1. USE OF COMMERCIAL ARBITRATION
1.1 Describe the prevalence of commercial arbitrations as a method of settling disputes, both domestic and international.
As far as the number of cases is concerned, commercial arbitration is much less frequently used in Japan as a method of settling either domestic or international disputes as compared with litigation in the courts. In its fiscal year 2004, the Japan Commercial Arbitration Association (JCAA), the Japanese counterpart of the American Arbitration Association, handled only 39 cases (21 new cases and 18 carried forward cases). The vast majority of commercial disputes have been resolved by litigation in the courts. However, practitioners and arbitration institutions have made efforts to promote the practice of arbitration in Japan. A number of Japanese local Bar Associations have set up arbitration centres. Established to make arbitrations more accessible, these centres have modest fee schedules, and accept the filing of arbitration requests even in the absence of an arbitration agreement (on the basis that if and when an arbitration agreement is reached in the course of discussions between the parties, the tribunal will proceed to render an arbitral award). Most of the cases handled by these centres are domestic cases, typically using hybrid ‘med-arb’ procedures, and many cases are settled rather than going to a final arbitral award. In the fiscal year 2003, a total of 1118 new cases were filed with the centres. Among the 512 cases that were resolved during that fiscal year, 492 cases (91 per cent) were settled, 16 cases (16 per cent) ended with arbitral awards based on settlement, and only four cases (one per cent) ended with arbitral awards without settlement. In the area of international commercial disputes, there is a trend whereby large, international commercial disputes are increasingly resolved through arbitration, partly because non-Japanese parties often prefer arbitration to Japanese courts, and partly because an increasing number of international contracts contain arbitration clauses. Arbitral institutions such as the JCAA have attempted to update their arbitration rules and practices (eg permitting a foreign claimant to initiate an arbitration by filing a request for arbitration in English only, without a Japanese translation), so as to bring arbitral practice into conformity with the arbitral practice of other modern jurisdictions. The modernisation of Japanese arbitration law will also help to make commercial arbitrations in Japan more reliable and globally compatible, and is expected to increase the use of arbitration within Japan in resolving commercial disputes.
2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)
On 1 August 2003, a new arbitration law (Arbitration Law, Law No 138 of 2003) (the New Law) was promulgated to replace Japan’s old arbitration law (Law Concerning Procedure for General Pressing Notice and Arbitration Procedure, Law No 29 of 1890) (the Old Law), and came into force on 1 March 2004.
The modernisation of Japan’s arbitration law was one of the major objectives of the Japanese government’s efforts to reform the Japanese judicial system, with efforts led by the Office for Promotion of Justice System Reform (established by the government in December 2002).
The New Law is modelled on the UNCITRAL Model Law (the ‘Model Law’). It was the legislators’ intention to make the New Law as compatible as possible with the Model Law, so as to encourage international arbitrations in Japan. However, the New Law governs both domestic and international arbitrations, and applies without distinction to both commercial and noncommercial arbitrations. Japan is not a federal state, and the New Law is the only law that generally governs arbitration in Japan.
As Japan is a civil law jurisdiction, court decisions are not themselves binding laws. Interpretation of statutory laws established by the courts (in particular, the Supreme Court), however, often provides significant guidance to judges in subsequent cases. However, on account of the significant revision to Japan’s arbitration law, previous court decisions which consider the Old Law may not necessarily be relied upon in interpreting the New Law.
2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.
The New Law governs international and domestic arbitrations and implements the Model Law. The Supreme Court Rules on Procedures of Arbitration Related Cases (Supreme Court Rules No 27, 26 November 2003) set forth the particulars of procedural rules for court cases related to arbitration. Japan is a contracting state to the New York Convention. Japan has declared that it will apply the New York Convention to the recognition and enforcement of awards made only in the territory of another contracting state. Japan has signed several bilateral treaties which have provisions on the recognition and enforcement of arbitral awards rendered pursuant to an arbitration agreement between Japanese nationals or companies and the other party state’s nationals or companies which may apply even where the arbitral awards are made in a non-contacting state to the New York Convention. Under the Japanese Constitution, international treaties are self-executing, and automatically have the same effect as domestic laws. Under the New Law, which has adopted almost verbatim the provisions of the New York Convention concerning requirements for the recognition and enforcement of arbitral awards and for setting aside arbitral awards, such provisions based upon the New York Convention apply equally to arbitral awards made in contracting states and non-contracting states. Japan is also a contracting state to the International Centre for Settlement of Investment Disputes (ICSID) Convention.
