I have had rust just inside the rear arches on both sides on both my LS400s.
The worst areas were on the front section of the rear arches about half way up. When I removed the rust here there were holes that needed to be repaired. I used Petropatch, which is used to repair holes in petrol tanks, to repair the holes. It is easy to work with and can be used on rusty metal.
Once I had repaired the holes and removed as much rust as I could, I gave the area a couple of coats of Bonda Rust Primer (not easy to get hold of but really good in my experience and I have been using it for over 25 years now). This was followed by a coat of black Hammerite, the following day. A few days later, I put on a thin (4-5mm thickness) coat of Hammerite Underbody Seal, which I left for about a week so that it hardened up as much as it was going to do. It always seems to remain a bit tacky. Finally, I put another coat of black Hammerite on, so the tacky feel disappears and there is a shiny surface which makes it easier to remove any mud etc.
Once I had done the above repair work, I then got hold of a pair of LS400 front wing liners which I adapted to fit inside the rear arches. The rear arches are now well protected and I am not anticipating having to do any further work there.
If anyone is interested in fitting front wing liners in the rear arches, I did do a post and write up on the Forum on how to do this.