International Commercial Arbitration - The Japanese View (A. Kawamura, журнал "Kutafin University Law Review", N 2 (Volume 2), October 2015)

International Commercial Arbitration - The Japanese View

A. Kawamura (Japan),

President, Japan Association of Arbitrators

Anderson Mori & Tomotsune (Tokyo, Japan)

Former President (2011-2012), International Bar Association

Журнал "Kutafin University Law Review", N 4, October-December 2015, р. 283-287.

The purpose of the presentation is to argue that a new regional arbitration centre should be established in Japan, which could provide arbitration services with a more culturally friendly choice to individuals and companies in the region. The author shows how the influence of the International Arbitration institutions has grown along with the increasing demand over the Asian Pacific region. The author analyses the reasons lying behind each of these facts. The author is certain that the Russia-Japan Commercial Arbitration Centre should be a worthwhile proposition and will be a realistically possible and useful facility if it is possible to obtain the support of both governments.

Table of contents

I. The remarkable growth of the Asian arbitration centres

II. The permanent power shift from West to East in the aftermath of the Global financial crisis

III. The advantage of arbitration in the international context

IV. Legal service asymmetries

V. The creation of international arbitration institutions in Japan

I. The remarkable growth of the Asian arbitration centres

New arbitration centres have recently been growing dramatically in the Asian Pacific region. The Singapore International Arbitration Centre (SIAC), the Kuala Lumpur Regional Centre of Arbitrations (KLRCA), the Korean Commercial Arbitration Board (KCAB), the Shanghai International Arbitration Centre along with the arbitration centres in Hong Kong and Beijing are the most impressive examples of that growth.

The SIAC is the most remarkable and successful body out of these. According to the SIAC's 2013 annual report, after the Global financial crisis (GFC), the number of new cases submitted to the SIAC increased from 99 in 2008 to 259 in 2013. This is a remarkable increase, given that the SIAC is one of the relatively new international arbitration centres in the world.

The KLRCA is another success story. The number of new cases increased from 51 in 2010 to 156 in 2013. The KCAB dealt with a large number of cases in 2012 (360), up from 316 in 2010. Another interesting body is the Shanghai International Arbitration Centre. The number of new cases accepted was 332 in 2007, increasing to 505 in 2012.

Why have they grown so much over these years? An explanation of why these arbitration bodies have been growing so much over these years is provided below.

II. The permanent power shift from West to East in the aftermath of the Global financial crisis

In the wake of the GFC, the centre of international trade and investment has shifted from Western markets to new territories in the East, Asia and the emerging markets. This phenomenon was referred to as 'the permanent power shift from the West to the East'. As business moves to new emerging territories, the demands for new, internationally practical commercial dispute resolution became critical in those territories. Thus, transformation of economy is the first factor.

In addition to the transformation of economy in the post GFC, three distinct factors promoted the success of these Asian arbitration centres.

1) They have a strong human resource base, with staff well-trained by the common law system.

2) They received very strong support from the government in relation to trade in services. The new and extremely well equipped arbitration centres were the notable common factors.

3) All are newly established.

III. The advantage of arbitration in the international context

Arbitration has an incontestable advantage for international commercial disputes compared to litigation before national courts. It is flexible and relatively independent from the influence of national powers, including national legal systems. It is a perfect option under newly growing, changing, multi-cultural, and multi legal system environments.

International arbitration could help and encourage foreign investment and international trade in developing countries.

IV. Legal service asymmetries

Japan is one of the largest investors in the region, so it follows that Japan should have been critically interested in international arbitration. However, this has not been the case at all. The number of arbitration cases has remained very low over the last decade, both inside and outside Japan. Even in a forum such as the SIAC, Japanese cases are not predominant.

The Japan Association of Arbitrators was recently commissioned by Japan's Ministry of Economy, Trade & Industry to conduct a comprehensive survey of investment treaty arbitration cases around the world. According to the report by the JAA, none of the Japanese companies had ever sought legal remedies through treaty arbitration as a claimant or respondent before any forum, whether the ICSID, the ICC or any other.

Thus, a question may arise as to why Japanese companies do not like arbitration.

Our survey of several hundred treaty arbitration cases revealed that large cases are dealt with almost exclusively by a relatively limited number of specialist lawyers and law firms, and arbitrators are chosen by those arbitration lawyers from a small pool of the arbitration community.

I would not be content for international arbitration to be overly dominated by the traditional Western legal system and professions. I fear that this may be why Japanese companies do not feel comfortable engaging in international arbitration.

It may be the case that Japanese companies are not legally protected in overseas markets.

V. The creation of international arbitration institutions in Japan

There are reasons why, as the President of Japan Association of Arbitrators, I would like to establish a new regional arbitration centre which could provide individuals and companies with a more culturally friendly choice of arbitration forum in the region.

Moreover I think that the creation of a joint project between Russia and the Japan Commercial Arbitration Centre would be a worthwhile proposition and realistically possible, resulting in the creation of a useful facility, provided that the support of both governments were obtained.

Accordingly, there are two major issues for JAA at present:

(i) the promotion of international arbitration in Japan

(ii) the formation of a new international arbitration centre in Japan.