Japan

The Constitution of Japan establishes five types of court within a three-tier court system, as follows:

• Three courts of first instance, depending on the nature or the amount of the claim:
  • Family courts specialise in family-related matters, such as civil status and probate, as well as juvenile cases.
  • Summary courts, in principle, handle civil claims not exceeding JPY 1,400,000. There is also a simplified small claims procedure for cases involving less than JPY 600,000.
  • District courts are the primary courts of first instance in most civil cases for claims over JPY 1,400,000. The district courts also hear appeals against decisions and judgments of summary courts in civil cases. Larger district courts, such as those of Tokyo and Osaka, have special divisions or departments for certain disputes such as bankruptcy and insolvency, construction, and intellectual property.
• Appellate courts hear appeals against judgments of the district and family courts. For cases commenced in the summary courts and submitted to the district court for appellate review, the appellate courts are the court of final appeal.
• The Supreme Court, as the highest court, handles appeals against judgments issued by the appellate courts.

The Japanese Code of Civil Procedure (Act No. 109 of 1996) (CCP) is the main body of law governing the conduct of commercial litigation.

Request for answering interrogatories/production of documents

A potential claimant or defendant can request that the other party answers interrogatories if the potential claimant has sent a notice of future litigation to the potential defendant. The requested party is required to answer the interrogatories, unless one of the reasons for refusal specified in the CCP applies (CCP, Article 132-2). Please note, however, that, even if a party refuses to answer the interrogatories without the reasons for refusal, there is no formal penalty, but a party’s refusal to answer can be taken into consideration in subsequent litigation by the court, which may adversely affect its position.

The court may allow a party to make a pre-action request that the other party or a third party produce documents in its possession, if the court considers that:

• the documents are necessary for the future litigation; and
• it is difficult for the requesting party to collect the documents.

However, this does not apply if it is unreasonable to request such production of the document (CCP, Article 132-4).

Again, although there are no formal penalties for non-compliance with an order for production, failure to comply can be taken into consideration by the court in subsequent litigation.

Examination of evidence

If the court finds circumstances to be such that unless the examination of evidence is conducted in advance it will be difficult to use the evidence, the court, upon petition, may conduct an examination of the evidence (CCP, Article 234).

Referring to mediation before going to court (Chotei Zenchi Shugi)

Certain disputes, for example, family disputes and particular rent disputes, must be first submitted to mediation before going to court. This requirement is not applicable to commercial disputes.

There are a variety of alternative methods to resolve commercial disputes in Japan, including court-supervised civil conciliation, commercial arbitration and mediation.

Arbitration and mediation are the two main ADR methods used to settle large commercial disputes, particularly where international parties are involved.

ADR features as one of the ongoing reforms to the justice system in Japan.

This will vary depending on various factors, including the complexity of the case, the nature of the claims, the amount in dispute, and the number of parties involved.

According to the latest available data published by the Japanese Supreme Court, the average length from the commencement of the proceedings to the issuance of a first instance judgment is approximately 10 months (as of 2018) (www.courts.go.jp/vc-files/courts/file4/hokoku_08_02minji.pdf).

The scope of document discovery is very limited in Japan. As explained below, a party may file a petition for the production of certain documents but the courts tend to encourage the requested party to voluntarily produce documents before issuing a discovery order.

A party can file a petition to order the other party or a third party to produce certain documents by specifying the title and summary of the document, the holder of the document, the fact to be proved and the grounds for such petition (CCP, Article 221).

If a request for specific documents is made and granted, each party must produce all of the requested documents in its possession, including documents adverse to the producing party, unless the document falls within one of the exceptions where refusing to produce is permitted, such as privilege and confidentiality (CCP, Article 220).

If the court determines that the requested party fails to comply with the order, the court may find the petitioner’s allegations concerning the details of said document to be true (CCP, Article 224).

Fact witnesses normally submit written statements (chinjutsu-sho) first and then, depending on the importance of the fact to be proved and the need for examination by counsel and the courts, may give oral evidence. At a hearing, the calling party conducts direct examination first, after which the opposing party conducts cross-examination. Thereafter, the court may pose questions to the witness. Cross-examination tends to take up the majority of time in a hearing. Oral evidence is transcribed in the record (cho-sho) and may be taken into account by the court like other evidence. Oral evidence, where necessary, is usually given during trial or at an advanced stage of litigation proceedings to help the court better understand relevant facts that may not be clear from a review of the documentary evidence alone.

