In September 1996, the Foreign Lawyers Law was amended to allow, for the first time, foreign lawyers to represent clients in Japan during international arbitration proceedings. This was passed in the House of Representatives and was promulgated as Law No. 65 of 1996 on June 12, 1996
International arbitration proceedings are not widespread in Japan and it is not often that claimants from non-Japanese countries decide on arbitration in this country. The main reason why arbitration is conducted in Japan is that one of the parties is Japanese, and that in the beginning of a transaction the Japanese party had insisted on the arbitration clause to refer to arbitration proceedings to be held in Japan. In this case of international arbitration taking place in Japan, the proceedings are normally conducted in accordance with the rules of The Japan Commercial Arbitration Association (JCAA).
Another reason is that if the Japanese party was the respondent and the non-Japanese party the claimant, an arbitration clause stipulating that arbitration proceedings to be held in Japan was agreed to be added to the contract in dispute. The place of arbitration shall be the country where the respondent resides: In case (foreign company) is a respondent, arbitration shall be held in (foreign country). In case (Japanese company) is a respondent, arbitration shall be held in Japan.
This leads to the consequence that, if the Japanese party, either as claimant or as respondent, is seeking arbitration in Japan, it is expecting that the arbitration proceedings through a tribunal will be conducted under the rules of JCAA.
The Japanese arbitration law needs to be updated. The law was promulgated in 1890, based on the German Code of Civil Procedure, and since then has not been amended or supplemented in its substance. The Japanese arbitration law was initially Book 8 of the Code of Civil Procedure. In 1996, when the Code was substantially amended and was made into a new Code, Book 8 remained as it was and, together with Book 7, renamed as the "Law Concerning Means for a Public Peremptory Notice and Arbitration Procedure." (Koji-Saikoku-Tetsuzuki oyobi Chusai-Tetsuzuki ni Kansuru Houritsu).
But even if the arbitration law is not updated for some time, actual arbitration cases in Japan have been well-administered by Japanese arbitral organizations including JCAA by means of their carefully-drafted arbitration rules. However, a well-prepared arbitration law should remove any misunderstanding (if any) about arbitration in Japan and, together with the fact that Japan is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, should strengthen confidence in arbitrating a case in Japan.
Choice of law clauses and jurisdiction clauses, though frequently linked, actually deal with different issues - the law which will govern the contract (sometimes called the "proper" or "applicable" law) and the jurisdiction within which any dispute will be heard. There is no rule to say the two have to match, so it is quite possible for the contract to be interpreted according to, say, Japanese law and the case to be heard in England.
If, however, the contract does not expressly state which law or which jurisdiction will apply, or if it is silent on both issues, the court has to decide whether a choice of law and/or jurisdiction can be implied.
In the case of Brotherton v. Aseguradora Colseguros SA, the governing law has been specified, but there is no jurisdiction clause, the court will be more inclined to find an equivalent implied term as to jurisdiction (or vice versa). Other factors will also be taken into account, however, such as an arbitration clause or other terms in the policy. The court will look at (in the case of governing law) the law with which the contract has the closest connection, and (in the case of jurisdiction) the most appropriate forum for the dispute, taking into account such factors as where the contract was made and by whom and (in deciding jurisdiction) where documents and witnesses are located.
However as is generally known, there is no meaning of place of arbitration explicitly defined in any arbitration laws and conventions. Dr. A.J. van den Berg says there are two meanings, one of which is the legal sense called "seat of arbitration," and the other the physical sense. In addition, the place of arbitration in the legal sense must be mentioned in the arbitral award as the place where the award is made.
On the other hand, the latter, physical sense connotes the place or places where the hearing is held, where the arbitrators administer evidence and where the arbitrators deliberate and sign the award. An award is "made" at the arbitral seat without regard to where the arbitrator actually signs theaward.
In this way, the above views hold that the place of arbitration will be identical to the place where an award is made. The English House of Lords held that the place where an award was made was the place where the arbitrator actually signed the award, [1991] 2 Lloyd's Rep 435, and it seems to evoke some controversy and raise the question of not only where an award is made but what the place of arbitration is.
Thus do the parties, following the "seat" theory, may choose without any quantitative restriction any "place of hearings" and "place of arbitration"? So can the parties choose Tokyo as the place of hearings and Paris as the place of arbitration because they feel that Tokyo is geographically convenient and want the arbitration to be governed by French arbitration law?
