ADR in Japan

Norihiko MAEDA
President
The Japan Commercial
Arbitration Association


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I. Introduction

  • Japanese disputes avoiding culture----since 1400 years ago
  • Controversy was regarded bad per se---under feudal regime
  • Sacrifice yourself for the service to the public--first half of this century
  • Japanese became known as workaholic---1960s and 1970s
  • Aggressive administration and modest judicature--latter half of this century
  • People became more claim conscious----since 1970s
  • Too few lawyers compared with other countries--today as well as in the past

II. Various ADR systems in Japan

1. Definition
  • "Arbitration" or CHUSAI in Japanese means to facilitate@resolving dispute by bringing in a neutral party which makes the decision binding upon the parties.
  • "Conciliation" or CHOTEI in Japanese means to facilitate resolving dispute by bringing in a neutral party which provides a settlement proposal.
  • "Mediation" or ASSENN in Japanese means to facilitate resolving dispute by bringing in a neutral party which helps the disputing parties without providing a settlement proposal.

In English the term of conciliation is frequently used synonymously to mediation, and this is also true to Japanese CHOTEI and ASSEN. When the settlement proposal is given implicitly, it is impossible to distinguish one from the other. But, conciliation will be used for CHOTEI and mediation for ASSEN throughout this paper wherever those Japanese terms are used.

2. ADR at the Courts

2-1. Amicable Settlement Suggested by the Judge

After litigation is commenced before a court, it is possible for the judge under the Code of Civil Procedure to try to bring the case to settlement by the parties' mutual compromises at any stage. Once such a settlement is appropriately achieved, the court puts it on the official record, by which the lawsuit ends and the settlement obtains enforceability just as a judgement.

During the above settlement process, the judge plays a role of conciliator. According to a recent Annual Report of Judicial Statistics, approximately 30% of ordinary cases of civil affairs before Japanese district courts were settled by this process.

2-2. Civil Conciliation

Conciliation as a part of legal system in Japan can be traced back to 1922, when a law for conciliation of disputes in lease became effective. Since then, several reform movements took place in the field of Japanese legal conciliation system. We have now, as the basic conciliation laws, (i) Law for Conciliation of Civil Affairs for conciliation of civil disputes except for family disputes and labor disputes, and (ii) Law for Adjudgement of Domestic Relations for, among other things, conciliation of family disputes.

The court handles civil conciliation and family conciliation. The hearing of conciliation proceeding is not open to the public. A recent statistics shows that, while approximately 389,000 suits were filed in 1995, approximately 129,000 cases were filed for civil conciliation in the same year.

Under the Law for Conciliation of Civil Affairs, a judge may refer an ongoing lawsuit to civil conciliation when the judge considers such reference appropriate. At Tokyo District Court, approximately 95% of civil conciliation cases in 1996 were by such reference of the judge.

When the other party does not respond to a conciliation procedures without reasonable reason (for example, does not show up to the court after he/she received a notice to do so), the court may fine such a party for not complying.

The civil conciliation proceeding is conducted by a conciliation board normally consisting of 3 members, among whom the chairman shall be a judge and the others are civilians appointed by the court. If an agreement is reached, the agreement is put on the official record, by which, like an amicable settlement suggested by the judge, the agreement obtains enforeceability just as a judgement. In the case of unsuccessful conciliation which was initiated by a reference by a judge, the original lawsuit resumes.

In order to promote a successful conciliation, the Law provides that the court may issue an order to the party to resolve the dispute under the terms which the court considers most appropriate for both parties. Each party has 2 weeks to object. If an objection is duly made, the order becomes void. If not, the conciliation is achieved on those terms.

2-3. Family Conciliation

Law for Adjudgement of Domestic Relations provides for conciliation of family disputes such as divorce, support of spouse and division of inheritance. Family conciliation is handled by the Family Courts which are at the same level of District Courts and specialized for family matters. Like civil conciliation, a conciliation board normally consists of 3 members, among whom the chairman, shall be a judge and the others are civilians appointed by the court.

