The conclusion of the JAEPA (the Free Trade Agreement between
Japan and Australia) in April presents new opportunities for
Australian companies to do business with Japan. With Japanese
companies increasingly demanding arbitration clauses in
international commercial agreements, expect that in any deal you
will be asked to agree to disputes being resolved by arbitration in
Japan is a suitable and reliable place for international
arbitration. But just like ordering Fugu (Japanese poisonous puffer
fish), it pays to know exactly what you're biting into.
THE TABLE IS SET
The Japanese arbitration law is based on the UNCITRAL Model Law
of 1985 and is generally compatible with the arbitration laws of
modern arbitration jurisdictions, Australia included. You can be
comfortable that procedural aspects of an arbitration will reflect
current international arbitration practice. Recent amendments to
the Japanese Commercial Arbitration Association's arbitration
rules have made arbitration in Japan even more palatable.
A DIFFERENT WAY OF EATING
Keep in mind Japan is a civil law country. If the arbitration is
in Japan and the agreement governed by Japanese law the arbitral
tribunal could include Japanese (or other civil) lawyers, and what
happened during negotiations before the contract is signed is
likely to play a bigger role in the dispute than it otherwise would
in Australia and other common law countries. Having civil lawyers
on the arbitration panel will also affect strategy as to how the
arbitration is run, including the level of detail of initial
pleadings and how written arguments and evidence are presented.
If the tribunal is led by Japanese lawyers, the process of
exchanging documents and its scope may be narrower and closer to
Japanese civil procedure, where only specific documents or very
limited categories of documents are swapped. This is in stark
contrast to the United States and (to a lesser extent) Australian
styles of disclosure.
The advantage is that a more limited document production process
can make the arbitration faster and keep costs down. On the flip
side, in arbitrations involving Japan many of the relevant
documents are likely to be in Japanese. What to translate, and the
time and cost of review and translation, must be planned for.
Also be aware that there are no laws providing for legal
privilege in Japan. Nor is there "without prejudice"
privilege. This doesn't mean that in international arbitrations
involving Japan, documents between lawyers and clients or
"without prejudice" communications must be handed over.
However, different considerations will apply in arguing for their
protection compared to litigation in Australia or arbitrations that
involve only countries that recognise legal privilege.
JUDGING THE MEAL
Japan's Courts are traditionally supportive of arbitration,
recognise valid arbitration agreements and are reluctant to
intervene. This generally means a procedurally smooth arbitration.
But, if a problem does arise that requires Court assistance, there
is less case law than in other countries and no specialist
MAKING SURE YOU GET DESSERT
There are no express restrictions in Japan's arbitration
laws as to the types of relief that an arbitral tribunal can award.
Where the substantive law of the arbitration allows what you are
seeking – arbitrators are able to grant those remedies. The
only exception is where those remedies are in violation of
Japan's public policy (punitive damages, for example).
Japanese courts are not known to be interventionist, and only in
the rarest instance would set aside an arbitral award rendered in
Like the country itself, arbitration in Japan is modern, safe
and reliable, but it does have a few quirks. Overall it is an
appetising place for arbitration. When an agreement to arbitrate in
Japan is put on the table for your next deal, knowing what is
involved will make any potential dispute easier to digest.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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