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International dispute resolution centre will be good for Japan

Out-Law Analysis | 26 Feb 2018 | 10:04 am | 3 min. read

ANALYSIS: Plans to establish a commercially competitive international dispute resolution centre in Tokyo could expand Japan's dispute resolution services while offering foreign investors and trade partners a more familiar system for handling disputes involving their Japanese business interests.

The plans, which were first announced in May 2017, are progressing slowly, but follow the recent creation of a new centre for international mediation in Kyoto. The Japan International Mediation Centre Kyoto (JIMC-Kyoto) is expected to open for business early this year, following final governmental approval and advice from the Singapore International Mediation Centre (SIMC) on the composition the panel of international mediators.

Both of these developments signal a shift in focus for dispute resolution in Japan, where Japan-specific commercial disputes tend to be resolved in a distinctly domestic manner.

Japan's Cabinet Office has reportedly established an inter-departmental committee to consider the options for a new dispute centre in more detail, although no discussions or conclusions have as yet been made public. However, in a recent article for the International Arbitration Law Review, academics James Claxton of Kobe University and Luke Nottage of the University of Sydney put forward one potential option which would see Japan's various dispute resolution bodies brought together under a single, internationally-focused umbrella.

The future progress, and likelihood of success, of the new centre will to some extent depend on whether and when the JIMC-Kyoto gains traction as a venue for international commercial mediation. We will be watching these developments with interest, for the advantages they could bring not only to Japanese companies, dispute resolution providers and citizens, but to companies and dispute resolution providers operating elsewhere in the region.

A new dispute resolution centre: what do we know so far?

The new centre would be jointly overseen by, and receive administrative support from, Japan's Foreign Ministry, Justice Ministry and Ministry of Economy, Trade and Industry (METI), according to an early article in Nikkei Asian Review. These bodies would draft the necessary rules and legislation, and provide staff and training. The centre itself would be operated by lawyer groups, companies and other private sector partners, and the JCAA could use its facilities while working on international cases.

One proposed approach

In their International Arbitration Law Review article, and earlier Kluwer Mediation Blog, Professors Claxton and Nottage propose that the new centre should take the form of a 'Tokyo Centre for International Dispute Resolution' (TCIDR). The TCIDR could be based on the Seoul International Dispute Resolution Centre established in 2013, but with even more of an international focus.

The new centre should be headed by a president with an excellent grasp of the English language, an international reputation and expertise in both international dispute resolution and marketing, according to the academics. It could also have an international board, and employ non-Japanese staff and interns. It should provide support for cross-border arbitrations using a variety of international rules, and could also provide a venue for other forms of cross-border dispute resolution, such as adjudication or mediation.

The reform envisaged is not unlike what happened in Singapore with the advent of the Singapore International Arbitration Centre, established with government support in 1991 and led by a board of directors that includes foreign luminaries.

It will be interesting to see whether the Cabinet Office adopts this kind of internationally-focused approach, or takes a more parochial line. Regardless, the Singapore example implies that the quality of a new centre's rules is irrelevant without quality, cosmopolitan human resources, sufficient budget and clear branding.

Whichever approach is taken, the creation of a more independent and commercially competitive dispute resolution centre in Tokyo can only benefit Japan; not least because it could expand Japan's professional services offering and raise taxes for the national and Tokyo metropolitan governments, even before we get to the obvious advantages for international commercial operators.

What about the JIMC-Kyoto?

For now, all eyes will be on the JIMC-Kyoto once the new facility becomes fully operational. It will be based at Doshisha University, one of Japan's oldest private institutions of higher learning, which will also provide the staff and facilities needed by the new centre.

The SIMC connection is an interesting one. Established in 2014, SIMC is itself still establishing itself with the international commercial dispute resolution ecosystem. SIMC is based in the same building as the long-established Singapore International Arbitration Centre (SIAC) and offers a joint 'Arb-Med-Arb' service, which gives parties the opportunity to resolve disputes referred to arbitration through mediation first. Could we see a similar tie-up between JIMC-Kyoto and the planned Tokyo-based international dispute resolution centre? 

On a wider note, at its sixty-eighth session earlier this month Working Group II of the United Nations Commission on International Trade Law published instruments on enforcement of international settlement agreements resulting from conciliation, consisting of a draft convention and draft amendments to the UNCITRAL Model Law on International Commercial Conciliation. If promulgated, these instruments could do much to close the enforcement gap between international mediation and international arbitration.

Nicholas Brown is an international commercial dispute resolution expert at Pinsent Masons, the law firm behind Out-Law.com.