3. ADR sponsored by administrative agencies

3-1. The Labor Relation Commission

The Labor Relation Commission is one of the formal administration commissions. Its activity is based on the provisions in the Labor Union Law and the Law for Adjustment Labor Relations. There are two levels of Labor Relation Commission: The Central Commission under the Minister of Labor, and the Local Commissions under the Governor of each Prefectural Government. The members of the Labor Relation Commissions, both central and local, consist of equal number of three groups of commissioners from labor, management and public interest.

The disputes that are subject to the Labor Relation Commissions are disputes between a group of employees and employer(s) including unfair labor practice. An individual labor dispute is not a subject matter for the Commissions. The Labor Relation Commission acts as a dispute resolution agency by providing mediation, conciliation and arbitration. Generally speaking, disputes are settled through mediation or conciliation.

3-2. The Commission for Settlement of Environmental Pollution Disputes

The Commission for Settlement of Environmental Pollution Disputes is another formal administration commission. It is a specialized agency under the Prime Minister's Office for settlement of dispute over environmental pollution.

The Law for Settlement of Environmental Pollution Disputes provides for its activities, i.e. mediation, conciliation, arbitration and adjudication. This law also enables the Prefectural Governments to establish the local version of the Commission but adjudication is handled only by the Commission. Until March 1997 the Central Commission handled approximately 700 cases in total, in which more than 90% are conciliation.

3-3. Consumer Dispute Settlement

According to the Basic Law for Protection of Consumers, the government shall take proper measures for the settlement of consumer disputes. The Japan Consumer Information Center and local Consumer Centers are public entities for such measures. Approximately 570,000 complaints, inquiries and request were filed with the Centers in 1997. The Centers provide such services as counseling and mediation. With consultation and advise by the Center, some cases are further negotiated between consumers and manufacturers. Approximately 10% are successfully mediated by the Centers.

3-4. Consumer Product PL Center

In 1994, the Product Liability Law was enacted as the basic law about product liability in Japan. The Consumer Product PL Center is an organization that provides consultation, mediation and conciliation with respect to disputes over consumer products. During 28 months until September 1997, the Center received approximately 2,700 filings, among which approximately 50 involved accidents. Most cases were settled with the Center's consultation. Only 2 cases were conciliated (there was no mediation case).

3-5. Building Contract Disputes Settlement Committee

The Construction Business Law (1949) provides for Building Contract Disputes Settlement Committee, which handles disputes over construction. A construction dispute can be very complicated due to its technical nature. In addition, a dispute that are raised during at a construction stage can delay the whole process of construction, thereby creating a huge damage. The Committee is supposed to provide faster and specialized services for such dispute resolution.

There are two levels of Committees; Central Building Contract Disputes Settlement Committee in the Ministry of Construction, and Local Committees in each local governments. Although these Committees are under general supervision of Minister of Construction or local governors, the dispute resolution is conducted independently.

A Committee consists of members not more than 15. The Committee conducts mediation, conciliation and arbitration. In recent years, approximately 200 to 300 new cases are brought to Building Contract Dispute Settlement Committee in total each year and there are more than 500 cases pending annually.

Most Cases are handled by the Local Committees. The number of cases which are filed with the Central Committee is in two digits. Among them, conciliation is generally the most popular, seconded by arbitration.

3-6. Housing Quality Assurance Act

In order to assure housing quality, to protect the interests of housing purchasers and to promptly resolve disputes related to housing, Housing Quality Assurance Act was enacted in June, 1999. The Act provides for, among other things, ADR body for housing disputes which is under designation, supervision and technical guidance by Ministry of Construction and which is in cooperation with bar associations and building expert groups, etc. The Act also provides for Housing Dispute Resolution Support Center, which will support the ADR body by supplying information and training. In response to application by disputing parties, the ADR body conducts mediation, conciliation and arbitration. The details of the ADR body as well as the Housing Dispute Resolution Support Center are yet to be finalized.

4-1. The Japan Commercial Arbitration Association (JCAA)

In 1950, the International Commercial Arbitration Committee, the former body of JCAA, was established within the Japan Chamber of Commerce and Industry with the support of 6 other business organizations. In 1953, with the further growth of international trade, the arbitration committee was reorganized as JCAA becoming independent from the Japan Chamber of Commerce and Industry.

