Japan

In court litigation, although certain measures — such as confidentiality orders or restrictions on third-party access to litigation records — may be permitted, the public nature of court proceedings is mandated by the Constitution. In addition, the parties cannot choose their judges.

By contrast, arbitration proceedings have the following characteristics:

1.1 Advantages

Although the Arbitration Act (“the Act”) itself does not contain provisions on whether proceedings are public or private, arbitration proceedings are generally conducted in private and subject to confidentiality obligations based on the parties’ agreement (including agreed institutional rules) or ordered by the tribunal. In arbitration, the parties may also appoint arbitrators with relevant expertise by mutual agreement.

1.2 Disadvantages and common pitfalls

When bringing a claim against a party who is not a party to the arbitration agreement, the claimant must, in principle, initiate separate court litigation against the third party instead of including it as a party to the arbitral proceedings.

In Japanese court litigation, the general rule is that each party bears its own attorneys’ fees, and only in exceptional cases, the losing party may be ordered to pay an additional amount of damages as compensation for the winning party’s attorneys’ fees. In contrast, in arbitration, the “cost follows the event” approach is commonly adopted, meaning that the losing party may be ordered not only to bear its own attorneys’ fees but also to reimburse the winning party’s attorneys’ fees.

1.3 Distinctive features

Arbitral institutions have been revising their arbitration rules in order to introduce concise and expedited procedures for relatively small cases.

For example, under the JCAA Commercial Arbitration Rules (2021) (“JCAA Rules”), cases with an amount in dispute of JPY 300 million or less are generally subject to the Expedited Arbitration Procedures. In such cases, the tribunal is, in principle, composed of a sole arbitrator, and the proceedings are conducted primarily on a documents-only basis. Evidentiary hearings, such as witness examinations, are held only if all parties agree. The tribunal is required to make reasonable efforts to render an arbitral award within six months from the date of its composition.

2.1 Legal framework

The core of Japan’s arbitration legal system is the Act, enacted in 2003. The Act broadly applies to arbitral proceedings seated in Japan and arbitration-related court proceedings carried out by the Japanese courts.

There is no special court to hear arbitration matters.

See Section 3, below for arbitration institutions in Japan.

2.2 What qualifies under domestic law as “international arbitration”? Is there a specific statute?

Under the Act, “international arbitration” is neither defined nor subject to any specific qualifications. On the other hand, Article 2(xiv) of the Act on the Handling of Legal Services by Foreign Lawyers defines an “international arbitration case” as a civil arbitration case that falls under any of the following:

• some or all of the parties are persons who have an address, or a main or head office in a foreign jurisdiction;
• the law governing the arbitral tribunal’s award (limited to the law provided for by the agreement of the parties) is not Japanese law; or
• the seat of arbitration is in a country other than Japan.

2.3 Ratification of the New York Convention

Japan ratified the New York Convention (NYC) in 1961. Although Japan has made a reservation that it will apply the NYC to the recognition and enforcement of awards made only in the territory of another contracting state, such reservation has little meaning as the Act allows the recognition and enforcement of an arbitral award regardless of the seat of arbitration under generally the same requirements as Article V of the NYC.

2.4 Ratification of the ICSID Convention

Japan signed the ICSID Convention in 1965, and it entered into force in 1967.

2.5 Other treaties relating to arbitration

Japan is a member of the Energy Charter Treaty. Furthermore, bilateral treaties concluded between Japan and other countries include provisions on the recognition and enforcement of arbitral awards.

2.6 Choice of forum for intra-EU dispute settlement

Not applicable.

2.7 Is the municipal law governing arbitration based on UNCITRAL Model Law?

The Act is in line with the 2006 UNCITRAL Model Law.

2.8 Recent amendments or reforms in arbitration laws

The amended Act came into effect on April 1, 2024. While the Act before the amendment was based on the 1986 UNCITRAL Model Law, this amendment brought the Act into line with the 2006 Model Law and introduced new provisions, including a mechanism that enables enforcement of tribunal-ordered interim measures. See also Section 18, below.

To promote international arbitration in Japan, various reforms have been implemented in recent years. The legal amendments mentioned in Section 2, above and 18, below are part of this effort, and other initiatives include establishing the Japan International Mediation Center in Kyoto.