3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?
The JCAA is the leading permanent commercial, non-maritime arbitration institution in Japan, handling both international and domestic commercial arbitrations. Historically, the JCAA’s focus has been on international commercial arbitrations. However, in an effort to express its intention to expand its domestic arbitration practice, the JCAA changed its Japanese name on 1 January 2003 from Kokusai (International) Shoji Chusai Kyokai (Commercial Arbitration Association) to Nihon (Japan) Shoji Chusai Kyokai (Commercial Arbitration Association).
The International Chamber of Commerce (ICC) maintains a Japan national committee (ICC Japan). However, ICC Japan does not provide secretarial or administrative services for ICC arbitrations in Japan, and parties wishing to initiate an ICC arbitration in Japan must contact the Secretariat of the International Court of Arbitration of the ICC in Paris direct.
The arbitration centres maintained by local Japanese Bar Associations have been increasing their presence in Japan as forums for commercial and noncommercial arbitrations. As of June 2003, there were 19 such arbitration centres in Japan.
4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?
Where a party to a valid arbitration agreement files a law suit with a national court in Japan, the other party may move to dismiss the claim (on a ‘without prejudice’ basis) based upon the existence of such an arbitration agreement, before pleading on the merits (New Law, art 14(1)). Japanese courts have generally favoured arbitration agreements through relatively broad interpretations of their scope. However, a Japanese court will simply dismiss the claims that have been brought before the court, and will not issue an order to compel arbitration or to stay the litigation. This is one deviation from the Model Law, under which the court refers the parties to arbitration. The New Law provides that no court shall intervene in arbitral proceedings except where so provided in the New Law (art 4). This is substantially the same as art 5 of the Model Law, and is interpreted to mean that even the parties may not agree to expand the court’s power to intervene beyond that which is set forth under the New Law. (For example, the parties cannot agree to expand the grounds for setting aside an arbitral award beyond that which is set forth in art 44 of the New Law.)
4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?
5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.
Books
Shortly after the New Law was promulgated in August 2003, government officials involved in the drafting of the New Law published the following commentary on it in December 2003:
M Kondo et al Chusai-ho Konmentaru (Japan: Shojihomu, 2003) In November 2004, an English translation of this commentary was published:
M Kondo et al Arbitration Law of Japan (Japan: Shojihomu, 2003) Another useful book authored by the Director of the Arbitration Department of the JCAA and published in February 2004 is:
T Nakamura Chusai-ho Naruhodo Q&A (Japan: Chuo-Keizaisha, 2004) The most influential books which address the Old Law include the following:
T Kojima and T Akira (eds) Chukai Chusai-Ho(Japan: Seirin Shoin, 1988)
T Kojima Chusai-Ho (Japan: Gendai Horitsugaku Zenshu No 59, 1999)
K Matsuura and Y Aoyama (eds) Gendai Chusai-Ho no Ronten (Japan: Yuhikaku, 1998)
T Nakamura Kokusai Shoji Chusai Nyumon (Japan: Chuokeizaisha, 2001) All of the above-referenced books are in Japanese only, except for the English translation of the commentary.
Journals
Several recent articles on the New Law are as follows:
M Kondo and T Kataoka ‘Chusai-Ho no Gaiyo’ (2003) JCA Journal 50–10–8, October Y Aoyama ‘Chusai-Ho no Seitei wo Furikaette’ (2003) JCA Journal 50–10–2, October K Uchibori and H Maeda ‘Chusai-Ho no Gaiyo’ (2003) Toki Joho 503–33, October
T Nakamura ‘Salient Features of the New Japanese Arbitration Law Based upon the UNCITRAL Model Law on International Commercial Arbitration’ 18 Mealey’s International Arbitration Report 9, September 2003
JCA Journal, a monthly periodical published by the JCAA, is one of the most influential journals on arbitration in Japan.
The outcomes of a series of round table meetings by members of the Arbitration Study Group and officials involved in the legislation of the New Law to discuss theoretical and practical issues under the New Law in detail are published in the legal periodical, Jurists, from nos 1263 to 1289 (2004–2005).6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?
