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The Japan Commercial Arbitration Association

October 1999 JCA Newsletter Number 5

The Distorted Image of the Japanese System of International Commercial Arbitration

by Yoshihisa Hayakawa 1

One Book Describing International Commercial Arbitration in Japan
From August 1998 to August 1999, I served as a visiting scholar at the Columbia University School of Law in New York City. During my stay there, I attended Professor Smit's seminar on international commercial arbitration. Professor Smit's lecture was excellent, and the discussion with Columbia students was exciting. However, one book used as a text in this seminar confused me greatly. This book describes international commercial arbitration in Japan as follows:2

Under Japanese law, foreign nationals cannot serve as arbitrators. Moreover, the Japanese attitude toward arbitration is not as favorable as that of their Western counterparts. Japanese culture generally disfavors the recourse to judicial litigation and strongly prefers to have disputes resolved by the parties themselves through negotiations or secondarily with the assistance of a mediator or conciliator. The Japanese see arbitration as an unauthorized form of dispute resolution in which a third party performs the role of a judge without official sanction. Arbitration, in effect, is even more unacceptable to Japanese cultural assumptions than judicial proceedings.
As a result, arbitrations often are conducted as a framework for negotiation or mediation. The arbitral tribunal attempts to get the parties to reach their own settlement. The arbitral tribunal will delay and prolong the proceedings to achieve that objective. This factor may explain why the JCAA proceeding in Forochrome was so protracted, especially in terms of the number of sessions. Also, one wonders why the U.S. company would have agreed to such a one-sided and non-nationality-neutral arbitral procedure?
This description is filled with misunderstandings and distorted images about international commercial arbitration in Japan. I was afraid that the Columbia students would accept the images that this book described. I tried to gather some articles written in English to explain the real features of the Japanese system to some students. However, I found that there were few accessible publications written in English that report the present features of international commercial arbitration in Japan. I realized that the misunderstandings in this book were due to lack of correct information available in English. I also realized that the distorted images were due to some of the essays and articles that I had gathered.


¨Under Japanese law, foreign nationals cannot serve as arbitrators.¨

The information in this sentence is completely wrong. Foreign nationals can serve as arbitrators under Japanese Law. Foreign arbitrators have conducted many proceedings with JCAA. JCAA's panel of arbitrators lists foreign candidates for arbitrators as well as Japanese candidates.
What led the author to misunderstand Japanese law? The author might have been confused by the rule that ¨foreign lawyers cannot represent parties in arbitration proceedings under Japanese law¨. It is true that at one time Japanese law did not permit foreign lawyers to represent parties even in international arbitration proceedings.
Nevertheless, this restriction has already been eliminated from Japanese law.3 Foreign lawyers can now represent parties in international arbitration proceedings in Japan. However, to my surprise, among the many arbitration specialists that I had met during my stay in New York, no one knew of this change in Japanese law.
This is most likely because there are few English-language publications reporting this change. I found one brief report about it by Mr. Stevens in this ¨JCA Newsletter¨.4 I also found one article by Professor McAlinn in the ¨Asian Business Law Review¨ which refers to this change.5 Unfortunately, these periodicals are not well-known among the arbitration specialists.
It is true that the report by Mr. Stevens also appeared in one internationally recognized periodical, ¨Arbitration International.¨6 However, his brief report was only summarized as a two-page note in this journal.
I believe that the most widely known publication that reports on the present situation of international commercial arbitration in each country is the ¨International Handbook on Commercial Arbitration.¨7 This publication adopts a loose-leaf system for which supplements are published once or twice per year. Thus, by removing old versions and inserting the supplements as new versions, we can keep the information in this book up-to-date. However, the last update of Japan's section in this book was in October 1995. The change in the foreign lawyer's status in international arbitration proceedings has not yet been reported.8
This book has a companion periodical, ¨Yearbook Commercial Arbitration,¨ one of the most renowned periodicals in this field.9 Many countries report their own recent developments in arbitration law and practice in this periodical. However, Japan has not reported any of its recent developments since its first and last ¨National Report¨ in 1979.10 Thus, the change of foreign lawyer's status in Japan has not yet been reported in this periodical either.11
The world lacks sufficient information on the Japanese system of international commercial arbitration. Because of this lack of information, foreign specialists do not know of any of the recent important changes in the Japanese system, leading them to misunderstand it. This is symbolized in the clearly incorrect statement quoted above.

