualification process.
However it is also reported that the Australian softball team plans to come to Japan for a training camp on 1 June 2021. If this plan is realized, they will be the first team to arrive.
8. Increasing Cost and Decreasing Revenue
Because of the increasing cost incurred as a result of the postponement, the IOC offered an additional support of reportedly 650 million USD. To reduce costs and support COVID-19 infection prevention measures, TMG and IOC agreed to simplify Tokyo 2020. It has already been decided that spectators from other countries will not be allowed to attend the games. As for domestic spectators, a final decision is expected to be made by the end of June 2021. At any rate, the revenue from the ticket sales will be significantly less than originally estimated.
The postponement of Tokyo 2020 has also resulted in additional costs related to the extension of the employment contracts of the TOCOG staff members, lease contracts of the TOCOG office, and no doubt, countless other contracts. As to domestic sponsorship contracts for Tokyo 2020, they were originally for terms ending December 2020. However, due to the postponement of the Games, all 68 domestic companies agreed to extend the contract until the end of 2021, despite also facing an unprecedented stagnant business situation.
As to the case of deficit or budget shortfall, the Candidature File and Host City Contract (HCC) provides who will bear the loss.
9. Candidature File and Host City Contract (HCC)
IOC elected Tokyo as the host city of the 2020 Summer Olympic Games in the 125th IOC Session took place in Buenos Aires, Argentina, from 7 to 10 September 2013. In the bidding process, Candidate Tokyo submitted a Candidature File to the IOC.
Case of Deficit or Budget Shortfall
As to the case of deficit or budget shortfall, the Candidature File and HCC provide that, if TOCOG incurs a deficit, TMG will guarantee to cover any potential economic shortfall of TOCOG, then if TMG should be unable to compensate in full, the Japanese government will ultimately provide the financial support.
Candidature File(*underline added by author for emphasis)
6.1 An OCOG budget fully guaranteed
6.1.1 TOCOG Budget guarantee
Tokyo 2020 is very confident the TOCOG budget will be balanced. Nevertheless, should TOCOG incur a deficit, the Tokyo Metropolitan Government (TMG) has guaranteed to cover any potential economic shortfall of TOCOG, including refunds to the IOC in advance of payment or for other contributions made by the IOC to TOCOG.
In addition, should TMG be unable to compensate in full, the Government of Japan will ultimately compensate for it in accordance with the relevant laws and regulations of Japan.
6.1.2 Compensation mechanism in the event of a budget shortfall
(…) if necessary, TOCOG will activate the compensation mechanism.
Under the compensation mechanism, TOCOG will consult with TMG and the Government of Japan to ensure that the Tokyo 2020 Olympic and Paralympic Games can take place as planned. Financial support will be primarily provided by TMG. In addition, should TMG be unable to compensate in full, the Government of Japan will ultimately provide the financial support in accordance with the relevant laws and regulations of Japan.
The compensation mechanism will function in a similar fashion in the event of full or partial cancellation of the Tokyo 2020 Olympic and Paralympic Games.
The Candidature File is referred to in the HCC, which was signed by the IOC, TMG and JOC on 7 September 2013. It provides that, the TMG and TOCOG shall be jointly and severally responsible for financial undertakings and the Japanese government shall support them.
Host City Contract(*underline added by author for emphasis)
4. Joint and Several Obligations of the City, the NOC and the OCOG
(…) the City, the NOC (other than with respect to the aforementioned financial undertakings of the City and the OCOG) and the OCOG shall be jointly and severally responsible in respect of all damages, costs and liabilities of any nature, direct and indirect, which may result from a breach of any provision of this Contract. The IOC may in its sole discretion take legal action against the City, the NOC and/or the OCOG, as the IOC deems fit.
The foregoing shall be without prejudice to the liability of any other party, including without limitation, any Government, national, regional or local authorities that provided financial guarantees during the City’s application or candidature to host the Games or otherwise.
7. Guarantees, Representations, Statements and Other Commitments
All guarantees, representations, statements, covenants and other commitments contained in the City’s application or candidature file (…) shall survive and be binding upon the City, the NOC and the OCOG, jointly and severally, (…).
On top of that, the HCC provides that the TMG, JOC and TOCOG must always protect IOC from all payments and other obligations in respect to any damages, claims, actions, losses, costs, and/or expenses. On the other hand, the TMG, JOC and TOCOG promised to waive any claims against the IOC in the HCC.