3.1 Presence of local arbitration institutions

The Japan Commercial Arbitration Association (JCAA) is the major arbitration institution in Japan that comprehensively handles arbitration and mediation for commercial disputes. Parties may select from three sets of arbitration rules the rules best suited to their needs:

• the Commercial Arbitration Rules (2021);
• the Interactive Arbitration Rules (2021);
• and the UNCITRAL Arbitration Rules (2010) and Administrative Rules for UNICTRAL Arbitration (2021).

Please see Section 17.1, below for specialized arbitration institutions.

3.2 Does the London Court of International Arbitration (LCIA) have a local office?

No.

3.3 Does the Permanent Court of Arbitration (PCA) have a local office?

No.

3.4 Does the ICC International Court of Arbitration have a local office?

No.

3.5 Does the International Centre for Dispute Resolution (ICDR) have a local office?

No.

3.6 Agreement entered into with local offices of international arbitration institutions

Not applicable.

The arbitration agreement is defined in Article 2(1) of the Act, while its validity and related matters are stipulated in Chapter 2 of the Act.

4.1 Requirements as to content and form

An arbitration agreement is effective only if it concerns the resolution of all or part of a dispute referred to in Section 5, below.

Furthermore, arbitration agreements must be in writing, either as a document signed by all parties or as letters, telegrams, or other written communications exchanged between the parties (Article 13(2), Act). If the arbitration agreement is made in an electromagnetic record (e.g., via email, website), such arbitration agreement shall be deemed to be in writing (Article 13(4), Act).

4.2 Validity of arbitration agreements

In addition to Section 4.1, above, the following party-related requirements also apply:

• capacity as a party;
• capacity to enter into the arbitration agreement (including mental capacity and capacity to act);
• authority to enter into the arbitration agreement; and
• mutual consent.

4.3 Special formalities

No.

4.4 Governing law

While various views exist, the prevailing view is that it is determined under the Act on General Rules for Application of Laws. Accordingly, if there is an explicit choice of law governing the validity of the arbitration agreement, that law applies. In the absence of such an explicit choice, the parties’ implied intent will be examined, and the governing law will be determined by considering factors such as the law governing the underlying contract and the seat of arbitration.

Articles 2(1) and 13(1) of the Act restrict the types of disputes that may be resolved through arbitration. Specifically, disputes subject to arbitration must be “civil” in nature (excluding disputes concerning divorce or dissolution of adoption) and must be disputes that “can be settled between the parties.”

5.1 Applicable restrictions

The following are examples of disputes that cannot be resolved through arbitration or are considered unresolvable:

• criminal cases;
• cases involving divorce, dissolution of an adoption;
• certain disputes concerning the validity of a patent;
• certain corporate-related cases;
• cases involving personal status;
• administrative cases; and
• individual labor disputes arising after the arbitration agreement.

An arbitration agreement is an agreement to have their disputes resolved by arbitrators chosen by the parties, which has the effect of excluding the resolution of such disputes from the state’s judicial authority. The consequences when a party initiates a court litigation in violation of the arbitration agreement is as follows:

6.1 Stay of proceedings

Rather than staying the proceedings, if a party brings an action before a court which is subject to an arbitration agreement, the court must dismiss the action without prejudice, upon the petition of the defendant prior to its presentation on the merit, unless exceptional grounds exist.

6.2 Anti-suit injunction

There appear to be no cases in which a Japanese court has issued an anti-suit injunctive order prohibiting a party to an arbitration agreement from filing a lawsuit in violation of that arbitration agreement.

The Act essentially adopts the tribunal’s power to order interim measures, including those under Article 17(2)(b) of the 2006 UNCITRAL Model Law. This Article is interpreted as allowing the tribunal to order anti-suit injunctive measures.

7.1 Restrictions on the parties’ freedom to choose arbitrators

The Act does not impose any restrictions on the parties’ freedom to choose arbitrators.

7.2 Requirement of arbitrator independence and impartiality

The Act does not set forth specific criteria for the arbitrator’s independence and impartiality. The IBA Guidelines on Conflicts of Interest in International Arbitration is widely accepted as a guidance in the arbitration practice in Japan.

