Japanese Law Update #3: JCAA calls for Public Comments on Reforms to its Arbitration Rules

The Japan Commercial Arbitration Association(JCAA), the leading international arbitration institution in Japan, expects to implement reforms to its arbitration rules in July 2021. The draft of the reforms is now available at the JCAA’s website, and the JCAA is calling for public comments on the draft until May 12, 2021 (JST).

In 2019, the JCAA introduced a set of new arbitration rules. Through that reform, the JCAA implemented new rules (Administrative Rules for UNCITRAL Arbitration, and Interactive Arbitration Rules) in addition to its Commercial Arbitration Rules (the “JCAA Rules 2019”). At that time, the draft of those reforms was available for public comments for just two weeks. For this year, the JCAA has secured a longer period.

Below is a list of what the newest reforms will bring to the JCAA arbitration.

1. Expanding the scope of expedited arbitration

Under the JCAA Rules 2019, the maximum threshold for the amount in dispute for expedited arbitration is JPY50,000,000 (approximately USD500,000). The threshold under other major arbitration rules is generally higher. As part of harmonization, the JCAA proposes to increase the threshold to JPY300,000,000 (approximately USD3,000,000). The parties to an arbitration with an amount in dispute greater than JPY300,000,000 may also choose expedited arbitration upon mutual agreement.

In expedited arbitration, a solo arbitrator will decide the case unless the parties agree otherwise, and no hearings will be held unless the tribunal finds it necessary. The current rules require the tribunal to make reasonable efforts to render an award within three months from the constitution of the tribunal, while the new rules extend the time limit to six months in accordance with the higher threshold for expedited arbitration. This reform will make the expedited solution available for more users.

2. Implementation of the Appointing Authority Rules

The JCAA sometimes serves as an appointing authority of the arbitration tribunal in ad hoc arbitration or institutional arbitration under arbitration rules different from its own. The newest reforms will implement the new rules to be applied for that process. The reforms propose to implement a process similar to the “list-procedure” under UNCITRAL Arbitration Rules. Unless parties agree otherwise, the JCAA will send the parties in arbitration a list of arbitrator candidates for their feedback. The parties have one week to give their feedback on the list. After the expiration of that period, the JCAA will appoint an arbitrator, considering the preference of candidates given by the parties and other relevant circumstances.

3. Improving access for smaller claims with affordable costs

The JCAA intends to increase accessibility for parties with smaller claims by offering a new cost table for administrative fees. The JCAA Rules 2019 provide that the administrative fee to be paid to JCAA is calculated by the amount in dispute. The minimum administrative fee is JPY500,000 (approximately USD5,000) under the JCAA Rules 2019. The draft of the reforms proposes that the administrative fee for disputes less than JPY5,000,000 shall be 10% of the amount in dispute. By implementing this new cost table, JCAA will offer a more cost-effective dispute resolution for parties with smaller claims.

Through these updates on their rules, the JCAA will be able to contribute more significantly to global business dispute resolution, especially related to the Japanese market. 

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Author

Yoshie Midorikawa, Partner
Yoshie Midorikawa has extensive experience in complex disputes and arbitration under the rules of the ICC, SIAC, UNCITRAL, LCIA, and ICSID. Having worked with leading law firms in Japan and Singapore, she has handled parallel proceedings across multiple jurisdictions as well as domestic disputes before Japanese courts. Through learning in the United States, practicing in Singapore, and serving on an international law firm’s arbitration team, among other accomplishments, she has developed expertise operating in diverse international environments. She has also served as a board member of listed companies in Japan, improving their corporate governance. Her deep understanding of the civil law system, her working experience in international environments, including common law jurisdictions, and her knowledge of business, enable her to bring practical and nuanced legal solutions to international commercial disputes. She is listed among “Best Lawyers in Japan 2022(Litigation)”, “Best Lawyers in Japan 2021(Litigation)” by Best Lawyers.