Jonathan Hill observed that if the most convenient geographical location for the hearings is country X, but the parties want the arbitration to be governed by the law of country Y, the parties should choose country Y as the seat and conduct the hearings in country X. Such a choice seems theoretically possible, but instead it will return to the question at the outset of what "place of arbitration" is. If the parties may so choose, should it be observed that they may directly choose the law governing the arbitration, without taking a roundabout way of choosing the place of arbitration?
However Japan presents a number of advantages for international arbitrations:
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The leading arbitration association in Japan, the JCAA, has staff and facilities of a very high calibre and offers attractive venue services for any arbitration in Japanese, English or other languages in Tokyo, Osaka, Kobe, and Nagoya, under the JCAA's own modern Commercial Arbitration Rules or under UNCITRAL Arbitration Rules.
- Other facilities and stenographic and translator services are easily available in Tokyo and other major Japanese cities for arbitrations conducted by other associations or under other rules.
- Tokyo itself has become an international legal center, and many international firms well known in international arbitration have Tokyo offices with resident foreign lawyers registered in Japan and younger lawyers who assist them.
- Many Japanese bengoshi are active in international practice, including arbitration practice. 925 bengoshi have sufficient interest in international practice to list them in the 1995 Martindale-Hubbell Law Directory. Of these 375 have foreign law degrees (mostly LLM's or MCL's from U.S. law schools) and 117 have foreign bar qualifications, including 111 who are qualified in New York.
The amended law may even boost Japan into a position as a preferred place of arbitration in Asia. Other rival arbitration places have aspects that make them less attractive to international businesses and practitioners. In particular two likely Asian arbitration venues, Singapore and Hong Kong, now present problems for international arbitrations:
- Foreign lawyers are not permitted to represent parties in international arbitrations in Singapore when the dispute is governed by Singapore law, an unfortunate restriction out of keeping with the international character of Singapore.
- Hong Kong's reversion to China in 1997 has cast into doubt the enforceability in China of arbitral awards rendered in Hong Kong after reversion since after reversion a Hong Kong award may be interpreted as a domestic award in China and, therefore, unenforceable in China through the New York Convention
Japan accounts for about two-thirds of the gross domestic product of all of Asia. It is the predominant foreign investor and foreign trader in many Asian jurisdictions. The sheer scale of its economic involvement in Asia, therefore, coupled with the liberality of the new law, should result in Japan becoming a preferred place of arbitration for international contracts.
Finally when considering Japan it is essential that the exporter work closely with its Japanese partner to ensure his product meet applicable regulations, standards, and quality marks. Much information on Japanese regulations and standards is only available through the appropriate Japanese governmental ministry and/or only exists in written form in the Japanese language. It will be virtually impossible for the company to accomplish this work without someone knowledgeable about regulations, standards, and quality marks in Japan. The company will most likely have to provide detailed information on the product in Japanese and the firm or Japanese partner will have to know the appropriate contacts in the relevant Japanese Government ministry or ministries responsible for granting relevant product approvals.
Furthermore knowledge of the Japanese language, orally and written, is essential to control translations and translators, to understand fully the explanations of witnesses or Japanese legal or technical experts, to draft and complete minutes, but also to grasp the internal debates between Japanese participants. This ability of an understanding of the Japanese language and the Japanese people involved, plus the command of other languages used in the arbitration proceedings, enables one to mediate between the parties, if a deadlock in the arbitration negotiations seems to be appearing.
More and more countries sign international legal agreements and as the body of international law become more and more established, there would be an expectation that increasing standardization and professionalism will apply to all international business transactions. More and more countries companies and law firms are embracing the UNIDROIT principles of Commercial Contracts (published 1994) in much way they are adopting International Standards Organisation (ISO) quality benchmarks. The UNIDROIT Principles set general rules for international commercial contracts.
They have a wide range of uses:
- As a checklist for important issues to be addressed in international trading;
- As a model for contract provisions;
- As the chosen law governing the contract;
- As a basis for legal defence and claim (UNIDROIT principles are widely referred to in cases);
- As a source of expert opinion (e.g in arbitration proceedings);
- and as the basis for the commercial law of many countries (e.g the Dutch Civil Code, the new Civil Code of the Russia Federation).
The UNIDROIT principles have the great advantage that they are accepted almost universally as “good” law. They are easy to read and understand, and are readily accessible on the internet. Finally yet importantly all the laws briefly described below are subject to change. Therefore, the information given could become outdated after publication.