7.3 Mandatory rules applicable to the appointment process

The parties may not exclude the right to petition the court for the appointment of an arbitrator where they are unable to appoint an arbitrator in accordance with their agreed procedure.

7.4 Appointment mechanism in the absence of party agreement or applicable institutional rules

If two parties agreed to appoint three arbitrators but failed to agree on the appointment mechanism, the parties shall each appoint one arbitrator, and the two arbitrators appointed by the parties shall appoint the third arbitrator. In this case, if the two arbitrators appointed by the parties fail to appoint the third arbitrator within 30 days from their appointment, the court shall appoint the arbitrator.

If two parties agreed to appoint one arbitrator but the parties are unable to reach an agreement for the appointment of the arbitrator, the court shall appoint the arbitrator, upon the petition of one of the parties.

If there are three or more parties, and the agreement for the appointment mechanism for the arbitrators has not been reached, the court shall appoint the arbitrator.

7.5 Mandatory rules applicable to the replacement process

Under the Act, an arbitrator’s duties shall terminate in the event of:

• the arbitrator’ death;
• the arbitrator’s resignation;
• the arbitrator’s dismissal by agreement of the parties; and
• the court’s decision to accept the parties’ challenge to the arbitrator.

7.6 Mandatory disclosure obligations

A candidate for appointment as an arbitrator must disclose all facts likely to give rise to doubts as to their impartiality or independence. Further, after appointment and during the course of the arbitral proceedings, the arbitrator must, without delay, disclose to the parties any such facts that arise or become known, except those already disclosed.

7.7 Grounds for challenge

The parties may challenge an arbitrator if:

• the arbitrator fails to satisfy the requirements provided by the agreement of the parties; or
• there are reasonable grounds to doubt the impartiality or independence of the arbitrator.

7.8 Mandatory rules governing the challenge of arbitrators

Other than those described in Section 7.7, above the parties are not allowed to add grounds for challenge of arbitrators. Further, a party that has appointed an arbitrator may not challenge that arbitrator on grounds known to the party before the appointment.

7.9 Removal

A party may file a petition with the court to dismiss the arbitrator if:

• the arbitrator has become de jure or de facto unable to perform their duties; or
• the arbitrator unjustly delays the performance of their duties.

7.10 Liability and immunity of arbitrators

Under the Act, arbitrators are not provided with any explicit immunity from claims relating to breach of contract or other illegal activities.

The JCAA Rules afford arbitrators immunity from liability for actions or omissions conducted in the course of an arbitration, unless those actions or omissions were shown to constitute willful misconduct or gross negligence (Article 13).

8.1 Interim measures

8.1.1 Overview of interim measures

The Act provides that a tribunal may order interim measures consistent with the 2006 UNCITRAL Model Law, and that Japanese courts may enforce such interim measures.

8.1.2 Relevance of availability of emergency arbitrator mechanism

An order issued by an emergency arbitrator is not considered equivalent to interim measures issued by a tribunal under the Act. Thus, an emergency arbitrator’s order is not enforceable.

8.2 Taking of evidence

If a tribunal finds it necessary and unless otherwise agreed by the parties, the tribunal or the parties may ask the court to implement examination of a witness and expert testimony, or examination of documentary evidence in a manner provided in the provisions of the Code of Civil Procedure.

8.3 Appointment or challenge of arbitrators

Please see our answers in Sections 7.3 – 7.8, above.

8.4 Other available assistance

The parties or the tribunal may request the court’s assistance in delivering a notice through the judicial procedure for the service of a document under the Code of Civil Procedure.

9.1 Domestic scope of sovereign immunity from jurisdiction

The Act on the Civil Jurisdiction of Japan with respect to Foreign States provides that, unless otherwise agreed in writing, a foreign state with respect to the written arbitration agreements related to commercial transactions between the foreign state and a citizen of a state other than the foreign state will not have immunity from jurisdiction with respect to the judicial proceedings concerning the existence or nonexistence or effect of the arbitration agreements or arbitral proceedings based on the arbitration agreements.