Distorted Images

¨As a result, arbitrations often are conducted as a framework for negotiation or mediation. The arbitral tribunal attempts to get the parties to reach their own settlement. The arbitral tribunal will delay and prolong the proceedings to achieve that objective.¨

As Professor Taniguchi mentioned in a previous issue of this Newsletter, the possibility of introducing the mechanism of mediation into international commercial arbitration is a hot issue.12 As Mr. Neumann did earlier in this Newsletter, some scholars and practitioners have attempted to promote this trend.13 However, we should not forget the fact that there are many negative opinions equally against this trend.14 The opinion found in the above passage is one such critical view.
In addition to this point, we should also pay attention to the fact that many arbitration specialists have been prejudiced against the Japanese system of international commercial arbitration. There have been a number of essays and articles about the Japanese system written from the viewpoint of actual participants.15 Mr. Ragan, for instance, pointed out many problems of the Japanese system of international commercial arbitration. In his essay, he described the Japanese system as filled with ¨pitfalls.¨16 He also wrote an article for a ¨caveat¨ against the Japanese system.17 This article also later appeared in an issue of ¨Arbitration International¨.18 In his essay and articles, Ragan reported that arbitrators in the Japanese system ¨appear positively to commend settlement¨ and serve ¨as a conciliator/mediator in an effort to obtain a settlement.¨19
It is true that some cases filed with JCAA resulted in settlements or were withdrawn.20 It is also true that some of Japanese arbitrators will appear positively to commend settlements with the agreement of parties. However, arbitration is a system by which parties can select the arbitrator or arbitrators who conduct their arbitration proceeding. There are many Japanese arbitration specialists who appear to commend settlements in the arbitration proceedings as negatively as foreign arbitration specialists. Parties can select their arbitrator or arbitrators among such Japanese and/or foreign specialists, and design their own scheme of dispute resolution as arbitration without any element of mediation. Unfortunately, Mr. Ragan and his client could not select such an arbitrator for another reason.21 Although the relevant arbitration proceeding he experienced might have been troublesome,22 it was a result not of the Japanese system of international commercial arbitration but of the relevant proceeding itself.
The distorted image against the Japanese system of international commercial arbitration has also been strengthened, I believe, by some articles written from the viewpoint of comparative studies. Researchers frequently compare one system with another to clarify the notable features of each system. In this manner, the features of one system tend to be described as more extreme than they really are. One article, for instance, named the Japanese system ¨Arbitration with the Flavor of Conciliation¨ after its comparative research of JCAA and AAA.23 Another article claimed that ¨Conciliation or Mediation during the Arbitration Process¨ was ¨A Japanese View¨ after its comparative analysis of the Asian and Western systems.24 Some articles or essays pointed to Confucianism or Kabuki theatre as a symbol of the Japanese system.25
The Japanese system described in these articles is a caricature of the reality. As such, the articles mislead some people into adopting a distorted image of the Japanese system. In fact, when Mr. Ragan cited one article of Professor Sawada as support for his impression that ¨arbitrators in Japan may act ex aequo et bono even if that authority is not expressly conferred,¨26 Professor Sawada had to clarify the intended implication of his article. He responded that ¨some arbitrators seem to feel that they are allowed to decide cases under general standards of fairness. There are, however, many cases where the arbitrators make admirable and conscientious efforts to ascertain and apply governing foreign laws.¨27

