Guest blog: Japan – The Next Arbitration Shangri-La?

Written by: Nobumichi Teramura (UNSW Law Faculty)
As reported by the Nikkei Asian Review on 18 May 2017, the Japanese government announced it planned to open a new centre for international commercial arbitration in Tokyo. The facility was reportedly to be established for the use of the Japan Commercial Arbitration Association (JCAA), the only permanent commercial arbitration institution in the country as well as other arbitration institutions from all over the world. The Ministry of Foreign Affairs, Ministry of Justice, and Ministry of Economy were working together for necessary legislative reforms and staffing issues.
Studying other institutions’ experiences is important to plan the forthcoming reform, but it is also important to reflect on the past Japanese arbitration reforms when considering the future of Japanese arbitration. A wise person learns from history. What reforms have been made in international commercial arbitration regimes in Japan until today? What can we learn from the past reforms? What implications do they have for the forthcoming arbitration reforms?
Th0se questions are addressed in the Japan chapter in a forthcoming book on “The Developing World of Arbitration: A Comparative Study of Arbitration Reform in the Asia Pacific”, co-edited for Hart by Hong Kong University Professors Anselmo Reyes (also a Judge of the Singapore International Commercial Court) and Gu Weixia. I was pleased to be invited to become the lead author of “Arbitration Reform in Japan: Reluctant Legislature and Institutional Challenges”, with my PhD thesis associate supervisor Professor Luke Nottage of Sydney Law School as co-author. My primary supervisor, Professor Leon Trakman of the University of New South Wales, contributed the chapter on arbitration reforms in Australia. Below is my outline of the forthcoming chapter on Japan.
The aim of establishing such a centre is to boost the number of international commercial arbitrations held in the country, which is now around 20 per year. New JCAA case filings have ranged from 14 to 27 annually between 2007 (15 cases filed) and 2016 (18). International Chamber of Commerce arbitration cases with the seat in Japan ranged from 2 to 5 annually between 2007 (4 filed) and 2015 (2). This number is quite small, compared with other countries or cities having those well-known arbitration institutions such as Hong Kong, Singapore, London, Paris and New York. (However, in Australia, ACICA only attracted a few new cases each year until 2009 and on average about 8 annually between 2010 and 2015, with ICC cases ranging between 1 and 8 each year from 2008 (2 cases filed with the seat in Australia) and 2016 (8 filed)). Japan’s Ministry of Justice launched a task force to investigate these popular institutions for the purpose of clarifying what reforms are necessary to attract more arbitration cases to Japan. Japanese arbitration is therefore venturing into a new era of reform.

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