Significant developments in Japan’s arbitration landscape

These developments are aimed at making Japan a more attractive destination for international arbitration and mediation.

Amended Japanese Arbitration Act

Recent amendments to Japan’s Arbitration Act are a major step forward. These changes allow Japanese-seated arbitral tribunals to issue various interim measures, including anti-suit injunctions, evidence preservation, asset preservation, and orders to maintain the status quo.

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Additionally, courts can now impose penalty payments if a party violated or is likely to violate an interim measure order.

The amendments will bring Japan’s international arbitration offering into line with that of key regional players such as Hong Kong SAR and Singapore.

Ratification of the Singapore Convention on Mediation

Japan has ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly known as the Singapore Convention. As of 2024, fifty-seven states have signed the Singapore Convention since it was opened for signature in 2019. The Convention requires each member state to enforce mediated settlement agreements, with limited exceptions for declining enforcement.

Japan’s ratification, effective from 1 April 2024, provides a harmonised legal framework for enforcing settlement agreements resulting from mediation in cross-border commercial disputes. The Ministry of Foreign Affairs of Japan stated that Japan’s ratification of this convention will further facilitate the use of mediation, and that it will contribute to expanding Japanese companies’ overseas business and attract foreign investment in Japan.

The Tokyo and Osaka District Courts will have jurisdiction to enforce these mediation agreements, promoting consistency and reliability in dispute resolution.

JCAA Commercial Arbitration Rules and Interactive Arbitration Rules

The Japanese Commercial Arbitration Association (JCAA) introduced new Commercial Arbitration Rules in 2021, which include significant updates to expedited arbitration procedures.

The threshold amount in dispute for expedited procedures has been increased from JPY 50 million (around US$ 317,000) to JPY 300 million (US$ 1.9 million) with awards to be rendered within six months from the constitution of the arbitral tribunal for larger disputes and three months for smaller ones. A total of 22 out of 70 cases filed with the JCAA between 2019 and 2023 were conducted under expedited arbitration procedures, according to JCAA data.

Under the JCAA rules, the parties can also apply for an emergency arbitrator who is generally appointed within two business days from JCAA’s receipt of the application for emergency measures. The decision is usually decided within two weeks of appointment.

The JCAA rules, in common with most leading arbitration institutions rules, include provisions on joinder and consolidation. Article 43 on joinder allows for joinder in multi-contract situations as there is no express requirement that the third party be a party to the arbitration agreement to be joined in the proceedings. For consolidation, consent is not required if multiple requests for arbitration arise out of the same arbitration agreement but if they arise out of separate arbitration agreements, in a multi-contract, situation then the tribunal will require written consent of all relevant parties.

The JCAA rules provide a rather innovative set of rules – ‘interactive arbitration rules’ – which offer a more ‘civil law’ approach in response to some criticism that international arbitration was becoming too much like common law litigation with extended discovery phase and higher costs. Articles 48 and 56 of the interactive rules, derived from Japanese civil litigation proceedings, also promote early settlement of the dispute by requiring the arbitral tribunal to provide its tentative views of the case as early as possible and before deciding whether witness examination is necessary. This also may help clarifying any misunderstanding that the arbitral tribunal may have. The interactive rules have been reportedly used once in 2022, which was a success as the case settled and parties gave positive feedback on the procedure. However, based on the latest statistics from JCAA, there has not been any use of the interactive procedure since.

Increased momentum and relevance of arbitration in Japan

Since 2017, the Japanese government has been proactive in promoting international arbitration.

A research group was recently established for the “Steady Promotion of International Arbitration Utilisation in Japan”, the primary goal of which will be to further promote international arbitration. A first report was issued in January 2024 which includes proposals to support Japanese arbitral institutions, raise awareness among Japanese companies, strengthen partnership with foreign justice ministries, assuming a leadership role in developing dispute resolution rules at United Nations Commission on International Trade Law (UNCITRAL).

More international arbitration conferences in Japan also show increased momentum and relevance of arbitration in the country. Last year marked the second International Court of Arbitration (ICC) Tokyo Arbitration Day, with the JCAA also celebrating arbitration days in November 2024 along with other leading institutions such as the London Court of International Arbitration (LCIA).