The Dispute
Resolution
Review
Sixth Edition
EditorJonathan Cotton

Law Business Research

The Dispute Resolution Review

Reproduced with permission from Law Business Research Ltd.
This article was first published in The Dispute Resolution Review, 6th edition(published in February 2014 – editor Jonathan Cotton).
For further information please email
nick.barette@lbresearch.com

The Dispute
Resolution
Review

Sixth Edition
EditorJonathan Cotton

Law Business Research Ltd

The Law Reviews
THE MERGERS AND ACQUISITIONS REVIEWTHE RESTRUCTURING REVIEWTHE PRIVATE COMPETITION ENFORCEMENT REVIEWTHE DISPUTE RESOLUTION REVIEWTHE EMPLOYMENT LAW REVIEWTHE PUBLIC COMPETITION ENFORCEMENT REVIEWTHE BANKING REGULATION REVIEWTHE INTERNATIONAL ARBITRATION REVIEW
THE MERGER CONTROL REVIEWTHE TECHNOLOGY, MEDIA AND
TELECOMMUNICATIONS REVIEWTHE INWARD INVESTMENT AND
INTERNATIONAL TAXATION REVIEWTHE CORPORATE GOVERNANCE REVIEWTHE CORPORATE IMMIGRATION REVIEWTHE INTERNATIONAL INVESTIGATIONS REVIEWTHE PROJECTS AND CONSTRUCTION REVIEWTHE INTERNATIONAL CAPITAL MARKETS REVIEWTHE REAL ESTATE LAW REVIEWTHE PRIVATE EQUITY REVIEWTHE ENERGY REGULATION AND MARKETS REVIEWTHE INTELLECTUAL PROPERTY REVIEWTHE ASSET MANAGEMENT REVIEWTHE PRIVATE WEALTH AND PRIVATE CLIENT REVIEW
THE MINING LAW REVIEWTHE EXECUTIVE REMUNERATION REVIEWTHE ANTI-BRIBERY AND ANTI-CORRUPTION REVIEWTHE CARTELS AND LENIENCY REVIEWTHE TAX DISPUTES AND LITIGATION REVIEW
THE LIFE SCIENCES LAW REVIEWTHE INSURANCE AND REINSURANCE LAW REVIEWTHE GOVERNMENT PROCUREMENT REVIEWTHE DOMINANCE AND MONOPOLIES REVIEWTHE AVIATION LAW REVIEWTHE FOREIGN INVESTMENT REGULATION REVIEWTHE ASSET TRACING AND RECOVERY REVIEWTHE INTERNATIONAL INSOLVENCY REVIEWTHE OIL AND GAS LAW REVIEWTHE FRANCHISE LAW REVIEW

www.TheLawReviews.co.uk

Publisher
Gideon Roberton
business development managerS
Adam Sargent, Nick Barettemarketing managerS
Katherine Jablonowska, Thomas Lee, James Spearing, Felicity Bown
publishing assistant
Lucy Brewer
Marketing assistantChloe Mclauchlan
Editorial assistant
Eve Ryle-Hodges
HEAD OF PRODUCTION
Adam MyersPRODUCTION editor
Anna Andreoli
subeditor
Timothy Beaver
managing director
Richard Davey
Published in the United Kingdom
by Law Business Research Ltd, London
87 Lancaster Road, London, W11 1QQ, UK© 2014 Law Business Research Ltd
www.TheLawReviews.co.uk
No photocopying: copyright licences do not apply.
The information provided in this publication is general and may not apply in a specificsituation, nor does it necessarily represent the views of authors’ firms or their clients.
Legal advice should always be sought before taking any legal action based on theinformation provided. The publishers accept no responsibility for any acts or omissions
contained herein. Although the information provided is accurate as of February 2014,
be advised that this is a developing area.
Enquiries concerning reproduction should be sent to Law Business Research, at theaddress above. Enquiries concerning editorial content should be directedto the Publisher – gideon.roberton@lbresearch.com
ISBN 978-1-907606-93-9
Printed in Great Britain by
Encompass Print Solutions, Derbyshire
Tel: 0844 2480 112

acknowledgements

The publisher acknowledges and thanks the following law firms for their learned
assistance throughout the preparation of this book:
Advokatfirmaet BA-HR DA (BA-HR)
ARTHUR COX
Arzinger
Attias & Levy
AZB & Partners
BAKER & MCKENZIE SOUTH AFRICA
Bizlink Lawyers & Consultants
Bonelli Erede Pappalardo
Bredin Prat
Bufete Hernández Romo
Consulegis Abogados
CRAVATH, SWAINE & MOORE LLP
DE BRAUW BLACKSTONE WESTBROEKDITTMAR & INDRENIUS
FONTES & TARSO RIBEIRO ADVOGADOSHENGELER MUELLER
Hergüner Bilgen Özeke Attorney Partnership
JUN HE law officesiAcknowledgements

KBH Kaanuun Ltd
Lansky, Ganzger & Partner (LGP)
Lloreda Camacho & Co
Loyens & Loeff
Luhut Marihot Parulian Pangaribuan
Mannheimer Swartling Advokatbyrå AB
Maples and Calder
Miyake & Yamazaki
MOHAMMED AL-GHAMDI LAW FIRM IN ASSOCIATION WITH
FULBRIGHT & JAWORSKI LLP
Molitor Avocats À La Cour
Motieka & Audzevičius
M/s Cheah Teh & Su, Advocates & Solicitors
Niederer Kraft & Frey
Osler, Hoskin & Harcourt LLPOXFORD & BEAUMONT SOLICITORSPatrikios Pavlou & Associates LLC
Pinsent Masons
Piper Alderman
Plesner Law Firm
SCHRECK LAW OFFICES
Shalakany Law Office
SLAUGHTER AND MAY
SOFUNDE, OSAKWE, OGUNDIPE & BELGOREii

