A topic from AEG's L5R CCG Rules forum, copied for Oracle of the Void from a copy of the forum saved in October 2015, so pages it didn't save are missing. Players' names are left out; the rules officials are named. Rulings are as they stood on these dates; later rulings, the rulebooks and the Rules Archive may differ.
viewtopic.php?f=59&t=106750
So now with the new Good Faith Rules Going Back to the Original Question.
• Favor actions require that you control the Imperial Favor, or have an alternate effect, substitute, or waiver (“need not”) for discarding the Favor.
Does this include the negation of the Shadowed Estate if my opponent has announced a favor action?
viewtopic.php?f=59&t=106750
So now with the new Good Faith Rules Going Back to the Original Question.
• Favor actions require that you control the Imperial Favor, or have an alternate effect, substitute, or waiver (“need not”) for discarding the Favor.
Does this include the negation of the Shadowed Estate if my opponent has announced a favor action?
No.
Negation means that the effect does not happen. "Need not" means that you are not required to attempt to create the effect. The Shadowed Estate does not create any effect that says you need not discard the favour, just that any attempt from the action's effects to do so will fail.