Proposal as a Conclusion
The earlier Japanese system of international commercial arbitration had some serious problems. As noted above, however, at present, foreign lawyers can represent parties in international arbitration proceedings in Japan. JCAA has amended its arbitration rules to solve the problems that many foreign practitioners besides Mr. Ragan had pointed out.28 The current Japanese system is therefore not so different from the global standard in this field. Thus, I now disagree with an opinion one practitioner expressed more than ten years ago that ¨it is generally recommended that a foreign party not use a JCAA arbitration clause.¨29
However, the correct information about the Japanese system has not yet reached the arbitration specialists across the world. Moreover, their image of the Japanese system is sometimes twisted by reports of a few cases that some practitioners had experienced, and sometimes distorted by articles written from the viewpoint of comparative studies.
Correct and current reporting on the Japanese system of international commercial arbitration is the most necessary measure to promote international commercial arbitration in Japan. From this viewpoint, it is important that JCAA has recently started this ¨JCA Newsletter.¨ However, this newsletter has not yet become widely known among arbitration specialists. I believe that Japanese scholars and practitioners in this field should make efforts to write more articles in internationally recognized publications and inform the world correctly about the current features of the Japanese system of international commercial arbitration.

  1. Associate Professor at Rikkyo University Faculty of Law (Tokyo); currently Visiting Scholar at Centre for Commercial Law Studies, Queen Mary & Westfield College, University of London (London).
  2. Tom Carbonneau, Cases and Materials on Commercial Arbitration, at 411-12 (1997 Juris Publishing).
  3. See, Gaikoku Bengoshi Niyoru Horitsu Jimu No Toriatsukai Ni Kansuru Tokubetsu Sochi Ho [Special Measures Law concerning the Handling of Legal Business by Foreign Lawyers], Law No.66 of 1986,58-2. Japan amended the Special Measures Law in 1996, to clearly permit foreign lawyers to represent parties in international arbitrations in Japan.
  4. Stevens, ¨Foreign Lawyers Gain Right to Represent a Party in Japan - Special Measure Law Amended,¨ 2 JCA Newsletter 1 (1997).
  5. McAlinn, ¨Japan¨ 19 Asian Business Law Review 46, at 49-50 (1998).
  6. Notes, ¨Foreign Lawyer Advocacy in International Arbitration in Japan,¨ 13 Arbitration International 103 (1997).
  7. Sanders-van den Berg (ed.), International Handbook on Commercial Arbitration (1984-99 Kluwer Law International).
  8. Japan has recently amended its Code of Civil Procedure. Until this amendment, the Code of Civil Procedure contained the provisions governing arbitration. These provisions were not substantially changed. However, these provisions were moved to a new law, Koji Saikoku Tetsuzuki Oyobi Chusai Tetsuzuki Ni Kansuru Horitsu [Law Regarding the Procedure for Public Notice and the Procedure for Arbitration], Law No.29 of 1890. This change has not reported in ¨International Handbook on Commercial Arbitration,¨ either.
  9. Sanders-van den Berg (ed.), 1-23 Yearbook Commercial Arbitration (1976-98).
  10. Doi, ¨Japan¨ 4 Yearbook Commercial Arbitration 115 (1979).
  11. The change mentioned in supra note 8 has not been reported in this periodical, either.
  12. Taniguchi, ¨Settlement in International Commercial Arbitration,¨ 4 JCA Newsletter 1, at 1 (1999).
  13. See Neumann, ¨The Role of Arbitrators as Mediator in International Arbitration Cases in Japan,¨ 3 JCA Newsletter 4 (1998).
  14. See Taniguchi, supra note 12. See, also, Hayakawa, ¨Beikoku Kara Mita Nihon No ADR To Sono Mondaiten [Japanese ADR from the Viewpoint of the United States],¨ 46-7 JCA Journal 30, 46-8 JCA Journal 36, 46-9 JCA Journal 2, 46-10 JCA journal 24, 46-11 JCA Journal ** (1999) (written in Japanese). In this article, the author pointed out many serious problems of settlement in international commercial arbitration.
  15. Among them, one article in particular might have influenced the view of the author of the book cited in supra note 2, regarding the foreign arbitrator's status in Japan. In the Journal of International Arbitration, Mr. Greig claimed that ¨a non-Japanese arbitrator should expect to be challenged.¨ See Greig, ¨International Commercial Arbitration in Japan: A User's Report,¨ 6 Journal of International Arbitration 21, at 24 (December 1989).
  16. Ragan, ¨Preparing for the Pitfalls of Arbitration in Japan,¨ East Asian Executive Reports 9 (January 1991).
  17. Ragan, ¨Arbitration in Japan: Caveat Drafters and Other Lessons from an American Perspective on Trans-Pacific Dispute Resolution,¨ Private Investments Abroad 12-1 (1990 Matthew Bender).
  18. Ragan, ¨Arbitration in Japan: Caveat Foreign Drafters and Other Lessons,¨ 7 Arbitration International 93 (1991).
  19. Ragan, supra note 18, at 109-10. See, also, Ragan, supra note 17, at 12-26; Ragan, supra note 16, at 14.

