13 Sep 2018
Douglas Kenji Freeman, FCIArb, Chair of the Japan Chapter of the Chartered Institute of Arbitrators, and Ayako Tsuru, MCIArb, arbitration practitioner, discuss significant developments in Japan's international dispute resolution regime.
2018 has seen rumblings of change in Japan's renewed interest in establishing itself as an international dispute resolution hub. No arbitration practitioner in the country would dispute that Japan has been an underutilized seat in international arbitration relative to its economic clout, particularly compared to neighboring Singapore and Hong Kong. But significant recent developments give hope that 2018 may mark the dawning of a new era for international arbitration and mediation in Japan.
Growing Impetus for Change
The greatest impetus for change is the stark realization of that Japan’s significant lag behind Singapore and Hong Kong—countries which have seen the fruits of deliberate efforts to increase their prominence as an arbitration seat.
The growing need for Japanese companies—including midsized, traditionally domestically focused corporation—to expand internationally into countries whose court systems are still unstable, increased utilization of investor state arbitration globally, and other factors have combined to generate a renewed interest in the corporate sector and dispute resolution community to look seriously at alternatives to the traditional court system.
Against this backdrop, the Japanese government has taken interest, establishing in September 2017 an Inter-Departmental Committee Regarding the Revitalization of International Arbitration under the auspices of the Cabinet Office. The Committee's report was issued in April of this year and includes broad-based initiatives to review Japan’s international dispute resolution infrastructure on many levels, including such notable proposals to consider the promotion of education of arbitration professionals, the revision of the Arbitration Law to incorporate the 2006 amendments to the Model Law, governmental support in developing physical infrastructure, and review of potential use of third-party funding.
The corporate sector responded to this in the form of a Report by the International Arbitration System Study Group of the Shoji Homu Kenkyukai (a leading legal research institution), which issued a seven-point proposal in June, which includes significant proposals such as the invitation of international arbitral institutions to establish offices in Japan, the promotion of strategic overseas PR activities, and a proposal to enact a special law in 2019 to promote international arbitration in Japan.
Signposts of A New Era
Japan has also seen a number of significant institutional initiatives that echo the country seriousness in moving forward in this area. In May of 2018, the Japan International Dispute Resolution Center was established in Osaka, Japan's second-largest city, which the above-mentioned Committee has flagged as a pilot project to model similar future developments.
Separately, the Japan Association of Arbitrators and Doshisha University have announced the opening in September 2018 of the Japan International Mediation Center in Kyoto, which provides mediation rooms with interpretation booths and administrative support. The Center ambitiously aspires to promote Japan as an Asian regional mediation center, finding support in Japan's cultural tradition of harmony and the country’s increased prominence as an international tourism destination. Notably, participation in the deliberations by the government in the UNCITRAL's prospective United Nations Convention on International Settlement Agreements Resulting from Mediation is among the agenda items of the Committee, which, if ratified, should bolster the Center’s utility.
Also, the International Arbitration Centre in Tokyo (IACT), termed as Asia’s first arbitration center specializing in intellectual property, is slated to open in September with plans to have around a dozen arbitrators from around the world, who would try to resolve disputes within a period of one year.
These initiatives would likely be boosted broadly by Japan's increased international profile with the upcoming Tokyo Olympics in 2020, and the establishment of a CAS sports arbitration tribunal in conjunction with that event. And Japan also may take advantage of its neutrality and geographically convenient location to promote usage as a seats to arbitrate disputes arising in the context of China's "One Belt, One Road" initiative.
If the above initiatives can cause Japan to muster enough critical mass of interest, Japan's status within the international dispute resolution field may very well look quite different in the next decade.