9.2 Immunity from execution

With respect to immunity from execution, the above act provides that a foreign state is not immune from compulsory execution against its property where it has consented to such execution through an arbitration clause, or where the compulsory execution is with respect to property that is in use or intended for use by the state for commercial purposes.

Under the Act, hearings do not have to be held at the seat of arbitration unless the parties agree otherwise (Article 28(2)). Hearings may be held virtually if the parties agree. If a party fails to appear at a hearing, the tribunal may issue an arbitral award based on the evidence collected by that time, unless there are justifiable grounds for the failure (Article 33(3)). A tribunal must hold a hearing at an appropriate time at the request of a party, except where the parties have agreed not to hold a hearing (Article 32(1)). In case of Expedited Arbitration Procedures under the JCAA Rules, the tribunal must conduct the proceedings on a document-only basis, unless it considers a hearing to be necessary or if all parties agree to hold a hearing (Article 87).

There is no provision in the Act regarding the confidentiality of arbitration. The JCAA Rules set forth that arbitral proceedings shall be held in private (Article 42(1)) and prohibits the relevant parties to the arbitration from disclosing facts related to or learned through the arbitral proceedings (Article 42(2)).

12.1 Requirements as to content and form

The Act sets forth that an arbitral award must be in writing and signed by the arbitrators, and must state its reasons, the date of preparation, and the seat of arbitration (Article 39). In addition to these items, the JCAA Rules require that an arbitral award must state the names and addresses of the parties and their counsel, the determination on the relief and remedy sought, the procedural history, and allocation of costs (Article 66). Further, the JCAA Rules prohibit arbitrators from stating a dissenting opinion (Article 63).

12.2 Time limit

The Act does not impose a time limit for rendering an award. The JCAA Rules set forth that the tribunal shall use reasonable efforts to render an arbitral award within nine months from the date when it is constituted (Article 43(1)). In case of Expedited Arbitration Procedures under the same rules, the relevant period is six months or three months, depending on the amount in dispute (Article 88).

12.3 Remedies

The Act does not contain an express provision on the types of remedies that can be granted in an arbitral award. If an arbitral award orders a remedy that is against the public policy of Japan, Japanese courts may refuse enforcement of the award (Articles 46(7) and 45(2)(ix), Act). Further, the enforceability of the remedies granted in an arbitral award will be determined by the applicable law of the place of enforcement.

13.1 Interpretation and correction of awards

A tribunal may correct clerical errors in the arbitral award upon the request of the parties or on its own initiative (Article 41(1), Act and Article 68(1), JCAA Rules). The parties must request a correction within thirty days from the date of receipt of the arbitral award, unless otherwise agreed (Article 41(2), Act). The relevant time limit is four weeks under the JCAA Rules (Article 68(2)).

The parties may request the tribunal to provide an interpretation of a specific part of the arbitral award only if there is an agreement between the parties that such request may be filed (Article 42, Act). The time limit is the same as that for correction (Articles 42(3) and 41(2), Act and Article 69, JCAA Rules).

13.2 Challenge of an award

If the seat of arbitration is in Japan, a party may file a petition with a court in Japan to set aside the award if a ground for setting aside the award exists (Articles 3(1) and 44, Act). The grounds are generally the same as those set forth in the UNCITRAL Model Law and the grounds for refusing recognition and enforcement set forth in the NYC. A petition to set aside the award must be filed within three months from the date of receipt of the award (Article 44(2), Act).

13.3 Recognition and enforcement proceedings

A party may file a petition with a court in Japan to obtain an enforcement order of a final and binding arbitral award, regardless of the seat of arbitration (Article 46(1), Act). There is no time limit for the petition. The court may, however, refuse to grant an enforcement order if a ground for resisting recognition and enforcement exists (Articles 46(7) and 45(2), Act). The grounds are generally the same as those set forth in the UNCITRAL Model Law and the NYC.

13.4 Cost of enforcement

When filing a petition to obtain an enforcement order of an arbitral award under Article 46(1) of the Act, the party must pay a fee of JPY 4,000 to the court (Appended Table 1, Act on the Costs of Civil Proceedings). Additional fees will be required when filing a petition for compulsory execution (e.g., the foreclosure sale of the respondent’s property). The amount of these fees vary depending on the type of execution.