As with the Old Law, the New Law limits the permissible subject matter of the arbitration by stipulating that an arbitration agreement is valid only where its subject matter is a dispute that can be resolved by settlement between the parties. The New Law expressly excludes disputes on divorce or separation from arbitration (art 13(1)). If an arbitration agreement is entered for future disputes, the agreement should concern disputes related to defined legal relationships (art 2(1)).
With regard to form, art 13(2) of the New Law requires that the arbitration agreement be in writing. Article 13(2) expressly provides that documents exchanged by fax satisfy the form requirements. Article 13(4) of the New Law further provides that where an arbitration agreement is made by way of electronic or magnetic records (eg emails), it is made in writing.Arbitration is not mandated for any type of dispute in Japan.
7.2 Is arbitration prohibited for certain types of dispute (restraints of fundamental public policy)?
Disputes on divorce and separation and disputes that cannot be settled by the parties cannot be arbitrated under the New Law. With regard to consumer arbitration and individual employment arbitration, an argument was raised during the legislative process that consumers and employees should not be deprived of their right to a fair trial in national courts. Proponents of this position argued that consumers/employees generally have less information and weaker bargaining power in negotiations with businesses/employers, and that many consumers/employees may be unaware of the existence and/or the legal effect of an arbitration agreement when entering into a consumer/employment contract. Accordingly, the New Law has special provisions in its Supplementary Provisions to deal with those two types of arbitration, which will apply ‘for the time being’.8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?
The New Law expressly stipulates the separability of an arbitration agreement and provides that where there is an agreement containing an arbitration clause, even if any contractual clause other than the arbitration clause is held to be invalid for any reason, the arbitration clause shall not be rendered ipso jure invalid (art 13(6)).9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS
9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?
Under the New Law, there are no citizenship, residency or professional requirements for arbitrators, unless otherwise agreed by the parties. The New Law provides that the parties are, in principle, free to agree on a procedure for appointing an arbitrator, as well as for challenging an arbitrator (arts 17(1) and 19(1)). Where there is no such agreement, the procedure for selecting or challenging an arbitrator as set forth in the relevant provisions of the New Law (arts 17(2)–(7) and 19(2)–(5), which are based on the Model Law) will apply equally to international and domestic arbitrations.
An arbitrator may be challenged if: (i) he or she does not satisfy the requirements as arbitrator that are agreed to by the parties; or (ii) if there is a good reason that is sufficient to doubt the impartiality or independence of the arbitrator (art 18(1)). The New Law imposes a continuing obligation on an arbitrator to disclose any circumstances that may possibly give rise to doubts as to his or her impartiality or independence (art 18(3), (4)). Any involvement by courts related to arbitration (art 6), and the selection or challenge of an arbitrator is resolved through an efficient procedure (kettei).
9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?
See section 9.1 above. With regard to the procedure for the challenge, where the parties have not agreed to such procedure, art 19(3) of the New Law stipulates that the party who intends to challenge an arbitrator shall, within 15 days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in art 18(1), whichever is later, submit to the arbitral tribunal a written application for challenge stating the reason for such challenge. Article 19(4) of the New Law provides for the party’s right to apply to the court for the challenge of an arbitrator within 30 days after having received notice of the decision of the arbitral tribunal rejecting the challenge. If the court denies such challenge, there is no further appeal to higher courts (art 7), ensuring that the disputes involving a challenge of an arbitrator will be resolved relatively quickly.
Under the New Law, if an arbitrator becomes de jure or de facto unable to perform his or her functions, or for other reasons causes undue delay in performing his or her functions, a party may apply to the court for removal of such arbitrator (art 20).
9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?
Japanese legislation is silent on the civil liability of arbitrators. Commentators argue that art 644 of the Japanese Civil Code, which imposes a duty of care as a good manager upon the person who handles matters for the other person under an inin agreement (eg consultants, lawyers or other professionals), also applies to arbitrators. There is no statutory immunity under Japanese law for arbitrators. However, a court would likely hold that the arbitrators have a broad discretion in their functions.
10. PARTY REPRESENTATION
10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?