JCAA provides such services as administration of arbitration of disputes in commercial transactions and consultation on disputes including disputes prevention. JCAA also conducts various activities to promote arbitration in Japan such as publishing periodicals and providing various seminars.

As a recent activities for promotion of arbitration, JCAA has started a project of "List of Applicants for Arbitrator" on its web page. The list is for the convenience of parties involved in arbitration. It includes applicants for arbitrators who (a) in principle agree to be appointed as an arbitrator or (b) may be prepared to make themselves available as an arbitrator in the event that such a request is made. The list is being published on a trial basis and there may be changes in the future.

In addition to those activities related to arbitration, JCAA has been issuing and guaranteeing ATA Carnets-official forms since 1973 for customs clearances-under the ATA Convention on temporary admission of goods.

4-2. The Japan Shipping Exchange

Since 1921, The Japan Shipping Exchange has administers maritime arbitration. TOMAC (Tokyo Maritime Arbitration Commission) deals with arbitration involving problems arising in maritime business. In addition to arbitration, it also conducts conciliation. Reorganized to the present form in 1933, The Japan Shipping Exchange aims to facilitate world maritime related business transactions and assist maritime organizations. For other activities than administrating TOMAC arbitration and conciliation, it promulgates various standard maritime contract forms such as Nanyozai Charter Party and Iron Ore Charter Party, and publishes periodicals. The Japan Shipping Exchange also provides its members with consultation and advice about such matters as interpretation of shipping contract clauses, maritime economy and Japanese shipping policies.

4-3. Dispute Resolution Centers by Local Bar Associations

In 1990, Daini Tokyo Bar Association established the Arbitration Center in Tokyo as the first such dispute resolution organization as attached to a local bar association. Since then, 9 additional similar organizations were established. During two years of 1997 and 1998, those Centers received more than 1,000 filings.

Even if a claim is filed by a party with a Center, it has no binding effect on the other party. In other words, it is entirely up to the other party whether he/she responds to such a claim. The ratio of voluntary consent by the other party to follow the proceedings at the local bar association ranges from 20% to 80% depending upon each local area.

4-4. Arbitration Center for Industrial Property

In 1998, the Japan Federation of Bar Associations and the Japan Patent Attorneys Association jointly established the Arbitration Center for Industrial Property. The Center is jointly operated by the two Associations and specializes in the dispute resolution relating to industrial property.

The Center accepts any filing relating to industrial property disputes regardless of the claim amount or type of dispute. It conducts conciliation and arbitration and has a roster of candidate conciliators and arbitrators who are lawyers and patent attorneys and trained experts in the field of industrial property.

4-5. Automotive Dispute Mediation Center

The Automotive Dispute Mediation Center, established in 1995, conducts ADR for disputes between consumers and auto manufacturers / dealers over automobiles. In addition to consulting services, it provides mediation and adjudication. Mediation is conducted by staff-lawyers and, if the dispute is not resolved, it is referred to adjudication by an examination committee of the Center. The committee proposes a settlement to both parties, however, it is not arbitration and does not have binding effect. In the first year of establishment, the Center received approximately 1,600 filings, out of which 3 were mediated.

4-6. Japan Credit Counseling Association

Japan Credit Counseling Association was established in 1987 in order to provide free counseling services for multiplex debtors. It was modeled after Consumer Credit Counseling Service of U.S.A. As a neutral and fair entity, it provides counseling to those consumers who have incur huge debt through credit card use. In 1995 it conducted approximately 750 counseling. If necessary, the Association provides advice for bankruptcy proceedings.


III. Features of Japanese ADR

  • Very high dependence on the national authorities
  • Increasing but still small private ADR
  • Very little arbitration
  • Mystery of very little demand for business ADR

IV. International Commercial Arbitration

  • Small number of cases
  • Efforts to promote International Commercial Arbitration in Japan

V. APEC ADR EEP 2000
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