Acknowledgements

Szecskay Attorneys at Law
TSMP LAW CORPORATION
ŢUCA ZBÂRCEA & ASOCIAţII
Uría Menéndez
Uría Menéndez – Proença de Carvalho
Uteem Chambers
Walkers
Wolff Gstoehl Bruckschweiger Advokaturbüro
Young Conaway Stargatt & Taylor, LLP

iii

contents

Editor’s Preface���������������������������������������������������������������������������������������������������xi
Jonathan Cotton

Chapter 1

AUSTRALIA������������������������������������������������������������������������������ 1
Malcolm Quirey and Gordon Grieve

Chapter 2

AUSTRIA��������������������������������������������������������������������������������� 34
Helena Marko, Anna Zeitlinger and Valentin Neuser

Chapter 3

BAHRAIN������������������������������������������������������������������������������� 51
Haifa Khunji and Kaashif Basit

Chapter 4

BELGIUM������������������������������������������������������������������������������� 64
Geert Bogaert and Stéphanie De Smedt

Chapter 5

BRAZIL����������������������������������������������������������������������������������� 87
Marcus Fontes, Max Fontes and Juliana Huang

Chapter 6

BRITISH VIRGIN ISLANDS����������������������������������������������� 106
Arabella di Iorio and Ben Mays

Chapter 7

CANADA������������������������������������������������������������������������������� 124
David Morritt and Eric Morgan

Chapter 8

CAYMAN ISLANDS������������������������������������������������������������� 139
Aristos Galatopoulos and Luke Stockdale

Chapter 9

CHINA���������������������������������������������������������������������������������� 152
Xiao Wei, Zou Weining and Stanley Xing Wan

Chapter 10

COLOMBIA�������������������������������������������������������������������������� 161
Gustavo Tamayo and Natalia Caropresev

Contents

Chapter 11

CYPRUS�������������������������������������������������������������������������������� 174
Eleana Christofi and Katerina Philippidou

Chapter 12

DENMARK��������������������������������������������������������������������������� 187
Peter Schradieck and Peter Fogh

Chapter 13

ECUADOR���������������������������������������������������������������������������� 199
Xavier Castro-Muñoz and Fabrizio Peralta-Díaz

Chapter 14

EGYPT����������������������������������������������������������������������������������� 209
Khaled El Shalakany

Chapter 15

ENGLAND & WALES���������������������������������������������������������� 214
Jonathan Cotton and Damian Taylor

Chapter 16

FINLAND����������������������������������������������������������������������������� 236
Jussi Lehtinen and Heidi Yildiz

Chapter 17

FRANCE�������������������������������������������������������������������������������� 248
Tim Portwood

Chapter 18

GERMANY���������������������������������������������������������������������������� 264
Henning Bälz and Carsten van de Sande

Chapter 19

GHANA��������������������������������������������������������������������������������� 284
David A Asiedu and Joseph K Konadu

Chapter 20

GIBRALTAR�������������������������������������������������������������������������� 297
Stephen V Catania

Chapter 21

HONG KONG���������������������������������������������������������������������� 307
Mark Hughes

Chapter 22

HUNGARY���������������������������������������������������������������������������� 332
Zoltán Balázs Kovács and Dávid KerpelviContents

Chapter 23

INDIA������������������������������������������������������������������������������������ 347
Zia Mody and Aditya Vikram Bhat

Chapter 24

INDONESIA������������������������������������������������������������������������� 362
Luhut M P Pangaribuan

Chapter 25

IRELAND������������������������������������������������������������������������������ 375
Andy Lenny, Claire McGrade, Gareth Murphy and Sara Carpendale

Chapter 26

ISRAEL���������������������������������������������������������������������������������� 390
Shraga Schreck and Daniella Schoenker-Schreck

Chapter 27

ITALY������������������������������������������������������������������������������������� 416
Monica Iacoviello, Vittorio Allavena, Paolo Di Giovanni andTommaso Faelli

Chapter 28

JAPAN������������������������������������������������������������������������������������ 440
Tatsuki Nakayama

Chapter 29

JERSEY���������������������������������������������������������������������������������� 454
David Steenson and Nicholas Mière

Chapter 30

KUWAIT������������������������������������������������������������������������������� 467
Kaashif Basit and Basem Al-Muthafer

Chapter 31

LIECHTENSTEIN���������������������������������������������������������������� 479
Christoph Bruckschweiger

Chapter 32

LITHUANIA������������������������������������������������������������������������� 489
Ramūnas Audzevičius and Mantas Juozaitis

Chapter 33

LUXEMBOURG������������������������������������������������������������������� 504
Michel Molitor

Chapter 34

MALAYSIA���������������������������������������������������������������������������� 515
Tiang Joo Su and Yin Faye Lim

vii

Contents

Chapter 35

MAURITIUS������������������������������������������������������������������������� 533
Muhammad R C Uteem

Chapter 36

MEXICO������������������������������������������������������������������������������� 547
Miguel Angel Hernández-Romo Valencia

Chapter 37

NETHERLANDS������������������������������������������������������������������ 563
Ruud Hermans and Margreet Poot

Chapter 38

NIGERIA������������������������������������������������������������������������������� 583
Babajide Ogundipe and Lateef Omoyemi Akangbe

Chapter 39

NORWAY������������������������������������������������������������������������������ 598
Jan B Jansen and Sam E Harris

Chapter 40

PORTUGAL�������������������������������������������������������������������������� 613
Francisco Proença De Carvalho

Chapter 41

ROMANIA���������������������������������������������������������������������������� 624
Levana Zigmund

Chapter 42

SAUDI ARABIA�������������������������������������������������������������������� 636
Mohammed Al-Ghamdi and Paul J Neufeld

Chapter 43

SCOTLAND�������������������������������������������������������������������������� 656
Jim Cormack and Laura Crilly

Chapter 44

SINGAPORE������������������������������������������������������������������������� 671
Thio Shen Yi, Karen Teo and Freddie Lim