Japanese arbitration legislation does not impose any formal requirements for party representatives who act as counsel on an arbitration. Article 72 of the Practising Attorneys Law generally prohibits anyone other than attorneys (bengoshi) licensed to practise law in Japan from handling, for the purpose of gaining fees, ‘legal business’ (horitsu jimu, which includes litigation and arbitration). However, the Special Measures Law Concerning the Handling of Legal Business by Foreign Lawyers (Law No 66 of 1986, the ‘Foreign Lawyers Law’) sets forth significant exceptions to this general rule. First, a foreign lawyer who is registered in Japan as gaikokuho-jimu-bengoshi (a special foreign member of the Japan Federation of Bar Associations, or a registered foreign lawyer) may handle certain legal business, such as legal business concerning the law of the country of his or her primary qualification. Article 5–3 of the Foreign Lawyers Law further provides that a registered foreign lawyer may represent a client in international arbitration proceedings (regardless of whether the subject matter concerns Japanese law). Secondly, art 58–2 of the Foreign Layers Law provides that a foreign lawyer (who is not a registered foreign lawyer) qualified to practise law in a foreign country (excluding a person who is employed and is providing services in Japan, based on his or her knowledge of foreign law) may, notwithstanding the provision of art 72 of the Practising Attorneys Law, represent clients in the proceedings of international arbitration cases which he or she was requested to undertake or undertook in such foreign country.
11. PLACE OF ARBITRATION/PROCEDURES
11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?
The New Law applies to arbitration procedures where the place of arbitration is in Japan (art 3(1)). The parties may agree on the place of arbitration (art 28(1)). Failing such agreement, the arbitral tribunal shall determine the place of arbitration having regard to the circumstances of the case, including the convenience of the parties (art 28(2)). The tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing parties, experts or witnesses or for inspection of goods or documents. These provisions are all based upon art 20 of the Model Law. The New Law further provides that where the place of arbitration has not been determined, if there is a possibility that the place of arbitration will be Japan and if either the claimant or the respondent has his or her address or principal place of business in Japan, the Japanese courts will still assist the parties in the appointment, challenge or removal of arbitrators (art 8(1)). The basic principle is that once the arbitral tribunal is formed through such assistance, the tribunal may then determine the place of arbitration.
11.2 Are specific procedures mandated in particular cases, or in general?
The New Law (art 26(1)) provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal, subject to the provisions of the New Law which concern public policy. Failing such agreement, the arbitral tribunal may, subject to the provisions of the New Law, conduct the arbitration in such manner as it considers appropriate (art 26(2)).
While many provisions of the New Law regarding arbitral procedures may be changed by agreement, certain mandatory procedural rules are established which are similar to those provided for in the Model Law. For example, the arbitral tribunal must provide the parties with sufficient advance notice of any hearing.12. EVIDENCE GATHERING
12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?
The New Law does not provide any detailed rules of evidence. Thus, the parties may agree on the procedural rules on the gathering and tendering of evidence, and failing such agreement, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate (art 26(1), (2)). As a practical matter, where the arbitral tribunal consists of Japanese lawyers only (which is common in domestic arbitration and which can occur even in international arbitrations, particularly where the non-Japanese party appoints a Japanese arbitrator), the arbitral procedure may often be similar to Japanese civil procedure, in which only limited document discovery is available. While the 1996 amendments to the Code of Civil Procedure (CCP), which came into force on 1 January 1998, have introduced some document discovery, the scope is much more limited as compared with US-style pre-trial discovery, and any ‘documents prepared solely for the holder’s internal use’ are excluded from document discovery. Use of witness statements prior to the witness hearing is fairly common, and the other party is commonly given the full opportunity to cross-examine the witness whose written statement has been submitted.
In recent years, an increasing number of international commercial arbitrations in Japan have been handled by an arbitral tribunal consisting of one Japanese and two non-Japanese arbitrators, in accordance with international norms. In some cases, the arbitral tribunal has ordered production of a fairly broad scope of documents from the parties. Increasingly, arbitrators have adopted the IBA’s Rules on Taking of Evidence in International Commercial Arbitration. Discovery by way of deposition is extremely uncommon.
12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?