9. Indemnification and Waiver of Claims Against the IOC
a) Indemnity by the City, the NOC and the OCOG. The City, the NOC and the OCOG shall at all times indemnify, defend and hold harmless and exempt the IOC, IOC Television and Marketing Services SA, the OBO, as further detailed in Section 54 (a) below, and their respective officers, members, directors, employees, consultants, agents, attorneys, contractors (e.g. Olympic sponsors, suppliers, licensees (of the IOC, the National Olympic Committees and the Organising Committees of the Olympic Games) and broadcasters) and other representatives (each, an “IOC Indemnitee” and collectively, “IOC Indemnitees”), from all payments and other obligations in respect of any damages, claims, actions, losses, costs, expenses (including outside counsel fees and expenses) and/or liabilities of any nature (including injury to persons or property), direct or indirect, suffered by the IOC (or any IOC Indemnitee), including all costs, loss of revenue, and also damages that the IOC (or any IOC Indemnitee) may have to pay to third parties (including but not limited to Olympic sponsors, suppliers, licensees and broadcasters) (collectively, “Claims”) resulting from:
i) all acts or omissions of the City, the NOC and/or the OCOG (…), relating to the Games (including in connection with the planning, organising, financing and staging thereof) and/or this Contract;
iii) any claim by a third party arising from, or in connection with, a breach by the City, the NOC or the OCOG of any provision of this Contract.
c) Waiver of Claims against the IOC. Furthermore, the City, the NOC and the OCOG hereby waive any Claims against the IOC and the other IOC Indemnitees, including for all costs resulting from all acts or omissions of the IOC relating to the Games, as well as in the event of any performance, non-performance, violation or termination of this Contract. This indemnification and waiver shall not apply to wilful misconduct or gross negligence by the IOC.
Cancellation
As to the cancellation of Tokyo 2020, only the IOC has the right to make such decision on ‘reasonable grounds’. In the case of cancellation by the IOC for any reason, the TMG, JOC and TOCOG will be considered as waiving any claim or right of indemnity, and promising to indemnify and hold IOC Indemnities harmless from any third party claims.
XI. Termination
66. Termination of Contract
a) The IOC shall be entitled to terminate this Contract and to withdraw the Games from the City if:
i) the Host Country is at any time, whether before the Opening Ceremony or during the Games, in a state of war, civil disorder, boycott, embargo decreed by the international community or in a situation officially recognised as one of belligerence or if the IOC has reasonable grounds to believe, in its sole discretion, that the safety of participants in the Games would be seriously threatened or jeopardised for any reason whatsoever;
(…)
iii) the Games are not celebrated during the year 2020;
iv) there is a violation by the City, the NOC or the OCOG of any material obligation pursuant to this Contract, the Olympic Charter or under any applicable law; or if
In case of withdrawal of the Games by the IOC, or termination of this Contract by the IOC for any reason whatsoever, the City, the NOC and the OCOG hereby waive any claim and right to any form of indemnity, damages or other compensation or remedy of any kind and hereby undertake to indemnify and hold harmless IOC Indemnitees from any third party claims, actions or judgements in respect of such withdrawal or termination(…).
Dispute Resolution
According to Article 87 of HCC, in the case of dispute among parties, the applicable law is Swiss law, and the dispute is to be decided by Court of Arbitration for Sport (CAS).
87. Governing Law and Resolution of Disputes; Waiver of Immunity
This Contract is governed by Swiss law. Any dispute concerning its validity, interpretation or performance shall be determined conclusively by arbitration, to the exclusion of the ordinary courts of Switzerland or of the Host Country, and be decided by the Court of Arbitration for Sport in accordance with the Code of Sports-Related Arbitration of the said Court. (…)
10. Conclusion
No one expected COVID-19 nor the impact that it would have on the Olympic Games at the time of the bidding process and of the signing of the HCC. As a result, the HCC and Candidature File provisions related to the losses caused by the postponement were not well understood among the Japanese people. Now people are starting to recognize the possibility that the TMG or/and Japanese government will likely incur huge losses as a result of the postponement or, in the worst-case, cancellation of Tokyo 2020.
Many Tokyo citizens and Japanese citizens were looking forward to Tokyo 2020 before COVID-19. However, judging from the national polls, now this excitement seems to turn into anxiety and concern.
While the whole world continues to prepare for the postponed Tokyo 2020, the situation is still uncertain. In fact, the current number of COVID-19 cases in Japan is much larger than at the time when the postponement was decided in March 2020. It is very hard for involved individuals to maintain their motivation in light of this uncertainty. On the other hand, the vaccination push is expected to be a game-changer. Not only the TOCOG, TMG and JOC, but also multimedia outlets, sporting federations, sponsors, travel agencies, and the general public are preparing, believing Tokyo 2020 will be held. It’s natural and understandable that host city citizens have various opinions. However, athletes have been training for the chance to qualify and compete at the Olympic Games their whole life. Therefore, it is hoped the situation will improve and the Tokyo 2021 Olympic Games will be held safely and securely even if they are totally different from what we expected originally.