Chapter 45

SOUTH AFRICA������������������������������������������������������������������ 684
Gerhard Rudolph and Nikita Young

Chapter 46

SPAIN������������������������������������������������������������������������������������ 702
Esteban Astarloa and Patricia Leandro Vieira da Costa

Chapter 47

SWEDEN������������������������������������������������������������������������������ 725
Jakob Ragnwaldh and Niklas Åstenius

viii

Contents

Chapter 48

SWITZERLAND������������������������������������������������������������������� 737
Peter Honegger, Daniel Eisele, Tamir Livschitz

Chapter 49

TURKEY�������������������������������������������������������������������������������� 755
H Tolga Danışman

Chapter 50

UKRAINE������������������������������������������������������������������������������ 774
Sergiy Shklyar and Markian Malskyy

Chapter 51

UNITED ARAB EMIRATES������������������������������������������������ 785
D K Singh and Sharon Lakhan

Chapter 52

UNITED STATES����������������������������������������������������������������� 796
Nina M Dillon and Timothy G Cameron

Chapter 53

UNITED STATES: DELAWARE������������������������������������������ 812
Elena C Norman and Lakshmi A Muthu

Chapter 54

VIETNAM����������������������������������������������������������������������������� 831
Do Trong Hai

Appendix 1

ABOUT THE AUTHORS���������������������������������������������������� 845

Appendix 2

CONTRIBUTING LAW FIRMS’ CONTACT DETAILS���� 877

ix

Editor’s Preface

Building on the previous five editions under the editorship of my partner Richard Clark,
I am delighted to have taken on the role of editor from him. The Dispute Resolution
Review has grown to now cover 54 countries and territories. It is an excellent resource forthose, both in-house and in private practice, whose working lives include involvement in
disputes in jurisdictions around the world.
The Dispute Resolution Review was first published in 2009 at a time when the
global financial crisis was in full swing. Against that background, a feature of some of the
prefaces in previous editions has been the effects that the turbulent economic times were
having on the world of dispute resolution. Although at the time of writing the worst of
the recession that gripped many of the world’s economies has passed, challenges and risks
remain in many parts of the world.
The significance of recession for disputes lawyers around the world has been
mixed. Tougher times tend to generate more and longer-running disputes as businesses
scrap for every penny or cent. Business conduct that was entrenched is uncovered andgives rise to major disputes and governmental investigation. As a result of this, dispute
resolution lawyers have been busy over the last few years and that seems to be continuing
as we now head towards the seventh anniversary of the credit crunch that heralded theglobal financial crisis. Cases are finally reaching court or settlement in many jurisdictions
that have their roots in that crisis or subsequent ‘scandals’ such as LIBOR.
The other effect of tougher times and increased disputes is, rightly, a renewed
focus from clients and courts on the speed and cost of resolving those disputes, with theaim of doing things more quickly and for less, particularly in smaller cases. The Jackson
Reforms in my home jurisdiction, the United Kingdom, are an example of a systemseeking to bring greater rigour and discipline to the process of litigation, with a view tocontrolling costs. Whether such reforms here and in other countries have the desired
effect will have to be assessed in future editions of this valuable publication.
Jonathan Cotton
Slaughter and May
LondonFebruary 2014

xi

Chapter 28

Japan
Tatsuki Nakayama1

I

INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK

i

Litigation

Japan is a unitary country with 47 prefectures and one judicial system. The three-tiered
judicial system in Japan, based on civil law, is composed of five types of courts: theSupreme Court, eight high courts, 50 district courts, 50 family courts and 438 summary
courts.
The Supreme Court is the highest court in Japan to review appeals from lower
courts, but only on restricted grounds.2 High courts have jurisdiction over appeals from
district courts and family courts. The Intellectual Property High Court is a special branchof the Tokyo High Court that handles appeals regarding intellectual property.
The district court is generally the court of first instance, except for cases within the
exclusive jurisdiction of other courts. It also functions as an appellate court for rulings
from summary courts. In general, cases at district courts are tried by a single judge unless
all three judges decide to hear the case as a panel.3 The summary courts are courts of first
instance for civil cases with claims of not more than ¥1.4 million.
Though the citizen judge system, or lay judge system, for bigger criminal cases
started in 2009, there are no jury trials in civil cases. Unlike common law countries,
most judges in Japan commence their careers after a traineeship following the passingof the Japanese National Bar Exam. Very few become judges after working as practising
attorneys.

1
2
3

Tatsuki Nakayama is a senior associate at Miyake & Yamazaki.
Article 312 of the CCP.
Article 26 (2) of the Court Act (Act No. 59 of 1947).

440

Japanii

ADR

Litigation is the most commonly used method of dispute resolution in Japan. The mostcommon alternative dispute resolution system for civil matters is conciliation in the
district and summary courts. Other extrajudicial methods for private ADR are still
uncommon but are gradually being used more and more.
II

THE YEAR IN REVIEWi

New law on international civil jurisdiction

Effective since 1 April 2012, rules on international jurisdiction for civil litigation were
established through amendments to the Code of Civil Procedure (CCP) (Act No. 109
of 1996) and the Civil Provisional Remedies Act (Act No. 91 of 1989). Before theseamendments, there were no statutory rules to determine international civil jurisdiction.4
Thus, determining whether a Japanese or a foreign court has jurisdiction has always
been determined case by case. These amendments essentially put Japanese case law oninternational jurisdiction on a statutory footing. The amended CCP also provides special
protection in favour of consumers and employees in consumer contracts and individual
labour disputes.5
Amendment to the CCP
The provisions laid out in Article 3-2 to 3-12 of the amended CCP set out conditions
to determine if there is jurisdiction in Japan and provide for ‘special circumstances’ todecline jurisdiction. The provisions are basically as follows:aJapanese jurisdiction. The new articles describe the conditions that must be met
for certain categories of disputes to be filed in Japan. For example, if the domicile
of a defendant is in Japan, the plaintiff can commence an action in Japan. In
tort cases, if the tortious act occurs in Japan, the plaintiff would be entitled tofile a suit in Japan. Actions related to the organisation or structure of a Japanesecompany or entity, registration and intellectual property rights (if registered inJapan) are exclusively subject to jurisdiction in Japan. In the case of joint actions(i.e., two or more claims are to be made by a single action) a court in Japan
would have jurisdiction if the claim for which jurisdiction in Japan exists is closely
connected to the other claims.
bSpecial protection for consumer contracts and individual labour disputes.
Consumers and employees are granted special treatment. For instance, if, at thetime of filing a suit or execution of a consumer contract, the domicile of theconsumer is located in Japan, then the consumer may file a suit in Japan. If the