Arbitrators do not have the power to compel the attendance of witnesses. There is no legislation to give the arbitral tribunal the authority to have a witness make an oath under the penalty of perjury. Similarly, the arbitral tribunal itself has no authority to enforce an order to produce documents. The arbitral tribunal may make an adverse inference if a party does not observe such an order. With regard to the party witness, the arbitral tribunal may also make an adverse inference if the party witness called by the counter party refuses to appear or testify without justifiable reason.
Article 35(1) of the New Law stipulates that the arbitral tribunal or a party (with the consent of the arbitral tribunal) can request court assistance in taking evidence (including entrustment of research, witness and expert testimony, document production order and inspection), and that the court will then act in accordance with the procedures under the CCP. While a judge will preside over the procedures for witness and expert testimony, arbitrators are entitled to attend and pose questions (art 35(5)).13. INTERIM MEASURES/ROLE OF THE TRIBUNAL
13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?
Similar to art 17 of the Model Law, the New Law expressly stipulates that unless otherwise agreed by the parties, the arbitral tribunal may order any party to take such interim or preliminary measure of protection as the arbitral tribunal considers necessary in respect of the subject matter of the dispute, and may require any party to provide appropriate security in connection with such measure (art 24(1), (2)). While the enforceability of an arbitral tribunal’s interim/preliminary order was discussed during the legislative process, the legislator of the New Law has decided that it is premature to make such order enforceable.
With regard to the power of a Japanese court to grant interim or preliminary relief in connection with the subject matter of arbitration, the New Law expressly confirms that an arbitration agreement shall not prevent the court from granting any preliminary relief before or during the arbitration proceedings (art 15).
14. TAXATION OF ARBITRATORS’ FEES
14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?
Japanese tax law does not treat foreign arbitrators differently from any other foreign persons earning income through the provision of personal services in Japan.
Broadly, if an arbitrator is resident in Japan for Japanese tax purposes, fees earned in respect of his or her services provided in Japan will be taxed in Japan regardless of nationality. If such fees are paid by a resident of Japan (such as the JCAA), Japanese withholding tax will apply. If the foreign arbitrator is not resident, the fees paid by a resident of Japan will be subject to Japanese withholding tax unless the applicable tax treaty provides for exemption. Indeed, many of the tax treaties to which Japan is a party provide for such exemption. In such cases, the resident payer is exempted from the withholding tax by submitting a notification to the relevant Japanese tax agency.15. DEFAULT PROCEEDINGS
15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?
The provisions of the New Law (art 33(1)–(4)) regarding the default of a party are similar to those set out under the Model Law, art 25. Unless otherwise agreed by the parties, (i) if the claimant fails to submit its statement of claim in a timely fashion without justifiable reason, the arbitral tribunal shall terminate the proceedings, (ii) if the respondent fails to submit its statement of defence in a timely fashion, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations and (iii) if any party fails to appear at a hearing or to produce documentary evidence without justifiable reason, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.16. THE ARBITRAL AWARD
16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?
Awards must be in writing and must be signed by the arbitrators (art 39(1)). Awards must also be dated and must indicate the place of arbitration. An award shall be deemed to have been made in the place of arbitration. Unless otherwise agreed by the parties, awards must state the reasons (art 39(2)) and a copy of the award signed by the arbitrators must be sent to each party.
16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?
The New Law has no provisions expressly addressing limits on the arbitrators’ powers to fashion appropriate remedies. Where the substantive law applicable to the subject matter of the arbitration provides for the remedies in question (eg injunctive remedies, rectification and interests for delayed performance), the arbitrators may grant such remedies to the extent permitted under the applicable substantive law, unless they are in violation of Japan’s public policy. Where the parties’ agreement or the applicable arbitration rules stipulate the rules regarding the interests and costs, such rules will generally apply. On account of a judgment of the Supreme Court of Japan dated 11 July 1997 (which denied the enforceability of punitive damages award by a judgment of a state court of California, on the grounds that punitive damages are in violation of Japan’s public policy), arbitrators may not award punitive damages.
17. RECOURSE FROM AN AWARD
17.1 Are there provisions governing modification, clarification or correction of an award?
The New Law now has provisions similar to art 33 of the Model Law. The arbitral tribunal may, at the request of a party (with notice to the other party) or on its own initiative, correct in the award any errors in computation, any clerical errors or any errors of a similar nature (New Law, art 41(1), (3)). Unless otherwise agreed by the parties, such party’s request for correction shall be made within 30 days from the receipt of the notice of the award. The arbitral tribunal shall make its decision regarding such request for correction within 30 days from the request, provided that the arbitral tribunal may, when it considers it necessary, extend such period of time. Unlike art 33(2) of the Model Law, there is no time limit under the New Law for a correction of an award made by the arbitral tribunal on its own initiative.