  20. This fact was also reported all over the world. See, Greig, supra note 15, at 24; Kakinuki, ¨Dispute Resolution in Japan: Choosing the Right Alternative, ¨East Asian Executive Reports 7, at 12 (1987).
  21. See, Ragan, supra note 16, at 12; Ragan, supra note 17, at 12-17-12-19; Ragan, supra note 18, at 102-04.
  22. JCAA, however, expressed some arguments against Mr. Ragan's view of the relevant proceeding. See, Sawada, ¨On Mr. Ragan's Lessons on Arbitration in Japan: A Response,¨ 7 Arbitration International 121 (1991).
  23. Notes, ¨The Japan Commercial Arbitration Association: Arbitration with the Flavor of Conciliation,¨ 22 Law and Policy in International Business 603 (1991).
  24. Tashiro, ¨Conciliation or Mediation during the Arbitration Process - A Japanese View,¨ 12 Journal of International Arbitration 119 (June 1995).
  25. See, Notes, ¨International Commercial Arbitration in Japan: Background and Suggestions,¨ 2 American Review of International Arbitration 87 (1991); Notes, ¨The East Asian Preference for Conciliation: An Example in a Kabuki Play,¨ 5 Arbitration International 43 (1989).
  26. Ragan, supra note 18, at 110. Mr. Ragan cited one of Professor Sawadafs article: Sawada, ¨Practice of Arbitral Institution in Japan,¨ 4 Arbitration International 120, at 127 (1988). Professor Sawada is also the author of an article: Sawada, ¨Conciliation - Japan's Experience - Prospects of Success in International Transactions,¨ 5 American Review of International Arbitration 162 (1994).
  27. Sawada, supra note 22, at 122.
  28. Many foreign practitioners pointed out the problem of the language of arbitration under the old version of JCAA rules. Under the current rules of JCAA, however, English may be designated as the language of arbitration. Mr. Kakinuki criticized the old rule, ¨Except where the parties have otherwise agreed, all arbitrator must be resident in Japan¨. Kakinuki, supra note 20, at 12. However, this kind of restriction has disappeared under the current rules.
  29. Kakinuki, supra note 20, at 12.

Recommended Arbitration Clause

In drawing up contracts, parties are recommended to include the following arbitration clause:

"All disputes, controversies or differences which may arise between the parties hereto, out of or in relation to or in connection with this Agreement shall be finally settled by arbitration in (name of city), Japan in accordance with the Commercial Arbitration Rules of The Japan Commercial Arbitration Association. The award rendered by the arbitrator(s) shall be final and binding upon the parties hereto."

JCAA to Play Key Role in 200,000 Dollar APEC ADR Executive Education Project (¨ADR EEP 2000¨)

As previously reported in Number 4 of JCA Newsletter (March 1999), Japan submitted a pre-proposal titled ¨Alternative Dispute Resolution Executive Education Project¨ (ADR EEP) to the Business Management Network of the Human Resources Development Working Group (HRD WG) of the Asia Pacific Economic Cooperation (APEC) in June 1998. Summarizing the past development of ADR EEP, the pre-proposal gained much wider support and became a proposal. It was immediately approved as a HRD BMN project as ADR EEP 98. The official organization representing Japan at BMN is the Institute for International Studies and Training (IIST) but JCAA has been playing the key role in ADR EEP 98 since its early stage. IIST and JCAA jointly conducted the APEC ADR EEP Osaka Workshop in November 1998. Upon conclusion, the Osaka Workshop suggested in its statement for initiatives to be considered for the ADR EEP:

- Promotion of the advantages of ADR for preventing and resolving commercial disputes.
- Education and training programs in cross cultural negotiation, dispute prevention, and dispute resolution.
- Encouraging business people and their professional advisors to consider using ADR methods to resolve their commercial disputes.