4
5

Aside from jurisdiction, the Act on General Rules for Application of Laws (Act No. 78 of 2006)
determines the governing law for international disputes.
The English language summary of the commentary on amendment of the CCP can be foundin the Investigation Committee of the Japan Federation of Bar Associations (JFBA) concerning
Legislation of Rules on International Jurisdiction, ‘New Legislation on International Jurisdictionof the Japanese Courts –Practitioner’s Perspective’, NBL No. 138 Extra Edition (2012).

441

Japancdeplace of performance of labour is located in Japan, the employee is qualified tobring an action in Japan.
Agreements on jurisdiction. The new CCP allows contracts to specify the countryof venue.
Jurisdiction by appearance or waiver. If a defendant fails to object to the venue
for cases filed in Japan, and has presented oral arguments on the merits or madestatements in preparatory proceedings, the court in Japan acquires jurisdiction.
General rules concerning international jurisdiction. Except when an action is
filed pursuant to a contract designating the venue in Japan, a court in Japan may
dismiss an action on ‘special circumstances’. In order to determine whether special
circumstances exist, the court will consider the extent of the defendant’s burden in
making an appearance, the location of evidence and any other conditions underwhich a trial and judgment by a court in Japan would harm equilibrium between
the parties or prevent a speedy and appropriate trial.

These latest amendments to the CCP remain silent on concurrent international
litigation where confronting parties bring overlapping actions to both Japan and anotherjurisdiction. In those cases, the court in Japan will decide whether the above general rules
concerning international jurisdiction should be used to deny Japanese jurisdiction bytaking into consideration the specific circumstances of each case.
Amendment to the Civil Provisional Remedies Act
A new amendment to the Civil Provisional Remedies Act allows a petition for aprovisional remedy order to be filed if:aan action on the merits may be filed with a court in Japan; orbthe property to be provisionally seized or the disputed subject matter is located inJapan.
Before the promulgation of the new Civil Provisional Remedies Act, it was disputable
whether a petition could be filed only if the property to be seized or the disputed subject
matter was in Japan. This amendment finally settled the issue.
ii

Enforceability of a multi-tiered dispute resolution clauseOn 22 June 2011 the Tokyo High Court denied the enforceability of a dispute resolution
clause that requires negotiation and mediation as a condition precedent to litigation.
In this case, the defendant moved to dismiss the suit due to the failure to undergo thepretrial dispute resolution process designated in the clause. However, the Court allowed
the claim because given that mediation, unlike arbitration, does not guarantee the final
resolution of disputes, such dismissal may undermine the right to access to a court under
Article 32 of the Constitution; and dismissal is inconsistent with Article 26 of the Act
on Promotion of Use of ADR (Act No. 151 of 2004), which only grants courts thediscretion to suspend litigation if jointly requested by both parties.

442

Japaniii

Grounds for setting aside an arbitral award

On 13 June 2011, the Tokyo District Court set aside an award rendered by the Japan
Commercial Arbitration Association (JCAA) on the ground that it was in conflict withpublic policy under Article 44(1) of the Arbitration Act (Act No. 138 of 2003). This is
the first decision under this Act setting aside an award. The court held that the arbitral
tribunal found disputed facts to be undisputed, which violates the procedural public
policy of Japan. The case is significant in that the court ruled that procedural public
policy is included in ‘public policy’ under Article 44(1) of the Arbitration Act.
III

COURT PROCEDURE

i

Overview of court procedure6

Civil court procedure is governed by the CCP and other applicable laws.7 English
translations of many Japanese laws can be found on the Japanese Law Translation8
database run by the Ministry of Justice.
ii

Procedures and time frames

Procedures
A civil action commences with the filing of a complaint. There is no electronic filingsystem, so physical filing of the complaint by post or in person is necessary.9 Within 30
days of receiving the complaint, the presiding judge should designate the date of thefirst hearing. After the service of the complaint and the writ of summons issued by thecompetent court, the defendant should file a reply.
There are in general two types of procedure before the examination: formal
hearings and informal preparatory proceedings. The formal hearing is the hearing fororal arguments. However, before the hearing the parties will be required to submit
preparatory briefs10 so hearings seldom require oral argument by the parties. Typically, ina hearing, attorneys will make only short comments on the documents that have alreadybeen produced. With the exception of petty monetary claims, after a few formal hearings,
many cases undergo non-public preparatory proceedings held at a small chamber among
the parties and the judge. At these informal proceedings, the parties will candidly discuss
the legal and factual matters of the case in order to clarify the main issues efficiently.

6

7
8
9
10

The Supreme Court and the JFBA furnish brief English guides on the judicial system in Japanon their websites (www.courts.go.jp/english/system/index.html and www.nichibenren.or.jp/
en/about/judicial_system/judicial_system.html).
The Civil Proceedings Regulations (Rules of Supreme Court No. 5 of 1996) and the Court Act,etc.
www.japaneselawtranslation.go.jp.
With the exception of some very important or specifically defined documents, some can be
filed by facsimile under the Civil Proceedings Regulations.
Articles 139 and 161 of the CCP.