If a witness fails to appear or refuses to swear under oath or make statements, the court may find that the opposing party’s allegations concerning the matters for examination are true (CCP, Article 208). In addition, a witness who fails to appear without justifiable grounds may be subject to an administrative or criminal fine or detention, or compelled to appear through a subpoena (CCP, Articles 192–194).

Generally, only limited costs incurred by the successful party may be borne by the unsuccessful party (CCP, Article 61). These include filing fees, postage, and witnesses’ travel expenses (“litigation costs”) but do not include attorneys’ fees.

Each party must bear its own attorneys’ fees. However, if the successful party claims its attorneys’ fees as damages under contract, in tort, or in a derivative suit, and the court awards such relief by judgment (which does not often occur), the unsuccessful party needs to pay them.

The unsuccessful party is liable to pay the litigation costs mentioned above, unless the successful party delayed or raised unnecessary applications in the proceedings (CCP, Articles 62 and 63). If neither party succeeds in entirety (e.g. when the claims are partially awarded), the court may apportion the litigation costs between the parties at its discretion (CCP, Article 64).

Interim attachments (kari sashiosae)

Interim attachments (kari sashiosae) are available to secure the enforcement of a monetary judgment. This order prevents the respondent from dissipating its assets. The court may order an interim attachment if the claimant has presented prima facie evidence (somei) of the claimant’s rights to be secured and the necessity of the interim attachment.

Interim injunctions (kari shobun)

An interim injunction is available to secure the enforcement of a non-monetary judgment through interim injunction proceedings (kari shobun). The court may grant an interim injunction if the claimant has presented prima facie evidence (somei) of the claimant’s rights to the relief requested and the need for an interim injunction.

There are two types of interim injunctions:

• Interim injunction relating to the subject matter in dispute. This order prevents the respondent from disposing of its assets in dispute or exercising its rights in relation to the assets (e.g. an interim injunction to prevent a respondent from transferring its ownership of real property to a third party).
• Interim injunction temporarily determining the state of affairs between the parties. This remedy is used to prevent the present harm a claimant is suffering and temporarily preserve the claimant’s rights in dispute (e.g. an injunction to prohibit construction works of a building that infringe the claimant’s rights).

The Japanese courts tend to be “pro-arbitration”, as shown in the AIU case (judgment dated 28 July 2009), in which the Tokyo District Court held that: “the arbitral procedure is an alternative dispute resolution process based on the agreement of the parties. It does not contemplate an appeal procedure and the arbitral award is final. Further, Article 4 of the Arbitration Act provides that with respect to arbitral proceedings, no court shall intervene except where so provided in this Law. In light of this, it goes without saying that an arbitral award should be respected as much as possible.”

The Arbitration Act (Act No. 138 of 2003) is the main law governing arbitrations seated in Japan.

The Arbitration Act incorporates the modern arbitration principles and framework set out in the 1985 Model Law. Furthermore, the Arbitration Act was recently updated to reflect the 2006 Amendment of the UNCITRAL Model Law (“2006 UNCITRAL Model Law”). The updated Arbitration Act entered into force in April 2024, enhancing, among other things, the usability of interim measures issued by arbitral tribunals by clarifying their available options and execution mechanisms.

The Japan Commercial Arbitration Association (JCAA) is Japan’s leading arbitration institution, administering both domestic and international commercial arbitration cases. The three main sets of rules are as follows:

• The Commercial Arbitration Rules (JCAA Rules) – the default rules for JCAA-administered arbitration cases, largely based on the UNCITRAL Arbitration Rules while incorporating recent international practices.
• The Administrative Rules for UNCITRAL Arbitration – the supplemental administrative rules for UNCITRAL Arbitration cases administered by the JCAA.
• Interactive Arbitration Rules – the alternative arbitration rules encouraging the tribunal to actively administer the proceedings, reflecting the inquisitorial civil law approach.

The JCAA Rules will apply if the arbitration agreement only refers to JCAA-administered arbitration without specifying the applicable arbitration rules (Article 3(2) of the JCAA Rules).

