Amendments to Japan’s Arbitration Act and New Legislation on International Mediation

Introduction

In past years, international arbitration and international mediation have been used more frequently than before in Japan as means of resolving international disputes, and the Japanese government has been working to make it easier to use these methods of dispute resolution.

 For example:

• In 2017, Japan’s Ministry of Justice officially announced its policy to promote international arbitration in Japan.
• In 2019, the Japan International Dispute Resolution Center (JIDRC) was established in Osaka, with a JIDRC office opening in Tokyo in March 2020 (see our previous update below).

• In 2020, Japan eased restrictions on the provision of legal services by foreign lawyers. The Amendments to the Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers (Foreign Lawyer Act) expanded the right of Registered Foreign Lawyers in Japan to represent parties in international arbitration (see our previous update below).

• In 2021, the Japan Commercial Arbitration Association (JCAA) amended provisions in its arbitration rules for, among other things, expedited arbitration procedures (see our previous update below).

Most recently, on April 21, 2023, Japan’s parliament unanimously enacted amendments to the Japanese Arbitration Act (Arbitration Act), which is the first substantial revision to the Arbitration Act in 20 years, and also passed the Act for Implementation of Settlement Agreements Resulting from Mediation (Singapore Mediation Convention Implementation Act).

Amendments to the Arbitration Act

The Arbitration Act, enacted in 2003, was modelled on the 1985 UNCITRAL Model Law (Model Law). The Model Law was amended in 2006, but the Arbitration Act did not incorporate such amendments at that time. With the revision this year the Arbitration Act now incorporates those earlier changes to the Model Law. These recent amendments will become effective in a year and mainly concern the four areas below.

Interim Measures

The Arbitration Act provides that an arbitral tribunal may order any party to take interim measures of protection that the arbitral tribunal considers necessary (for example, to prevent parties from disposing assets or destroying evidence). However, there has been no system for the compulsory enforcement of such measures by a Japanese court.

Following the recent amendments to the Arbitration Act, a court can enforce interim measures granted by an arbitral tribunal to prevent actions which would unfairly affect the status quo of the arbitral proceedings. This change effectively provides a mechanism for an arbitral order for interim measures in Japan to have legally binding status. These interim measures include specifically:

•  preserving assets to satisfy claims;
•  maintaining the status quo between the parties;
•  prohibiting conduct harmful to the arbitration process; and
•  preserving evidence for the arbitration.

Validity of Arbitration Agreement

Under the Arbitration Act, an arbitration agreement is to be in writing to be valid (for example, an arbitration agreement contained in signed written contracts or in an exchange of messages between parties).

The amended Arbitration Act provides that an arbitration agreement may meet the writing requirement where it is recorded as part of a contract that has been concluded orally, by conduct, or by other means.

Arbitration-related Court Proceedings

Previously, a Japanese court’s jurisdiction over arbitration-related court proceedings (for example, concerning interim measures) has depended on factors such as the parties’ agreed choice of venue or the Japanese company’s headquarters. Under the amended Arbitration Act, if the place of arbitration is in Japan any application for arbitration-related proceedings may be made before the Tokyo or Osaka District Courts, in addition to other competent courts. This revision aims to help the Tokyo and Osaka District Courts gain greater expertise in arbitration-related matters where Japan is the place of arbitration.

Translations of Arbitral Awards

Under the recent amendments to Arbitration Act, a court may exercise discretion to waive the requirement to translate into Japanese foreign arbitral awards submitted to the court.

New Act on International Mediation

Japan’s parliament passed the Singapore Mediation Convention Implementation Act at the same time as the amendments to the Arbitration Act. In anticipation that Japan will sign and ratify the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Mediation Convention), which is an international framework for enforcement of settlement agreements resulting from international mediation, this new law will establish a system in Japan to facilitate the compulsory enforcement of such settlement agreements based on the Singapore Mediation Convention (see our previous update below).

On October 1, 2023, Japan began the process to join the Singapore Mediation Convention. Japan is the 12th signatory country and the treaty will come into effect for Japan on April 1, 2024.

Keeping an Eye on the Latest Trends

It is expected that the legislation made this time will make international arbitration and international mediation more operative in Japan.

Composed of teams with Japanese lawyers, a registered foreign lawyer with US license, and other experts, ZeLo offers seamless legal services globally in close alliance with local law firms in different legal jurisdictions. In fact, we have dealt with many cases of international disputes such as international arbitration or mediation and litigation abroad. We would be at your service in the field of disputes, among others, in their emerging phases.

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Click here for the Japanese translation article.