443

JapanAs the case proceeds, the court will order hearings every one to two months.
Before each hearing, the parties exchange written briefs until the major issues become
clear. There are no time restrictions imposed on the exchange of briefs; it will continue
as long as necessary at the discretion of the judge. Judges usually require the submissionof these briefs seven days before the hearing. In bigger cases, this exchange of preparatory
briefs can last for a couple of years or more. But statistics show that most cases will
require four hearings on average.
At any time the judge can encourage the parties to settle.11 The judge will often act
as the mediator. In Japan, some argue that the judges with the highest settlement rates,
thus showing the greatest efficiency in resolving disputes, are promoted more quickly
than others. Thirty-two per cent of district court cases were settled in 2011.
In Japan there is no American-style extensive discovery procedure, nor is there
any separation between the pleadings and discovery stage. The parties can at any time
produce the evidence they think is relevant to the merits of the case. Evidence can beproduced at the initial stage together with a complaint or at the last minute, even after
the completion of the witness examination. However, evidence produced in an untimely
fashion can be denied.12
Once the key issues are clear, the case proceeds to the examination stage. In
Japan, the examination stage of the case is relatively short compared to common law
countries. A witness will normally take no more than two hours on the stand, including
cross-examination, and only a few witnesses are questioned.13 Therefore, the wholeexamination of witnesses and parties is often complete in only half a day.
After the examination stage, the judge may require the parties to submit final
statements, to attend subsequent hearings for settlement, or to close the hearings
immediately in preparation for considering the judgment. The judgment is rendered one
to two months after the closing of hearings.
Time frame
The average time for completion of all cases in district courts was 6.8 months in 2010.
In 2011, 81 per cent of all cases in district courts were completed within one year and96 per cent within two years.14 However, it should be noted that more than half the cases
at district courts are petty monetary claims for the recovery of interest that is overpaid
pursuant to the Interest Rate Restriction Act (Act No. 100 of 1954). These petty claims
normally finish faster within just a few months. If we exclude these petty claims, theaverage time for completion is 8.3 months in 2010.
As would be expected, more complicated cases take longer to resolve. In 2010, theaverage time for completion of labour cases was 11.8 months, intellectual property cases

11
12
13

14

Article 89 of the CCP.
Article 157 of the CCP.
The average number of witnesses and parties examined at the first instance is only 0.3 (if petty
monetary claims for the recovery of overpaid interest, common in Japan, are excluded, theaverage number goes up to 0.5) in 2010.
Judicial Statistics, Supreme Court.

444

Japan14.8 months, construction-related cases 17.5 months and medical malpractice cases 24.9
months. The newly introduced Labour Dispute Adjudication System settles individual
labour disputes faster. The average time for completion of disputes under this system was
71.6 days in 2010.15
Under the Consumer Contract Act, qualified consumer organisations, certified
by the Prime Minister, may demand an injunction to prevent business operators’
unreasonable conduct. There is currently no provision in this Act that allows theorganisations to demand damages.
iii

Interim measures

Under the Civil Provisional Remedies Act, there are two types of interim measures:provisional seizure and provisional disposition. Provisional seizures are used to preserve
the debtor’s property to secure the monetary claims of creditors. On the other hand,provisional dispositions are used to preserve the disputed subject to secure non-monetaryclaims or to determine provisional legal status between the parties. The rulings on suchprovisional measures are rendered quickly: 70 per cent of the interim procedures were
finished within one month in 2011.
iv

Class actions

There is no provision in the CCP for class action suits. Instead, if a group wants to bea party to litigation, they must appoint among them one or more persons who stand asplaintiffs or defendants on their behalf.16
Under the Consumer Contract Act,17 qualified consumer organisations, certified
by the Prime Minister, may demand an injunction to prevent business operators’
unreasonable misconduct. There is currently no provision in this Act that allows theorganisations to demand damages. However, the Special Civil Litigation Procedure for
the Collective Recovery of Consumers’ Monetary Damages Act (Act No. 96 of 2013)
was newly promulgated in December 2013 and will take effect three years after its
promulgation. This new Act paves the way for consumers to collect damages.
v

Representation in proceedings

Natural persons and legal entities may represent themselves in all levels of courts. In
addition, associations and foundations without a legal status can be a party to the litigation
under their own name so long as they have a representative or an administrator.18
Non-lawyers such as licensed judicial scriveners19 may represent clients at thesummary courts with the court’s permission.20 In 2011, in only 30 per cent of district

15
16
17
18
19
20

Report on Inspection regarding Acceleration of Judicial Process, Supreme Court, 8 July 2011.
Article 30 of the CCP.
Article 12 of the Consumer Contract Act (Act No. 61 of 2000).
Article 29 of the CCP.
The official national association of judicial scriveners call themselves ‘Shiho-Shoshi lawyers’ attheir website. www.shiho-shoshi.or.jp/english/.
Article 54 of the CCP.

445

Japancourt cases (if smaller monetary claims for the recovery of overpaid interest are excluded,
40 per cent) and 2.3 per cent of summary court cases were both parties represented bylawyers.21
vi

Service out of the jurisdiction

Service of process in foreign jurisdictions is conducted through the competent government
agency by letters rogatory or through the Japanese consulate of that jurisdiction.22 Direct
service by post to foreign recipients is not allowed. The 1965 Hague Service Convention,
the 1954 Hague Civil Procedure Convention, bilateral conventions23 and reciprocal
judicial aid arrangements set out these processes. Service through foreign agencies orJapanese consulates can take several months or more. Service to foreign jurisdictions
without diplomatic relations with Japan, such as Taiwan and North Korea, is by law
through publication, but in practice the Japanese court clerk also notifies the party bypost.24
Pursuant to Article 184 of the CCP, if a party needs to examine a witness or otherevidence in a foreign jurisdiction, he or she must coordinate with the governing agencyof that jurisdiction or the Japanese consulate.
vii

Enforcement of foreign judgments

A final and binding judgment rendered by a foreign court shall be effective in Japan
when it meets all the following requirements:25
aJurisdiction of the foreign court is recognised under laws, regulations, conventions
or treaties. The recognition of jurisdiction of a foreign court has long been
determined by the ‘rule of reason’, or principles of justice, found in case law,considering the circumstances of each case; no clear criteria were provided.26
However, after the promulgation of the amended CCP in April 2012, the updated
Article 3-2 to 3-12 of the CCP will govern the determination of international
jurisdiction. If jurisdiction in Japan is not found through Article 3-2 to 3-12 of
the CCP, then a foreign court’s jurisdiction will be in turn recognised.
b
The losing party must receive notice through a method other than service by
publication, or any other service similar thereto, of a summons or order necessary
for the commencement of the suit. If a party appears without receiving suchservice, they will be deemed to have waived any challenge to the adequacy ofservice.