Taking the Osaka statement as a guide, more specific activities were proposed for the APEC HRD and BMN meetings in Chile in January 1999 as ADR EEP 2000. HRD WG encouraged BMN to approach the Dispute Mediation Experts' Group (DMEG), whose mission was to prevent and resolve various disputes that become obstacles to international transactions. DMEG is a sub-group of the Committee on Trade and Investment (CTI) of APEC. The purpose of the approach by BMN to CTI-DMEG was for the latter to join ADR EEP 2000 and to provide dispute mediation expertise, while HRD was to provide expertise on executive education. With that recommendation, a presentation was made by the BMN representative, Mr. Norihiko Maeda (also President of JCAA), at the DMEG Meeting in April 1999. The majority of DMEG members were very forthcoming and DMEG expressed its support. However, as CTI was then reviewing its subgroups as part of an APEC-wide restructuring process, the idea of a BMN/DMEG joint project was not pursued further. Later it was decided that the dispute mediation issues would be handled directly under the chairman of CTI.
Thus the ADR EEP 2000 was proposed as HRD BMN project for the APEC Trade and Investment Liberalization and Facilitation (TILF) funding, with the possibility of CTI members joining at the implementation stage. The HRD WG Hong Kong meeting in May 1999 endorsed the proposal as the only project from HRD WG with the support of 15 member economies. This proposal seeking U.S. $ 200,000 from the TILF Special Account was endorsed by the Budget Management Committee (BMC) held in July 1999. ADR EEP 2000 was formally approved by APEC Ministers in September 1999.
The proposed ADR EEP 2000 includes the following activities:

- A workshop will be held to identify current approaches of ADR usage and ADR education and to agree on a few experimental approaches for effective executive education on ADR.
- Based on the approaches agreed upon, pilot training programs will be implemented.
- With the experience gained by those pilot programs, a symposium will be organized to draw lessons from the pilot programs and to determine the future course of action.

It is envisioned that diverse institutions and individuals should participate in this project from different economic and cultural backgrounds represented in APEC. Such diversity will provide rich learning experience. Therefore, multiple approaches for executive education may be identified as appropriate. Further activities may also be identified as the project moves on.
Within the framework of the budget and project proposal that has been approved, there is good room to jointly design the activities of the ADR EEP 2000. All those interested in the promotion of ADR are solicited to join the project from the early part of its design process through implementation of pilot training programs and up to drawing lessons from the experience. Such participation can be in various forms. For example, any effort to disseminate ADR EEP 2000 among business executives and legal professionals, or even just to let us know those business executives and legal professionals who are considered appropriate in a region, would be good support for the project. Participation in designing and developing the programs at a Workshop, or in even organizing such programs at a later stage, is of course welcome. Even after the project has started, there will be opportunities for individuals and institutions interested in the subject to participate in the activities of the project. A web-site will provide further information on ADR EEP 2000. (Web-site address:

APEC ADR Seminar Held in Tokyo

As a part of the previously mentioned APEC ADR EEP 98, JCAA held a seminar on March 26, 1999 in Tokyo under the theme of ¨The Recent Situations of ADR in the United States.¨ The speakers were Mr. Yoshihisa Hayakawa,* Associate Professor at Rikkyo University Faculty of Law in Tokyo and Ms. Hisako Kobayashi-Levin, Mediator at the Brooklyn Mediation Center in New York City.
Mr. Hayakawa, then a visiting scholar at the Columbia University School of Law in New York City, reported on two ADR institutions in the nationThe American Arbitration Association and CPR Institute for Dispute Resolution.
He first introduced AAA's long-time efforts to develop its full potential in ADR industry, and impressed the audience with its image as a comprehensive ADR center able to provide broad ADR options. He then introduced CPR with major emphasis on its ¨Pledge Program¨ a scheme designed to promote the use of ADR, especially of mediation and negotiation, by obliging the pledge signers to seriously explore the use of ADR before resorting to traditional litigation. He added that over 4,000 companies and 1,500 law firms are signatories to this program.
Finally, he compared the ADR situations there with those in Japan and observed that there is much for Japan to learn from the U.S. forerunners. At the same time he stressed that efforts should be made to dispel misunderstandings and prejudice about Japanese ADR systems that have gone mostly unchallenged in the United States.
The next speaker, Ms. Levin, who has served as a mediator in New York City for six years, reported on mediation through an empirical approach.
After introducing its mechanism, she described mediation as one of the most effective dispute resolution procedures and added there is every reason to believe that mediation will be built into the mainstream of future dispute resolution mechanisms in the United States. For one thing, she said, mediation is a solution based on the parties' mutual trust and goodwill through which the parties have a chance to reach a mutually-advantageous or win-win solution not available in a court of law.
She then referred to a noticeable trend today for a company to set up its own in-house mediation system to address ever-diversifying and increasing disputes arising among its employees. She attributed this increase in disputes mainly to the fact that traditional one-corporate-culture which had functioned well to control its employees has been undermined by increasing say among minorities and expanding gaps in values.
During a subsequent question-and-answer session, discussions centered on differences in ADR systems between the U.S. and Japan. Reflecting growing public awareness and interest, this ADR seminar brought together 170 participants mostly from the fields of business, law and academia.

