THE AUTHORS:
Lars Markert, Partner at Nishimura & Asahi
Benedikt Kaneko, Law Clerk at the Higher Regional Court of Hamburg
Mihiro Koeda, Associate at Nishimura & Asahi
International Arbitration in Japan in 2024
On 1 April 2024, amendments to Japan’s Arbitration Act (“Arbitration Act”) came into force (Act Partially Amending the Arbitration Act – Act No. 15 of 2023). The amendments come about twenty years after Japan last changed its arbitration law by introducing the Arbitration Act in the first place, which replaced arbitration-related provisions that were included in Japan’s Code of Civil Procedure.
Overall, the amendments are part of the broader ongoing initiative by the Government of Japan to increase its presence in the global alternative dispute resolution market, with a particular focus on international arbitration and mediation. This effort is spearheaded by Japan’s Ministry of Justice and aims to strengthen Japan’s offering as a seat for international arbitrations.
The amendments to the Arbitration Act underscore Japan’s modernization efforts. Up until 1 April 2024, the Arbitration Act was based on the 1985 UNCITAL Model Law. The amendments bring it in line with the 2006 UNCITRAL Model Law and provide additional improvements, such as court assisted enforcement of interim measures, disposal of some translation requirements in arbitration-related court proceedings, and establishment of a concurrent jurisdiction of the Tokyo and Osaka District Courts for arbitration-related proceedings to concentrate these cases before experienced judges.
Court Assisted Enforcement of Interim Measures
Article 24 of the Arbitration Act now clarifies an arbitral tribunal’s authority to issue interim measures. Such interim measures include preservation of assets, maintaining or restoring the status quo between the parties, prohibiting actions that could cause harm or prejudice to the arbitration proceedings, and preserving evidence needed for the arbitration. These interim measures largely align with Article 17(2) of the 2006 UNCITRAL Model Law. Articles 47 and 48 of the Arbitration Act implement court assisted enforcement of such interim measures. It is noteworthy that Japanese courts may enforce interim measures regardless of whether the seat of arbitration is located in Japan. Article 49 of the Arbitration Act is a rather unique provision that allows courts in Japan to order payment of penalties to facilitate enforcement, should a party violate or be likely to violate an order for interim measures prohibiting certain behavior.
Form Requirements of an Arbitration Agreement
In line with Option I Article 7(3) of the 2006 UNCITRAL Model Law, the Arbitration Act has now relaxed its form requirements for a valid arbitration agreement. Under the newly introduced Article 13(6) of the Arbitration Act, arbitration agreements are considered to be valid (“in writing”) if a non-written contract incorporates a written (including electronic) record of an arbitration agreement by reference.
Translation Requirements
Under Article 46(2) of the Arbitration Act, courts in an enforcement proceeding may dispense with the requirement to submit a Japanese translation of the arbitral award. The otherwise imposed translation requirement can be lifted either in full or only partially at the discretion of the courts, after hearing the parties. The same discretion is given to courts in proceedings relating to the enforcement of interim measures pursuant to Article 47(2) of the Arbitration Act. Considering that these provisions leave the decision in the court’s discretion, much of their impact will depend on their application in practice.
Jurisdiction
The Arbitration Act now allows the concentration of arbitration-related court proceedings with the Tokyo District Court and Osaka District Court. Parties may file their arbitration-related court proceedings with either court. However, it should be noted that this jurisdiction does not constitute an exclusive jurisdiction and parties may still opt to refer their matters to the district courts that otherwise have jurisdiction under the Arbitration Act. At the same time, the otherwise petitioned courts may themselves transfer arbitration-related proceedings to the Tokyo District Court or Osaka District Court if they find it appropriate. Overall, this amendment has the potential to concentrate expertise and experience with the two district courts.
What is next for Japan’s Arbitration Act
Several further amendments have already passed the Japanese legislature and will enter into force in several steps in the future, with the last amendments currently expected to take effect in 2028. However, these amendments are mostly of an editorial nature, aligning the Arbitration Act with upcoming amendments addressing the digitalization and modernization of Japan’s Code of Civil Procedure. These amendments will not bring changes to the core substantive provisions of the Arbitration Act. It should be noted, however, that at some point in the future the article numbering of the Arbitration Act will be changed as a consequence of such further amendments.
Japan’s Ministry of Justice has provided an unofficial translation of the Arbitration Act that already reflects the substantive changes described above. It should be noted for all those wishing to work with the unofficial translation that it already includes some amendments that did not yet enter into force on 1 April 2024, but will only do so at a later time (e.g. Articles 9-2 to 9-5).
ABOUT THE AUTHORS:
Dr. Lars Markert is a partner in Nishimura & Asahi’s international dispute resolution department in Tokyo, Japan. He represents clients in international contentious proceedings involving post-M&A, commercial, manufacturing, construction and distribution matters, in areas such as life sciences, automotive and energy. Lars also acts as arbitrator. He has particular experience with cases involving governments, and has advised foreign investors and states on issues of foreign direct investment and public international law, including related negotiations and investor-state disputes. Lars is regularly recommended in legal directories for his expertise in international arbitration, and frequently writes, speaks and lectures on the subject.
Dr. Benedikt Yuji Kaneko currently works as a law clerk at the Higher Regional Court of Hamburg as part of the mandatory two-year clerkship for admission to the German Bar (Referendariat). He is admitted to the New York Bar (Attorney at Law) and has experience acting in commercial and investment arbitrations under various rules (ICC, SIAC, KCAB, UNCITRAL, and ICSID).
Mihiro Koeda belongs to Nishimura & Asahi’s international dispute resolution group in Tokyo, focusing his practice on international arbitration for nearly a decade. He has advised clients in a number of arbitration cases, seated in Singapore, Tokyo, London, Copenhagen and Zurich, in accordance with the SIAC, ICC and JCAA Rules. He has also acted as tribunal secretary in multiple arbitration cases seated in Stockholm and Seoul, in accordance with the ICC and KCAB Rules.
