12 April 2018

New arbitration and mediation centers in Japan

By Patric McGonigal

Centre for International Dispute Resolution, Tokyo

The Japanese government recently announced that it is proposing to establish a new dedicated dispute resolution centre in Tokyo. The move follows recent initiatives in countries such as South Korea and Malaysia to establish and promote international arbitration centres and reflects the increasing number of Japanese corporates that seek to resolve their cross-border disputes through arbitration.

The government’s press release states that Japan's Foreign Ministry, Justice Ministry and Ministry of Economy, Trade and Industry will have joint jurisdiction over the new centre and will provide institutional support as well as staff training. It is expected that these government agencies will work together to ensure that with the forthcoming 2020 Olympics, the centre is also equipped to handle sports tribunal-related matters such as doping cases.

It is also expected that the focus will be on bringing together Japan’s various dispute resolution bodies such as the Japan Commercial Arbitration Centre (JCAA) in a far more internationally focused environment than currently exists in Japan.  It is hoped that the new centre will operate with a multi-lingual staff and an international board of directors, catering for the resolution of international disputes and accommodating a variety of arbitral bodies and rules, including alternative forms of dispute resolution such as adjudication and mediation.

As a sign of support from the international business community, the American Chamber of Commerce in Japan and the European Business Council in Japan issued a joint statement in January 2018 expressing their “strong support” for the development of Tokyo as an international arbitration centre.  In doing so, they underlined the importance of ensuring that the openness and internationalization of Japanese arbitrations and mediations should be clarified so that foreign counsel registered in Japan and otherwise are accepted to act as advocates and neutrals in all such proceedings seated in Japan.

This development comes at an interesting time in that with the March 2018 release of the Singapore International Arbitration Centre (SIAC) 2017 case statistics, it is evident that there has been an increase in both the number of new claims involving Japanese parties and the value of those claims. In the past few years, Singapore has increasingly become the preferred seat of arbitration for Japanese corporates, not least borne out by the fact that claims involving Japanese parties accounted for USD1 billion out of a total value in dispute for all new case filings of circa USD4 billion handled by the SIAC.  Moreover, of the 27 new claims involving Japanese parties, half of these involved the Japanese party as claimant and not as respondent.  This represents a significant change in approach to resolving disputes by Japanese parties who are notoriously litigation-averse.

In short, it is hoped that the new centre will lead to a more open and international dispute resolution regime in Japan such that both Japanese corporates and their foreign counterparts may be persuaded to choose Japan as their preferred seat of arbitration in appropriate cases.

Kyoto International Mediation Centre (KIMC)

More recently, it was also announced that Doshisha University and the Japan Association for Arbitrators intend on opening an international mediation centre in Kyoto in collaboration with the Singapore International Mediation Centre (SIMC).  The new mediation centre will be headquartered at Doshisha University.  

Acknowledging the success of mediation as a method for resolving cross-border disputes in the US and Europe, it is hoped that the new mediation centre will help to raise awareness of this form of alternative dispute resolution process amongst Japanese corporates.  While court-directed conciliation for domestic matters is widely used in Japan, mediation remains little used – despite its undoubted advantages in a culture that emphasizes the importance of relationships and is therefore litigation-averse.

It is envisaged that a similar system to the arb-med-arb protocol in place between the SIAC and the SIMC in Singapore may be established.  This would mean that disputes which are initially referred to arbitration could instead be mediated and if successfully settled, the agreement resulting from the mediation could form the basis of an award in the original arbitration reference.  By doing so, the settlement agreement could then be enforced as an arbitration award under the New York Convention thereby addressing one of the perceived shortcomings of mediation i.e. issues surrounding the enforcement of mediated settlement agreements.

Japanese government approval is expected in May and the mediation centre is due to be launched in September 2018.  A select group of senior international dispute resolution practitioners in Japan have been invited by the SIMC to participate in the first training scheme in May 2018 with a view to establishing a panel in time for the opening of the new mediation centre in the autumn.

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