Bibliography:
- Margaret M.Gatti&Associates .By Margaret M.Gatti .(Article appeared in the 1996 Official Export Guide)
- Benders, B.J. (1993), Articles - C.I.S.C. Prepared for American Corporate Counsel Association Program for the UN Convention on Contracts for the International Sale of Goods. [http://www.kanekessler.c...es/kk-articles-cisg.ht]
- Bonell, M.J. (1997), The UNIDROIT Principles in Practice - The experience of the first two years. [http//www.agora.stm.it/.../principles/pr-exper.h]
- J.C.T Chuah “Law of International Trade” Second edition.Sweet&Maxwell (2001)
- Ray August “International business Law”, Third edition,Prentice Hall.
- Williams, S.C. (1997), Export of food products to Japan: Legal aspects and strategies. Paper presented at 5th International Trade Law Conference, Brisbane, 25 June 1997.
- Private Law Dictionary (2002).Collins.
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16.10.03.
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.20.10.03
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16.10.03
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16.10.03
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20.10.03
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02.11.03
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Kluwer Law International:
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The 1961 (Geneva) European Convention on International Commercial Arbitration 29.10.03
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Cornell University Legal Information Institute.The research site of this well-known American Law School can be consulted at:
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FindLaw.An American legal research site accessible generally at: and, specifically for arbitration, at: 28.20.03
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The Fletcher School of Law and Diplomacy.The Fletcher School has a trade law research site at: 29.10.03
Private Law Dictionary, supra note 14, 72
MUSTILL & BOYD, Commercial Arbitration, 2 Ed., Butterworths, London, 1989, 74.
See MUSTILL & BOYD, supra note 170 at 75-77; W. TETLEY, supra note 149 at 413-414. See also Czarnikow v Roth, Schmidt & Co. [1922] 2 K.B. 478 at 491, (1922) 12 Ll. L. Rep. 195 at 198 (C.A. per Atkin L.J.).
See the New Code of Civil Procedure (France) Art. 1474 (re. domestic arbitration) and Art. 1497 (re. international arbitration) and the Code of Civil Procedure (Québec) at Art. 944.10.
See generally, Japanese Code of Civil Procedure, Articles 786-805
See generally, Id., at Article 46.
Supra note 40, at Article 200.
See Japanese Patent Law, Article 71; see also Id., at Article 786; see also Teruo Doi, The Law and Practice of Int'l Commercial Arbitration in Japan, Patents & Licensing, IP-L Communications, Tokyo, Japan (Feb. 1996).
Law concerning Procedure for General Pressing Notice and Arbitration Procedure (Law No. 29, April 21, 1890) (Extract) (Amendment:Law No.151 of 1999)
Article 1
(Mutatis mutandis application of the law and regulations relating to civil procedure)
Article 786
(Arbitration agreement)
Article 787
(Arbitration agreement for future dispute)
Article 788
(Appointment of arbitrators)
Article 789
(Method of appointment of arbitrators)
Article 790
(Binding effect of appointment notice)
Article 791
(Appointment to fill vacancies)
Article 792
(Challenge of arbitrator)
Article 793
(Loss of effect of arbitration agreement)
Article 794
(Procedure for making award)
Article 795
(Examination of witnesses, experts)
Article 796
(Cooperation of the competent court)
Article 797
(Plea of illegality of arbitration procedure and power of arbitrators to continue)
Article 798
(Making of award by several arbitrators)
Article 799
(Award)
Article 799
(Award)
Article 801
(Action for setting aside the award)
Article 802
(Execusion based on award)
Article 803
(Action for setting aside the award after the rendering of execution judgment)
Article 804
(Time limit for institution of action)
Article 805
(Competent court of action in respect of arbitration procedure)
*1
Article 23 (Exclusion of judge) of the Code of Civil Procedure
Article 24 (Challenge of judge) of the Code of Civil Procedure
*2
Article 338 (Grounds for renewal of procedure) of the Code of Civil Procedure
See Japanese Law No. 66 (amended in 1997).
Case Note based on an Article in the January 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA
"Non-domestic arbitral awards under the 1958 New York Convention," Arbitration International, Vol. 2, No. 3 (1986), p. 202,
Arbitration International, Vol. 1, No. 1 (1985), p. 108
The Law Relating to International Commercial Disputes (1994), p. 478
See an example of a Court Decision: Enforcement of CIETAC Arbitral Award underthe New York Convention
Tokyo District Court, June 19, 1995Hanrei Times, No.919 (1996), pp.252-255
APPENDIX I.
FLOWCHART OF ARBITRATION PROCEDURES