* The author of ¨The Distorted Image of the Japanese System of International Commercial Arbitration¨ in this issue.

APEC ADR Tokyo Workshop Also Held in March

On March 30, 1999, four days after the APEC ADR Seminar, JCAA organized a workshop in Tokyo to get insight into current situations and backgrounds of ADR as well as to discuss ways to further promote ADR. It was held also within the framework of APEC ADR EEP 98 and this time with the support of Co-chair of the Legal Services Committee of the American Chamber of Commerce in Japan. The nine participants attending the workshop included international lawyers, scholars and businessmen, all of whom have considerable experience and expertise in ADR and five of whom were American nationals resident in Japan.
Among the issues taken up at the workshop were ¨Place of arbitration,¨ ¨Advantages of arbitration,¨ ¨How to nurture qualified and skillful arbitrators¨ and ¨How and for whom ADR training should be provided.¨ Through a lively exchange of views, a consensus was emerged among the participants that, for the promotion of ADR, appropriate education and training should be provided not only for business executives but also for their counsels or legal consultants. It was later suggested that, if such legal experts are included in the target, cooperation or support for this program from other APEC organizations with such expertise would be desirable.

'Applicants for Arbitrator' on
JCAA Web Site

In addition to its ¨Panel of Arbitrators¨, JCAA has compiled a ¨List of Applicants for Arbitrator¨ (in Japanese and English), and has published the list on JCAA web site on a trial basis. This service is expected to provide a wide range of information about potential arbitrators to parties involved in arbitration, both within and outside of Japan.
As one means of resolving commercial disputes outside the judicial system, the commercial arbitration system provides a host of merits, including the fact that it is fast, economical, internationally enforceable and not open to the public.
However, in Japan, arbitration has not been widely utilized. Therefore, for the convenience of parties involved in arbitration (especially those who are using arbitration), as well as to promote the active utilization of the arbitration system, JCAA has compiled a list of applicants for arbitrators. These applicants either (a) actively wish to be appointed as arbitrators, or (b) are prepared, in principle, to make themselves available as an arbitrator in the event that such a request is made by a party involved in a commercial dispute. Information about each of these applicants for arbitrator, including field of expertise and academic/employment background, is now included on JCAA web site. This new system allows those parties who are using arbitration to directly access information about potential arbitrators.
Parties who wish to appoint an arbitrator can use the information on the web site to look for arbitrator candidates who fulfill their requirements and can enter an agreement with an appropriate arbitrator directly. This list merely provides information about applicants for arbitration, and JCAA does not make any recommendations of the most appropriate arbitrators on the list based on users' requests.
At present, a total of 48 applicants are registered, including 22 Japanese and 26 foreigners. There are no qualifications or any other requirements necessary to apply for being listed, and all information has been included on the list free of charge to applicants.
Applicants who wish to submit their own data to JCAA for inclusion on the list can do so directly from this web site. We expect the number of registered applicants to increase even further in the future.