21
22
23
24
25
26

Judicial Statistics, Supreme Court.
Article 107 of the CCP.
The 1964 Japan-US Consular Convention and the 1965 Japan-UK Consular Convention.
Article 110 of the CCP and Article 46(2) of the Civil Proceedings Regulations.
Article 118 of the CCP.
Supreme Court judgment, 28 April 1998.

446

Japancd

The content of the judgment and the court proceedings are not contrary to public
policy in Japan. In this regard, punitive damages under the civil code of California
were held contrary to public policy in Japan.27
A mutual guarantee exists that the foreign jurisdiction will enforce the judgments
and rulings of Japanese courts. The following jurisdictions have been held to havesuch a mutual guarantee: many states in the United States, the United Kingdom,
Germany, Singapore, Korea, Zurich, Queensland and Hong Kong. On the other
hand, China, Russia, Thailand, Indonesia and other developing jurisdictions are
believed to have no mutual guarantee with Japan.

Aside from foreign insolvency proceedings, there is no specific procedure in Japan forscreening the above requirements. The party seeking enforcement of a foreign judgment
must file an action for execution of judgment pursuant to Article 24 of the Civil
Execution Act (Act No. 4 of 1979). For foreign insolvency proceedings, the foreign
trustees, etc. must file a petition to a court in Japan for recognition of the foreign
insolvency proceedings.28
viii

Assistance to foreign courts

Service to individuals and entities in Japan by foreign jurisdictions29 can be made via(1) the Ministry of Foreign Affairs of Japan under the 1965 Hague Service Convention,
the 1954 Hague Civil Procedure Convention or reciprocal judicial aid arrangements, or(2) the Japanese consulates of the countries that are parties to the above Conventions orbilateral treaties.30
In either case, personal delivery is not allowed in Japan. However, it is controversial
whether direct service by post to Japanese recipients from jurisdictions that are parties to
a competent convention is legal.
The examination of evidence for foreign jurisdictions is also governed by (1)and (2) above. The examination of evidence for foreign jurisdictions, even where it
contravenes any laws of the jurisdiction, is effective if it does not contravene the CCP.31
ix

Access to court files

Any person can make a request to a court clerk for the inspection of a case record,
whether the case is pending or not, unless:32

27
28
29

30
31
32

Supreme Court judgment, 11 July 1997.
Articles 17 and 21 of the Act on Recognition of and Assistance for Foreign Insolvency
Proceedings (Act No. 129 of 2000).
The Act on Special Provisions concerning Civil Procedures Incidental to Enforcement of theConvention on Civil Procedure and other Convention (Act No. 115 of 1970) and the Law
relating to the Reciprocal Judicial Aid to be given at the Request of Foreign Courts (Act No. 63
of 1905) are the main laws.
The 1964 Japan-US Consular Convention and the 1965 Japan-UK Consular Convention.
Article 184(2) of the CCP.
Articles 91 and 92 of the CCP.

447

Japanabcx

the oral hearing was closed to the public;a material secret regarding the private life of a party is stated or recorded and theinspection of such information would cause substantial detriment to their social
life; ora trade secret (as defined in Article 2(6) of the Unfair Competition PreventionAct) is contained within the record.
Litigation funding

A party to the litigation who lacks the financial resources to pay the expenses necessary
for preparing for and conducting a suit (i.e., the stamp fee on the complaint) or a person
who will suffer substantial detriment to his or her standard of living by paying such
expenses, may ask the court for judicial aid.33
On the other hand, those who cannot afford lawyer fees may turn to the Japan
Legal Support Centre for financial support.
IV

LEGAL PRACTICEi

Conflicts of interest and Chinese walls

Conflicts of interests 34
A lawyer is prohibited from undertaking:acases in which he or she provided support to the other party after consultations,
accepted the other party as his or her client, or was in a relationship of mutual
trust with and was consulted by the other party; orbcases that he or she handled as a public officer, an arbitrator or a mediator.
Also, without consent from the client, a lawyer is prohibited from undertaking:aother cases requested by the other party to the client; orbcases in which the interest of the client contradicts that of other clients or the
lawyer.
Chinese walls
A lawyer is not allowed to provide legal services for a matter on which other lawyers of
the same law firm are prohibited from providing legal service. However, this restriction
does not apply if there is a reason for maintaining the fairness of their legal service.35
There are no specific provisions that define ‘reason for maintaining fairness’ or Chinese

33
34
35

However, this aid applies only where it cannot be said that the applicant is unlikely to win thecase pursuant to Article 82 of the CCP.
Article 25 of the Attorney Act (Act No. 205 of 1949) and Article 27 of the Basic Rules on the
Duties of Practising Attorneys established by the JFBA in April 2005.
Article 57 of Basic Rules on the Duties of Practising Attorneys.