If so agreed by the parties, a party may, with notice to the other party request the arbitral tribunal to give an interpretation of a specific point or part of the award (art 42(1), (2)). Unless otherwise agreed by the parties, a party may, with notice to the other party and within 30 days of receipt of the notice of the award, request the arbitral tribunal to make an additional award as to claims presented in the arbitration proceedings but omitted from the award (arts 43(1), 41(2), (3)). The arbitral tribunal shall make its decision on such request within 60 days from the request, provided that where it considers it necessary, the arbitral tribunal may extend such time period.17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?
An arbitral award may not be appealed to the courts, but may be set aside by the courts on certain enumerated grounds. The New Law (art 44) has narrowed and clarified the grounds for setting aside an arbitral award by adopting almost verbatim those for setting aside, or refusing the enforcement of, an arbitral award under the Model Law (art 34) or the New York Convention (art 5). The New Law provides for a simpler and more efficient procedure in which the court’s decision (kettei) to set aside an arbitral award may be made without an oral hearing in open court, and only with a hearing (shinjin) that both parties may attend.
The New Law limits the filing of a request to set aside an arbitral award only within three months from the receipt of the notice of the award and only prior to the decision to enforce the award becoming final and conclusive.18. ENFORCEMENT OF AWARD
18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?
Since Japan is a contracting state to the New York Convention (with a declaration that it will apply the New York Convention to the recognition and enforcement of awards made only in the territory of another contracting state), the provisions of the New York Convention apply to arbitral awards made in other contracting states. Practically, since most reported cases on the issue of enforcing foreign arbitral awards have involved awards in other contracting states, Japanese courts have simply applied the provisions of the New York Convention in such cases.
The New Law (arts 45 and 46) has adopted almost verbatim the provisions regarding the grounds for refusing the recognition and enforcement of arbitral awards under the Model law (art 36) and the New York Convention (art 5). Article 3(3) of the New Law provides that the provisions in s VIII thereof (ie provisions regarding the recognition and enforcement of arbitral awards) shall apply regardless of whether the place of arbitration is in or outside of Japan. Therefore, these provisions apply not only to domestic awards but also to foreign awards, regardless of whether they are made in another contracting state to the New York Convention.19. CONFIDENTIALITY OF PROCEEDINGS
19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?
While litigation proceedings in Japanese courts must be, in principle, open to the public, arbitrations need not be open to the public and, practically, there is a widely accepted notion that arbitrations should be regarded as confidential unless otherwise agreed by the parties. However, there are no specific legislative provisions requiring that arbitration be conducted on a confidential basis. Article 42 of the Commercial Arbitration Rules of the JCAA imposes confidentiality obligations upon the arbitrators as well as the parties and their representatives. Articles 17 and 19 of the Rules of Arbitration of the Tokyo Maritime Arbitration Commission (TOMAC) of the Japan Shipping Exchange, Inc also impose confidentiality obligations upon both the arbitrators and the parties etc. Where the applicable arbitration rules do not have such provisions expressly imposing confidentiality obligations upon the arbitrators or the parties (eg the ICC Rules of Arbitration), the parties may want to agree upon confidentiality obligations.
There is no Japanese legislation that stipulates what remedies will be available if there is a breach of the confidentiality obligations owed by a party. Some commentators have argued that such a breach may only give rise to a separate claim for relief (such as injunction or damages) only in the courts. However, an increasingly prevalent view appears to be that an arbitral tribunal may grant such remedies as it considers appropriate (eg ordering the breaching party to refrain from further disclosure of confidential information, warning that further breach may result in a default award or damages claim in the same arbitration proceedings).
20.1 Is there any particular aspect of the approach to arbitration in the jurisdiction which bears special mention?
One of the New Law’s major deviations from the Model Law is the stipulation that special treatment for arbitration agreements involving consumers and individual employees will apply ‘for the time being’ (see section 7.2 above).