ATA Carnet-The Merchandise Passport

In addition to the administration and management of arbitration proceedings, JCAA has been issuing and guaranteeing ATA Carnets, since JCAA was designated in 1973 by the Japan Chamber of Commerce and Industry as the issuing and guaranteeing organization for ATA Carnets.
The ATA Carnet is an official international Customs document that simplifies Customs procedures for the temporary importation of commercial samples, professional equipment, and goods for exhibitions and fairs under the ¨Customs Convention on the ATA Carnet for the Temporary Admission of Goods¨. In a word, the ATA Carnet is ¨The Merchandise Passport.¨
The initials ¨ATA¨ are an acronym of the French and English words ¨Admission Temporaire/Temporary Admission¨.
In December, 1961, the above mentioned ¨Customs Convention on the ATA Carnet for the Temporary Admission of Goods¨ was adopted by the Customs Co-operation Council, now the World Customs Organization (WCO) in order to encourage world trade by reducing the obstacles caused by varying national customs regulations. The ATA Carnet is a system established by the International Bureau of Chambers of Commerce (IBCC), a division of the International Chamber of Commerce (ICC) in Paris and the Customs Co-operation Council.
There are many practical advantages in using the ATA Carnet.
- When travelling abroad with business necessities, such as temporary samples of value, goods for trade fairs or exhibitions, or professional equipment of some kind, the ATA Carnet provides for a simple and speedy way to make things easy by avoiding extensive Customs procedures.
- The ATA Carnet reduces costs to the exporter, eliminating payment of duties and value-added taxes, and eliminating the posting of security normally required at the time of importation.
- The ATA Carnet facilitates reentry into the issuing country, eliminating the need to register goods with Customs at the time of departure.
Thus, for businessmen, the ATA Carnet saves time, effort, and money.
The ATA Carnet only covers goods returning to the issuing country within 12 months and may be used an unlimited number of times as the Carnet holders travel in and out of such issuing country. At present the ATA Carnet system operates in 53 countries/territories in Africa, America, Asia-Pacific and Europe. JCAA issued 8,321 Carnets in 1998 covering goods valued at US$425,000,000.

New Japanese-Hong Kong Cooperation Agreement Signed

JCAA enters into Cooperation Agreement with the Hong Kong Institute of Arbitrators Limited on May 10, 1999.
The Hong Kong Institute of Arbitrators Limited was established in 1996 as a non-profit organization by professionals in Hong Kong in the field of arbitration. In addition to appointment of arbitrators for the settlement of disputes and the education and training of arbitrators and mediators, its objectives include promotion and development of arbitration and other ADR, research of the law and practice of arbitration and other ADR, and dissemination of related information. The Cooperation Agreement was signed at the occasion of the visit by Mr. Norihiko Maeda, President of JCAA, to the Hong Kong Institute of Arbitrators Limited.
For cooperation in the promotion of arbitration and other alternative means of dispute resolution in the Asia-Pacific and wider regions, the Agreement provides that JCAA and the Hong Kong Institute of Arbitrators Limited shall endeavor to cooperate in the provision of the means of selection, education and training of potential and practicing arbitrators, in the setting up and running of conferences and seminars on arbitration and other ADR, and shall exchange information and recommendations of persons suitable in its opinion to act as arbitrator, mediator or conciliator.
The Hong Kong Institute of Arbitrators Limited does not itself provide administration services for arbitration. The Hong Kong International Arbitration Centre is such an administrative institution, with whom JCAA signed a Cooperation Agreement in 1992.