448

Japanwalls. Chinese walls are considered to be a factor in favour of maintaining such fairness,but each case should be determined on its own facts and circumstances.36
ii

Money laundering, proceeds of crime and funds related to terrorism

Money laundering is prohibited by several laws.37 Effective from 1 April 2013, an
amendment to the Act for the Prevention of Transfer of Criminal Proceeds will be
enforced. This will require specified business operators, except for lawyers, to confirm
more details about their clients in certain types of transactions.38
To prevent possible money laundering, lawyers, including registered foreign
lawyers, are required to verify the identity of clients when they engage in the following
transactions:aadministration of a client’s account in a financial institution, taking custody of or
administration of assets over ¥1 million; orbpreparation for, or execution of:• sales or purchase of real estate;• making capital contributions to establish or manage a company;• establishment of a legal entity;• a trust agreement; or• sales or acquisition of a company.
Lawyers should also preserve clients’ identification and documents describing thesummary of transactions for five years after the completion of transactions. Further,lawyers are required to confirm whether the client’s request involves a transfer of criminal
proceeds. If they recognise the involvement, lawyers are prohibited from participatingin the request.39
Lawyers’ fees
There is no rule requiring the defeated party to pay the prevailing party’s lawyers’ fees.
However, in tort cases, a defeated party may be held responsible for extra damages

36
37

38

39

The Ethics Committee of the JFBA, ‘Commentary on Basic Rules on the Duties of Practising
Attorneys’ (2nd Edition) (2012).
The Act concerning Special Provisions for Narcotics and the Psychotropic Control, etc., andother Matters for the Preventions of Activities Encouraging Illicit Conduct and other Activities
involving Controlled Substances through International Cooperation (Act No. 94 of 1991), Act
on Punishment of Organized Crimes and Control of Crime Proceeds (Act No. 136 of 1999),
and Act on Punishment of the Financing of Criminal Activities for the Purpose of Intimidationof the General Public and of Governments (Act No. 67 of 2002) and Act for Prevention ofTransfer of Criminal Proceeds (Act No. 22 of 2007).
Japan Financial Intelligence Centre under National Police Agency provides English
information concerning restrictions against money laundering, www.npa.go.jp/sosikihanzai/
jafic/jaficenglishpage/jaficenglish.html.
Article 8 of the Act for Prevention of Transfer of Criminal Proceeds and Articles 2 to 4 of the
JFBA Rules regarding the Verification of Clients’ Identity and Record-keeping.

449

Japan(amounting to around 10 per cent of the damages) as lawyers’ fees, if so claimed by theother party. Further, a defeated party must bear the court’s fees under Article 61 of the
CCP.
ii

Data protection

In December 2012, the JFBA established a new rule for the administration of clients’personally identifiable data.40 Under this Rule, when lawyers are engaged in the following
services, they must confirm their clients’ identification by requesting official identification
data as follows:adriver’s licence;aadministration of financial accounts;bmaintenance or administration of assets amounting to not less than ¥2 million;andcpreparation or implementation of significant transactions, including the following:• sale of real estates;• incorporation or change in the organisation of a company; or• appointment of a company representative.
V

DOCUMENTS AND THE PROTECTION OF PRIVILEGE

i

Privilege

In Japan, lawyers benefit from attorney–client privilege. Lawyers have a confidentiality
duty under the Penal Code and the Attorneys Act.41 Hence lawyers, including registeredforeign lawyers, may refuse to testify or turn over documents that may reveal confidential
information obtained in the course of representing a client.42 In-house lawyers will
also be protected under this privilege so long as they acted primarily as a lawyer in thecompany they work for.
However, a client may not exercise any attorney–client privilege or work productprotection. In February 2012, the JFBA proposed to amend the CCP to provide theclient with the explicit right of refusal to testify on privileged matters or to produce
privileged documents.
ii

Production of documents

A party to litigation or a third party holding relevant evidence must, subject to the court’sorder, submit the evidence designated by the other party in accordance with Article 220of the CCP. However, the holder of the evidence may refuse to produce them if:athe holder or the spouse or the relative of the holder is likely to be prosecuted orconvicted due to the disclosure;

40
41
42

Rule for Confirmation and Record of Clients’ Identification Data (The JFBA Rule No. 95 of2012).
Articles 197 and 220 (4) of the CCP.
Articles 197 and 220 (4) of the CCP.

450

Japanbcde

the confidentiality of a public officer, doctor, lawyer (including registered foreign
lawyer) or other professionals could be compromised;technical or professional secrets could be revealed;
the document is for the exclusive use of the holder; orthe document relates to a criminal or a juvenile case.

If a party does not comply with an order to submit evidence, the court may admit therequesting party’s allegations in lieu of the non-disclosed evidence. If a third party does
not obey the disclosure order, it may be fined.43
It is debated whether or not a court order to produce documents under the CCP
can be made to a party in a foreign jurisdiction. In theory a party can request the court
to commission the document holder (via foreign government agencies or the Japanese
consulate under Article 184 of the CCP) to send the document under Article 223 of the
CCP. However, this process is not in common use.
VI

ALTERNATIVES TO LITIGATIONi

Overview of alternatives to litigation

ADR in Japan is divided into two categories: judicial ADR in which the court is involved,
and non-judicial ADR in which the administrative institution or the private sector,
instead of the court, handles disputes. Conciliation44 is the most common. However,litigation is still used more often than conciliation. In both summary and district courts,
the number of petitions for conciliation in 2011 is only about one-tenth of that for
litigation: 74,891 for conciliation and 749,006 for litigation.45
ii

Arbitration

Arbitration remains uncommon in Japan. To encourage more arbitration, the Arbitration
Act was enacted in line with the 1985 UNCITRAL Model Law (the Model Law). ThisAct applies to both domestic and international arbitration. Registered foreign lawyers
and non-registered foreign lawyers practising in a foreign state may represent their client
in international arbitration in Japan.46
Japan is a signatory to the New York Convention and it does not limit theacceptance of the Convention to ‘commercial’ arbitration.47 Setting aside and refusal torecognise or enforce awards are limited to the restricted situations outlined in the Model

43
44

45
46
47

Articles 224 and 225 of the CCP.
To avoid doubt, the term ‘conciliation’ corresponds to chotei in Japanese while ‘mediation’ isassen in Japanese. Compared to conciliation, in mediation a neutral third party tends not tointervene in the dispute and gives more party autonomy for an amicable settlement.
Judicial Statistics, Supreme Court.
Articles 5-3 and 58-2 of the Act on Special Measures concerning the Handling of Legal Services
by Foreign Lawyers (Act No. 66 of 1986).
Japan applies the New York Convention on condition that the arbitral award is rendered inanother contracting state of this Convention.

