Obstacles for Japanese Investors in International Arbitration (kokusai chūsai) to Resolve Commercial Disputes
Obstacles for Japanese Investors in International Arbitration (kokusai chūsai) to Resolve Commercial Disputes

Summary/Abstract: Japanese investors’ presence in the international arbitration scene is minor compared to its eco-nomic scale. The Japanese arbitration law conforms with the UNCITRAL model law, and Japan isa member of the New York Convention. In contrast, the Japanese legal terminology correspondingto arbitration (chūsai), incorporated into modern Japanese in the 19th century, is confusing. Chineselaw restrains domestic entities, including those with foreign capital, from going to foreign arbitraltribunes, which may undermine Japanese investors in China to settle disputes in arbitration. Direct/cross-examinations, popularly seen in international arbitrations, are not substantial in Japanese courtproceedings. As the TPF (Third Party Funding) is not implemented in arbitrations in Japan, Japaneseinvestors may suffer from idea gaps in arbitration tactics. The importance of CISG/UNIDROIT in in-ternational arbitration is increasing. Since the Japanese court does not actively refer to them, Japanese investors may access them less frequently than their peers abroad, which is a potential risk in formingarbitration strategies. The scarcity of arbitrators possessing Japanese legal education is a matter. TheJapanese legal mentality opts for choosing dialogues rather than confronting the other party in courtor arbitral tribunes. Since the Japanese arbitration law fulfills the latest UNCITRAL requirementsand the government has been keen on ratifying the newest arbitration treaties, including the 2019Singapore Convention on Mediation (ratified by Japan on 1 October 2023), Japanese investors wouldbe more recurring users in international arbitration in the future.

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