Meeting with Chilean Lawyers

JCAA had a meeting with a group of Chilean Lawyers last May in Tokyo. Included in the group were Mr. Sergio Urrejola, President, Chilean Bar Association, Ms. Claudia Bobadilla, National University Network Cooperation, Chilean Pacific Foundation, Mr. Gabriel del Favero, Specialist on Electronic Commerce and New Technologies and 9 other eminent Chilean lawyers. Mr. Particio Torres, Minister Counsellor, and Ms. Eriko Nagaoka, Administrative Assistant, attended the meeting from the Embassy of Chile. The group visited Japan as a part of the Japan-Chile Business Co-operation Committee for an interchange of private economic activities between Japan and Chile. The Japan-Chile Business Co-operation Committee is usually composed of business people, but the Chilean delegation included a group of Chilean lawyers for the first time, who took advantage of the opportunity to have meetings with Japanese counterparts.
At the meeting, Mr. Favero gave a presentation about the Arbitration and Mediation Center of Santiago, which was a joint venture between the Santiago Chamber of Commerce and Chilean Bar Association. Mr. Norihiko Maeda, President of JCAA, then explained the recent situation of JCAA arbitration. He also explained APEC Alternative Dispute Resolution Executive Education Project 2000 (ADR EEP 2000; See page 4 of this issue). The attendees from both countries exchanged information about arbitration and mediation for mutual understanding and future cooperation. In addition, ¨Cooperation Agreement between the Arbitration and Mediation Center of the Santiago Chamber of Commerce and The Japan Commercial Arbitration Association,¨ which bore the signature of JCAA, was sent under the care of the group of Chilean lawyers. The agreement was later countersigned by the Arbitration and Mediation Center and therewith became effective between the two organizations.

Visit to Vietnam Chamber of Commerce

Mr. Norihiko Maeda, President of JCAA, visited the Vietnam Chamber of Commerce and Industries (VCCI) in early September. On September 6, he had a meeting with Mr. Vu Tien Loc, Secretary General, VCCI, Mr. Phung Quang Huy, Director, Vietnam Center for Customs Brokers, VCCI, and other people in order to discuss the ATA Carnet System (for ATA Carnet, see page 6 of this issue). On the following day, a meeting was held with Mrs. Pham Chi Lan, Executive Vice President, VCCI, and Mr. Nguen Minh Chi, Vice President, Viet Nam International Arbitration Centre to discuss facilitation of mutual cooperation between the Centre and JCAA. Mr. Maeda explained to them various types of cooperation agreements for establishing such relations. He also explained ADR EEP 2000 (see page 4 of this issue), and the Centre indicated its willingness to participate.

Study Report on International
Arbitration Published

A study report on international arbitration in Japan was published by the ¨International Arbitration Study Group¨ formed jointly by The Ministry of Justice and the Japan Federation of Bar Associations.
The group was composed of twenty members who were university professors, business executives, representatives from Japanese arbitral institutions as well as government officials and attorneys. Mr. Norihiko Maeda, President of JCAA, participated in the study group as a member. Mr. Hiroshi Hattori, then-General Manager, Arbitration Department and Mr. Tatsuya Nakamura, Deputy General Manager, Arbitration Department also participated from JCAA as observers.
The group held thirteen meetings in Tokyo during December 1997 through March 1999. It invited professionals in the field of international arbitration to learn from their experience and to listen to their opinions. It also sent study teams to the Hong Kong International Arbitration Centre, Singapore International Arbitration Centre, London Court of International Arbitration, The Chartered Institute of Arbitrators and ICC International Court of Arbitration.
Having enumerated the advantages of arbitration over litigation, the report analyzes the problems of international arbitration in Japan and discusses the measures for solving them. Making good arbitrators available is one of the most important factors. Use of non-lawyer arbitrators and non-Japanese arbitrators should be explored as well as more training and education of Japanese arbitrators. Another important factor is awareness raising efforts, particularly to foreign business people. It should begin with providing correct and up-to-date information. Revising the 100 year old arbitration law of Japan is equally important.
In conclusion, the report emphasized the following two points:
(a) The establishment of a network organization of such existing arbitration institutions as JCAA and Japan Shipping Exchange, Bar Associations, Ministry of Justice, Ministry of International Trade and Industry and other related organizations. This organization is expected to take all steps that have been identified by the study group as much as possible. It will also examine the establishment of an organ to assist arbitration institutions.
(b) The amendment of the outdated Japanese arbitration law into a new law which is easily understood by foreign people. The report does not say much about the amendment, because there is another, more official study dedicated to this problem.

Establishment of the network organization has been under way. It will hopefully start working by the time of publication of this newsletter. In the meantime, JCAA is undertaking steps that can be taken by JCAA alone. Inviting potential arbitrators to enlist themselves on its ¨List of Applicants for Arbitrator¨ is one of such examples. (See page 6 of this issue).

The JCA Newsletter is published by:

The Japan Commercial
Aribitration Association


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