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Presentation of Prof. Mochtar Kusuma-Atmadja : Arbitration in the 1990s: Developments in East Asia : Arbitration in the Southeast Asian Region

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Japan

Japan is party to the 1923 and 1972 Geneva Conventions; the 1958 New York Convention and the 1965 ICSID Convention, as well as a number of bilateral conventions providing for reciprocal recognition and enforcement of international arbitral awards. Domestically, arbitration has not played a large role in Japan. In the international sphere, there are two recognized institutions based in Japan which administer international arbitrations þ the Japan Shipping Exchange (JSE) and the Japan Commercial Arbitration Association (JCAA). The JCAA was founded in 1953, although there are predecessors going back to 1890. The JCAA is aimed primarily if not solely at international arbitrations.

The JCAA is intimately connected with the Japan Chamber of Commerce and Industry. The JCAA's Articles of Incorporation provide that it is the exclusive agency through which the arbitration function of the Chamber will be accomplished. It is also under the unofficial sponsorship of the Ministry of International Trade & Industry, which provides subsidies for it. At the present state of arbitral practice in Japan, the scale of both the JSE and JCAA are relatively small and their utilization is much less than that of arbitral institutions in other OECD countries. Moreover, arbitration is virtually unused in most sectors of domestic Japanese business and other social spheres.

The first efforts to improve the situation of arbitration in Japan in recent years were those of a group of scholars in Japan who, in the mid-1980s, formed an unofficial group called the Society for Arbitration Studies and in 1988 produced a draft of a new law based on the UNCITRAL Model Law. Also in the late 1980s, some foreign lawyers involved in arbitration began to publish articles critical of the regime. These criticisms focused mainly on the issue of foreign representation in arbitrations in Japan and secondarily on a number of problems in JCAA practice such as protracted proceedings, appointment of Japanese as the sole or third arbitrator, use of Japanese as the language of the arbitration even when the contract and most correspondence and evidence is in a language other than Japanese, and limitation of arbitrators to those resident in Japan.

The JCAA first changed its policies as far back as 1991 to accept the UNCITRAL Rules in lieu of its own for arbitrations it would administer. At the same time, it accepted the principle that arbitrators need not be resident in Japan. In October 1992, it released a new, revised edition of its rules. These have been extensively rewritten and changed and it is clear that the JCAA was trying to meet and deal with prevailing criticism, with the encouragement and cooperation of MITI.

A Draft Arbitration Law Report seeks to improve the situation of arbitration in Japan:

1. to improve awareness in Japan of the nature and merits of arbitration;

2. to enact a new modern arbitration law based on the UNCITRAL Model Law;

3. to clarify and reform the law so as to allow foreign lawyers to act as advocates in arbitration in Japan;

4. to strengthen institutions for research and education on arbitration; and

5. to strengthen institutions for administration of arbitration in Japan and with regard to international arbitration, to strengthen the JCAA.

The Draft Report focuses on the JCAA and what should be done to improve it. Measures mentioned include increasing and broadening the panel of arbitrators to include more non- Japanese including those resident outside Japan as well as Japanese with knowledge of specialized subject matters. The Draft Report also contains a clear recommendation that the law in Japan on several issues needs to be reformed and clarified so that foreign lawyers can participate in arbitrations in Japan.

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