The Japanese government plans to join forces with the private sector to strengthen the country’s capability to resolve international business disputes, government sources have said.
A specific facility for international arbitration hearings will be set up in Tokyo in March next year, and experts will be trained to handle such cases. The aim is to reduce the legal risks associated with international transactions and help Japanese companies expand overseas.
International arbitration is a system in which the parties to a dispute choose an arbitrator, such as a lawyer, and entrust that person with settling the dispute. The arbitrator’s decision is as binding as a final court ruling.
Unlike lawsuits, procedures for international arbitration are not open to the public, so trade secrets are protected. A decision is usually made after a single hearing, helping resolve disputes swiftly.
According to the sources, the government will commission the Japan International Dispute Resolution Centre (JIDRC), a general incorporated association comprising scholars and lawyers established in February last year, to handle arbitration procedures at the newly built facility.
The JIDRC will hold seminars in and outside Japan for companies and lawyers, and also dispatch lawyers to international arbitration bodies.
The government will invest about 780 million yen ($7.2 million) in the JIDRC over five years from fiscal 2019.
The new facility will be established in Toranomon Hills Business Tower in Tokyo’s Minato ward in March. It will be the second such arbitration facility in Japan, following one that the JIDRC opened in the Osaka Nakanoshima National Government Building in Osaka’s Fukushima ward in May last year.
The Tokyo building is to be a full-fledged facility equipped with hearing rooms and videophones to listen to the opinions of both parties involved. It also introduces cutting-edge technology in which each side’s opinions and claims are written in shorthand and quickly displayed on a screen.
The facilities can be used by parties who have submitted requests to the Japan Commercial Arbitration Association in Japan (JCAA) or to international arbitration institutes overseas.
According to the Justice Ministry and other sources, more than 2,000 international arbitration hearings take place around the world annually, but the JCAA accepted only nine requests in fiscal 2018. In many cases, foreign companies find it problematic that procedures in Japan are carried out in locations such as rented hotel rooms.
For Japanese companies, it would be beneficial to conduct international arbitration in Japan from the perspective of cost. If a dispute arises over the validity of an arbitrator’s decision, it may be advantageous if the case is tried by a domestic court under Japanese law.
In addition to the US, European countries and Singapore, where many international arbitration cases have already been handled, countries such as South Korea and Malaysia have been increasingly drawing on international arbitration in recent years.
The Japanese government has deemed it necessary to increase the global credibility of its framework in this area, partly to help attract a wide range of foreign investment.
THE YOMIURI SHIMBUN (JAPAN)/ASIA NEWS NETWORK