Yes. Under the Arbitration Act, an arbitral tribunal is empowered to order interim measures. Prior to the amendment of the Arbitration Act in 2024, tribunals could still issue interim measures, but the statutory text did not explicitly provide specific types of interim measures that the arbitral tribunal may order, nor did it provide any enforcement mechanism available for interim measures ordered by arbitral tribunals. However, the amended Arbitration Act, effective 1 April 2024, aligned with the 2006 UNCITRAL Model Law, provides a clear category for the interim measure that may be ordered by the arbitral tribunal as well as its enforcement mechanism (as described in the section below). Article 24(1) of the Arbitration Act provides that the arbitral tribunal may order the following measures:

• Asset preservation measures under Article 24(1)(i) and (ii). The tribunal may order measures to prevent the disposal, alteration or other changes to property that is critical for satisfying a monetary claim or a claim for delivery of property.
• Preventive or restorative measures under Article 24(1)(iii). The tribunal may order a party to prevent or take necessary action to prevent substantial loss or occurrence of imminent danger to the petitioner regarding the subject property or legal rights, or to restore the changed state to the original state.
• Proceedings protection measures under Article 24(1)(iv). The tribunal may order a party to bar actions that would disrupt the arbitration proceedings.
• Evidence preservation measures under Article 24(1)(v). The tribunal may prohibit actions such as disposing of, erasing or altering evidence that is necessary to determine the case. Notably, for this category, the Arbitration Act does not require the petitioner to demonstrate prima facieevidence, leaving the necessity of ordering such measures to the tribunal’s discretion.

Chapter V, Section 1 of the JCAA Rules also provides a set of interim measures similar to those under the Arbitration Act, which can be issued by the tribunal.

In addition, under Japanese law, interim measures issued by an emergency arbitrator are considered valid. Although the Arbitration Act does not provide any provision relating to an emergency arbitrator, Chapter V, Section 2 of the JCAA Rules stipulate rules on interim measures issued by Emergency Arbitrators. Under the JCAA Rules, upon application from a party, the JCAA will appoint the emergency arbitrator within two days from the filing date of the application for emergency measures after which the emergency arbitrator must render a decision on the application for interim measures within two weeks of being appointed (Article 74(4) of the JCAA Rules). Unlike interim measures ordered by a fully constituted arbitral tribunal or a national court, there is no enforcement mechanism available for interim measures ordered by emergency arbitrators under the Arbitration Act.

An arbitral award cannot be appealed, even if the unsuccessful party is not satisfied with the award. An unsuccessful party may, however, file an application for setting aside the arbitral award if it considers that there are grounds for setting aside the arbitral award pursuant to Chapter VII (Article 44) of the Arbitration Act. A party that wishes to set aside an arbitral award must file an application for setting aside the arbitral award with the competent district court in Japan within three months from receipt of the award. A party may not file an application for setting aside if an execution order (shikkou kettei) issued by a court in respect of the award has become final and binding.

Japan is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).

Domestic judgments

Enforceable. The following judgments or decisions are enforceable:

• Monetary judgments.
• Judgments ordering or prohibiting the doing of acts/injunctions.
• Orders for interim attachments (kari sashiosae).
• Orders for interim injunction (kari shobun).

Excluded. The following judgments or decisions are not enforceable:

• Declaratory judgments (kakunin hanketsu).
• Formative judgments (keisei hanketsu).
• Interlocutory judgments (chukan hanketsu).
• Judgments made without notice (ex parte), except for interim attachment and interim injunctions.

Foreign judgments

Enforceable. The following judgments by foreign courts are enforceable in Japan:

• Monetary judgments.
• Judgments ordering or prohibiting conduct/injunctions.

Excluded. The following judgments by foreign courts are not enforceable in Japan:

• Declaratory judgments.
• Judgments pending appeal in the country where the judgments are issued.
• Foreign decisions granting provisional measures or preliminary relief.
• Judgments made without notice (ex parte).
• Foreign enforcement orders/pre-judgment attachment orders.

Foreign judgments

A foreign judgment is recognised if it is final and satisfies all of the following requirements:

• The foreign court had jurisdiction over the case based on Japanese law or a treaty to which Japan is a party.
• The process was duly served on the unsuccessful party, or the unsuccessful party voluntarily entered an appearance in the proceedings.
• The foreign judgment and the foreign court proceedings are not incompatible with public policy in Japan.
• The foreign country recognises a similar judgment rendered in Japan (i.e. the principle of reciprocity) (CCP, Article 118).

To enforce a foreign judgment, the party seeking enforcement must first file an application with the competent court for an execution order (shikkokettei). The enforcement judgment is granted if the foreign judgment is final and satisfies the above four requirements (Civil Execution Law, Article 24). The Japanese court will not determine the merits of the case.

Arbitral awards

Arbitral award to which the Arbitration Act applies

An arbitral award has the same effect as a final and binding judgment in Japan. It is automatically “recognised” and becomes binding without any court order, unless it falls under one of the grounds for the refusal of recognition and enforcement of arbitral awards (Arbitration Act, Articles 45(1) and 45(2)). This means that the award has the status of res judicata (kihanryoku) in any subsequent civil litigation with the opposing party concerning the same dispute (CCP, Article 114(1)).