13.5 Enforcement of orders of emergency arbitrators

The Act contains no provisions for the enforcement of orders issued by emergency arbitrators.

14.1 Process for enforcing New York Convention awards

Japan applies the NYC on the basis of reciprocity. The process for enforcing the NYC awards is the same as that for enforcing other arbitral awards as explained in Section 13.3, above.

14.2 Grounds for resisting enforcement of New York Convention awards

As explained in Section 13.3, above, the grounds for resisting enforcement of an arbitral award set forth in the Act are generally the same as those provided in the NYC. Accordingly, when the Japanese courts apply the NYC, they may refer both to the interpretation of the Act as well as foreign judicial precedents that applied the NYC.

14.3 Enforcing non-Convention awards

The process for enforcing non-Convention awards is the same as that for enforcing other arbitral awards as explained in Section 13.3, above.

15.1 Applicable to counsel

Article 72 of the Attorneys Act sets forth that no person other than an attorney certified in Japan may arbitrate a case or otherwise handle legal services regarding general legal matters for the purpose of receiving compensation. However, the Act on the Handling of Legal Services by Foreign Lawyers allows registered foreign attorneys and non-registered foreign attorneys to represent a party in international arbitration proceedings (Articles 7 and 98).

15.2 Applicable to arbitrators

Regardless of Article 72 of the Attorneys Act, non-attorneys are commonly appointed as arbitrators in arbitral proceedings conducted in Japan. Article 24(2) of the JCAA Rules requires that a candidate for an arbitrator must conduct a reasonable investigation into any circumstances which may, in the eyes of the parties, give rise to justifiable doubts as to their impartiality or independence.

16.1 Applicable regulatory requirements

There are no laws or regulations in Japan which expressly regulate third-party funding, and nor are there court cases regarding the validity or legality of third-party funding. However, some existing laws may impact third-party funding. Article 72 of the Attorneys Act sets forth that only qualified lawyers can provide certain legal services as business, and third-party funding should be structured so that funders do not engage in such legal services. Other relevant regulations are Article 73 of the Attorneys Act, which prohibits exercise of rights assigned from others as business, and Article 10 of the Trust Act, which prohibits creating a trust for the main purpose of having another person conduct litigation.

16.2 Overview of the third-party funding market

While the regulatory framework on third-party funding is not clear, third-party funding has been utilized by Japanese companies, especially for international litigation and arbitration seated abroad. Whether third-party funding will be used for Japanese domestic litigation or arbitration remains to be seen.

17.1 Types of specialist arbitration

Several arbitration institutions in Japan focus on distinct areas of specialization, for example:  

• the Japan Intellectual Property Arbitration Center (JIPAC) deals with arbitration regarding intellectual property;
• the Tokyo Maritime Arbitration Commission (TOMAC) handles maritime arbitration; and
• the Japan Sports Arbitration Agency (JSAA) engages in arbitration regarding sports.

There are other institutions or committees in Japan which deal with arbitration regarding labor, construction, real estate transactions, etc.

17.2 Key legal principles

The key legal principles concerning specialist arbitration above are the same as other regular arbitrations. The procedures are dictated by the arbitration rules of the arbitration institution agreed to by the parties.  

17.3 Types of claim and defences typically brought in that area

The claims and defences differ in each arbitration case and cannot be categorized.

17.4 Issues and strategic considerations to take note of

One of the characteristics of arbitration institutions in Japan is that they conduct not only arbitration but also mediation. Therefore, parties usually seek resolution not only by arbitral award but also by settlement through mediation.

The Act was amended in April 2023, and the amended Act came into effect in April 2024. The amendments include, inter alia:

• providing for interim measures that a tribunal can issue;
• granting the Tokyo District Court and the Osaka District Court concurrent jurisdiction over arbitration-related proceedings, and
• allowing courts at their discretion to waive requirements for Japanese translations of arbitral awards in foreign languages with regard to proceedings for the enforcement of arbitral awards and other arbitration-related proceedings.

With the establishment of the so-called Business Court at the Tokyo District Court in 2022, which deals with arbitration-related cases, Japanese courts are well equipped to handle arbitration-related cases with greater efficiency and speed.