451

JapanLaw. If a party with a valid arbitration agreement files suit in a Japanese court, the court
must decline to hear the case if so requested by the defendant.48
Regardless of the above pro-arbitration attitude and the strenuous efforts topromote arbitration, it has yet to be commonly used in Japan. According to JCAA, themajor arbitration institute in Japan, there were only 19 petitions in the 2012 fiscal year.
iii

MediationMediation is the least commonly used dispute resolution method in Japan. It is handledby municipal bodies or the private sector. Collective labour disputes,49 constructionrelated disputes and consumer affairs, are the most common cases settled throughmediation.
To facilitate quicker settlement of claims resulting from the situation at the
Fukushima Daiichi Power Plant after the Great East Japan Earthquake on 11 March
2011, the Dispute Settlement Centre for Nuclear Damage Compensation was establishedon 1 September 2011. Many lawyers are serving as mediators at this Centre. As of 6
December 2013, the Centre has received 8,816 applications for mediation, out of which
6,272 applications have been resolved. However, the Centre still has a large number ofpending cases, so it wants to simplify and expedite the mediation procedures.
iv

Other forms of alternative dispute resolution

Judicial ADR
Conciliation50
The goal of conciliation, governed by the Civil Conciliation Act,51 is to settle disputes
through amicable discussion and mutual agreement by the parties. Conciliation for civil
matters can be conducted at the district and family court, while family conciliation isheld at the family court. The process of conciliation is presided over by a conciliationcommittee, typically composed of a judge and two civil commissioners. Unlike litigation,
there is no ruling or decision that binds the rights and duties of the parties.
Labour dispute adjudication system
To encourage earlier settlement for lengthy labour disputes, the labour disputeadjudication system started in April 2006. In this system, a tribunal composed of a judge
and two part-time experts on labour relations is required to complete the trial within
three hearings.52 Disputes that cannot be resolved through this system are referred to the
district courts for litigation. In the six years since its promulgation, this system has beenused more commonly for labour cases than district courts. In 2011 there were 3,586

48
49
50
51
52

Article 14 of the Arbitration Act. However, unlike Article 8 of the Model Law, the court inJapan does not refer the parties to arbitration.
Article 10 of the Labour Relations Adjustment Act (Act No. 25 of 1976).
The Japan Federation of Conciliation Associations provides a brief English guide of theconciliation system in Japan on its website, www.choutei.jp/english/index.html.
Act No. 222 of 1951.
Article 15 of the Labour Dispute Adjudication Act (Act No. 45 of 2004).

452

Japancomplaints filed in this new system and only 3,065 labour complaints in the district
courts.
Non-judicial ADR
To promote ADR, the Act on the Promotion of the Use of ADR was enacted. Under
this Act, private ADR institutions that satisfy certain conditions can obtain certificationfrom the Ministry of Justice to conduct ADR. As of 1 October 2013, 127 certified ADR
institutions are in operation.
Applying to be a certified ADR institution can have a special effect on thenullification, or interruption, of extinctive prescription.53 If a party that applied for
certified dispute resolution fails to resolve their case and brings a suit within one monthfrom the date of being notified of the termination of such resolution procedure, extinctive
prescription is nullified as if the suit had been brought on the date on which the ADR
application was made through the certified dispute resolution procedure.
The Financial ADR System,54 which started in October 2010, is becoming more
and more popular to address disputes between financial institutions and customers
concerning financial commodities or services. It received 1,625 applications for ADR in
fiscal year 2012, about double the 837 received in 2010.
VII

OUTLOOK & CONCLUSIONS

An interesting case in terms of overlapping international jurisdiction is pending in theTokyo District Court. Nippon Steel Corp (currently Nippon Steel & Sumitomo Metal
Corp) filed a lawsuit in Tokyo against its South Korean rival, Posco, for ¥98.6 billion
in compensation for damages alleging trade-secret theft. Posco reportedly filed a suit inKorea alleging that the Japanese pending litigation commenced by Nippon Steel is void.
Which court will have jurisdiction is one of the issues in both cases. However, given theTokyo District Court is currently litigating the merits of the case, the Japanese court is
likely to have jurisdiction.

53
54

See Article 147 of the Civil Code. In Article 153 a demand has a similar effect as filing anapplication to certified ADR institutions.
Act for Amendment of the part of Financial Instruments and Exchange Act (Act No. 58 of2009).

453

Appendix 1

about the authors

Tatsuki Nakayama
Miyake & Yamazaki
Tatsuki Nakayama is a senior associate of Miyake & Yamazaki. His area of practice ranges
widely from international commercial transactions, including cross-border M&A, tointernational and domestic dispute resolutions.
He graduated from the University of Tokyo (LLB, 1998) and the National
University of Singapore (LLM, 2010). After several years of litigation practice in Japan,
he worked for the dispute resolution department of Singapore law firm Drew & Napier
LLC as an international lawyer (2010 to 2011). He is the vice chair of the Scholarship
Committee, the secretary general of the Japan Fund Committee and a member of the
APEC Committee in the Inter-Pacific Bar Association. He is the co-author of Labour
Law and Practice in Asia (Shoji Homu, 2011).
Miyake & Yamazaki
Sogo Nagatacho Building, 5F
11-28, Nagatacho 1-chome
Chiyoda-ku
Tokyo 100 0014
Japan
Tel: +81 3 3580 5931
Fax: +81 3 3580 5400
nakayama@mylaw.co.jp
www.mylaw.co.jp845