Like the enforcement of a foreign judgment, to enforce an arbitral award in Japan, the party seeking enforcement must first file an application with the competent court for an execution order (shikkokettei). The court will grant such order unless any of the grounds to refuse recognition and enforcement under Article 45(2) of the Arbitration Act have been established (Arbitration Act, Article 46(7)–(9)). The Japanese court will not determine the merits of the case.

The grounds for the refusal of recognition and enforcement of arbitral awards, which are based on, and generally correspond to, those under the 1985 Model Law, are as follows:

• The Arbitration Agreement is not valid due to a party’s lack of capacity.
• The Arbitration Agreement is not valid on grounds other than the limited capacity of a party pursuant to the laws and regulations designated by the agreement of the parties as those which should be applied to the Arbitration Agreement (if the said designation has not been made, the laws and regulations of the seat of arbitration).
• A party did not receive the notice required under the laws and regulations of the seat of arbitration in the procedure for appointing arbitrators (unless the parties have agreed otherwise).
• A party was unable to present a defence in the arbitration proceedings.
• The Arbitral Award contains a decision on matters beyond the scope of the Arbitration Agreement or a petition in the arbitration procedure.
• The composition of the Arbitral Tribunal or the arbitration procedure is in violation of the laws and regulations of the seat of arbitration (unless the parties have agreed otherwise).
• According to the laws and regulations of the seat of arbitration (or if the laws and regulations applied to the arbitration procedure are laws and regulations of a country other than the seat of arbitration, those of the stipulated other country) the Arbitral Award is not final and binding, or the Arbitral Award has been set aside or its effect has been suspended by a judicial body of that country.
• The petition filed in the arbitration procedure is concerned with a dispute which is capable of settlement by arbitration pursuant to the provisions of Japanese laws and regulations.
• The content of the Arbitral Award is contrary to the public policy of Japan.

Foreign awards

The framework for the recognition and enforcement of domestic awards also applies to arbitral awards made outside Japan (Arbitration Act, Article 45(1)). Where the New York Convention applies, Article 45(2) of the Arbitration Act establishes substantially the same legal requirements for enforcement as those found under the New York Convention.

In order for the judgment creditor to execute a foreign judgment or arbitral award which becomes final and binding, the judgment creditor must file an application for compulsory execution in accordance with the Civil Execution Act (Act No. 4 of 30 March 1979) (CEA) and the Rules of Civil Execution (Rules of the Supreme Court No. 5 of 8 November 1979) (RCE) (the execution procedures are the same as those for a domestic judgment (CEA, Article 22(vi))).

The procedures used for execution after the application differ, depending on the type of claim being enforced and type of assets for which compulsory execution is sought.

Monetary claims 

Where a judgment creditor intends to enforce a monetary claim upheld by a judgment, there are three main categories of assets against which the judgment creditor seeks relief:

• Real property. After an application for compulsory execution against the real property of the judgment debtor, the execution court can issue a commencement order for a compulsory auction or administration procedure to seize the real property for the judgment creditor (CEA, Articles 45 and 93). In the case of compulsory auction, the execution court sells the seized property by auction. In cases of compulsory administration procedure, an administrator appointed by the execution court collects proceeds from the sale of real property, distributing the proceeds to the creditor (CEA, Articles 95(1) and 107).
• Movable assets.Where the judgment creditor files an application for compulsory execution against movable assets of the judgment debtor, a court execution officer (shikkoukan) can seize such assets (CEA, Article 122). After seizure, a court execution officer sells the movable assets by bid, auction or any other method specified by the RCE (CEA, Article 134), and the proceeds are then distributed to the creditor (CEA, Article 139).
• Monetary claims. For compulsory execution against monetary claims owned by the judgment debtor, the execution court issues an order of seizure (CEA, Article 143). This prohibits the judgment debtor from collecting or otherwise disposing of the claims and prohibiting a third-party debtor from making payments to the judgment debtor (CEA, Article 145). The judgment creditor can directly collect the monetary claims of the judgment debtor from a third-party debtor after one week has elapsed from the day on which an order of seizure was served on the judgment debtor (CEA, Article 155(1)).

Non-monetary claims

Where the judgment creditor intends to enforce non-monetary claims awarded under the judgment, there are several methods for compulsory execution depending on the nature of the claims to be enforced:

• Delivery of, or eviction from, real property. The compulsory execution is carried out by a court execution officer visiting the site and releasing the real property from the judgment debtor’s possession and causing the judgment creditor to acquire the possession of such real property (CEA, Article 168).
• Delivery of movable assets.The compulsory execution is carried out by a court execution officer confiscating the movable assets from the judgment debtor and delivering the property to the judgment creditor (CEA, Article 169).
• Performance of an action. If the action ordered by the judgment can be performed by a third party instead of the judgment debtor, the execution court may issue an order to demand that the third party perform that action at the judgment debtor’s expense (CEA, Article 171). If the action cannot be performed by a third party, the execution court may order that the judgment debtor pay the judgment creditor a specified amount of money during the period when the judgment debtor fails to perform the action (kansetsu kyosei) (CEA, Article 172).

Domestic judgments

Under the Civil Provisional Remedies Act (Act No. 91 of 22 December 1989) (CPRA), a judgment creditor may file a separate application with a competent court in Japan to obtain interim measures (i.e. interim attachments or interim injunctions), if necessary.

Foreign judgments

In Japan, there are different court procedures to obtain interim relief pending the enforcement of a foreign judgment or award. The interim relief primarily consists of provisional seizure of those assets. Under the CPRA, a judgment creditor can file an application with a competent court in Japan to obtain those interim measures.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

Enforcement in Japan under the New York Convention

There is no case precedent or article on this issue. However, based on the stated assumptions, a Japanese court would in principle recognise and enforce the arbitral award.

Article V(1): scope and validity

Article V(1)(a) concerns the validity of the arbitration agreement under the law governing that agreement or the law of the seat. On the assumed facts, the governing law and seat recognise non-payment of the contractual obligation as giving rise to a dispute capable of arbitration and the arbitration agreement is valid. A Japanese enforcing court would not refuse enforcement on this basis.

Article V(1)(c) permits refusal if the award deals with matters beyond the scope of the submission to arbitration. Here, the tribunal’s mandate was expressly limited to confirming that the judgment was final and unpaid and to ordering the agreed contractual consequences of non-payment. It was not empowered to review or re-litigate the merits of the underlying court judgment. The award therefore falls within the scope of the arbitration agreement.

Article V(1)(e) concerns whether the award has become binding or has been set aside or suspended at the seat. It is assumed that the award is final and binding and has not been set aside or suspended. Accordingly, no ground of refusal arises under this limb.

There is likewise no suggestion on the assumed facts of procedural unfairness under Article V(1)(b) or irregular composition under Article V(1)(d).

Article V(2)(a): arbitrability under Japanese law

Article V(2)(a) requires the Japanese court to consider whether the subject matter of the difference is capable of settlement by arbitration under Japanese law.

Under Japanese law, while litigation related to personal status or family matter is considered incapable of settlement by arbitration, non-payment of a sum said to be due is capable of constituting a dispute referable to arbitration. The subject matter here is a contractual monetary obligation and interest arising upon non-payment. Such disputes would be arbitrable under Japanese law. The fact that the contractual trigger is the existence of a final court judgment does not alter the essential character of the dispute, which concerns the contractual consequences of non-payment. The tribunal’s mandate is confined to verifying objective conditions and applying agreed contractual consequences, without reopening the merits of the court decision. The arbitration therefore does not encroach upon matters reserved exclusively to the courts.

Article V(2)(b): public policy

It might be argued that the arbitration is, in substance, an attempt to enforce or review a court judgment and thus it is contrary to Japanese public policy.

However, as noted above, the tribunal does not purport to enforce the judgment as a judgment or to sit in appeal from it. The tribunal’s mandate is confined to verifying objective conditions and applying agreed contractual consequences, without reopening the merits of the court decision. The arbitration therefore does not encroach upon matters reserved exclusively to the courts.

Further, public policy under Article V(2)(b) is construed narrowly in Japan and is engaged only where enforcement would violate fundamental principles of justice or morality. Enforcement of the award would not offend Japanese public policy. The award gives effect to party autonomy, a principle which the Japanese courts generally uphold and respect. The mechanism may be innovative in linking contractual consequences to non-payment of a judgment, but novelty in and of itself does not engage public policy. The tribunal does not undermine or contradict the foreign judgment; it applies the parties’ agreed contractual framework. The assumed facts do not involve any element of abuse of process, procedural unfairness or circumvention of mandatory rules of Japanese law.

Conclusion

On the assumed facts, and taking into account the approach under Japanese law that non-payment may itself constitute a dispute capable of arbitration, a Japanese court would recognize and enforce the award under the New York Convention. It is unlikely that the grounds in Article V(1) or Article V(2) would justify refusal of enforcement.