Japan
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
In Japan, various forms of ADR procedures (including mediation) are used to resolve disputes. Amongst them, court-led mediation can be positioned as a more formal ADR procedure. Court-led mediation was first established in Japan in 1922 to deal with landlord-tenant disputes. Today, it includes mediation for both civil disputes and family disputes. Once the parties’ agreement to settle the dispute has been recorded in the court record, it will be enforceable in the same manner as a final and irrevocable court judgement. Depending on the nature of the dispute, private mediation is also often used.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Engaging in ADR does not itself impose an automatic stay on any legal proceedings already commenced. The right to litigate or arbitrate is also not directly affected by engaging in ADR.
In 2004, the Japanese Diet enacted the Act on Promotion of Use of Alternative Dispute Resolution (Act No. 151 of 2004, the “ADR Act”). The ADR Act provides for the certification of private ADR institutions by the national government (such as the Ministry of Justice). If a mediator in a certified ADR procedure expects that the dispute will not be resolved by mediation and terminates the procedure, and either party files a lawsuit within one month from the date of notice of such termination, the statute of limitation of the claim is tolled from the date of commencement of the mediation.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
No. The parties do not have to enter into/consider ADR before litigation or arbitration except in family cases and certain cases, such as rent review. The Japanese government has not signed any pledges to enter into/consider ADR in all cases.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. The parties can agree in advance that they will or may try one or more ADR methods, such as mediation, to resolve any dispute that may arise. For example, a dispute resolution clause in a contract can provide that mediation is required prior to commencing litigation or arbitration.
When does ADR generally take place?
ADR can be conducted at any time upon agreement of the parties.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Since Japan is conventionally classified as having a civil law legal system, the concept of privilege (including without prejudice privilege) does not exist in Japan. In practice, confidential information is protected in ADR proceedings by imposing confidentiality obligations on those involved in the proceedings. If the rules applicable to ADR procedures include confidentiality obligations, the protection of confidential information is ensured. If there are no such confidentiality obligations in the relevant rules, it is necessary to consider concluding a separate Non-Disclosure Agreement (NDA) with the parties involved in the proceedings.
Does the output from ADR create precedents?
ADR procedures, such as mediation, do not create a precedent in the legal sense, since the person presiding over the proceedings (such as a mediator) does not render a binding judgement.
Who bears the costs of ADR?
Typically, the parties share the costs of ADR. However, it is also possible for the parties to agree otherwise, in the settlement terms.
Is your jurisdiction subject to any specific rules for cross border ADR?
On April 1, 2024, the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) entered into force in Japan. This convention establishes a framework for enforcement of international settlement agreements resulting from mediation in order to promote the use of mediation as a method of resolving international commercial disputes. Japan shall apply this Convention only to the extent that the parties to the settlement agreement have agreed to the application of the Convention.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
Under the Attorneys Act of Japan (Act No. 205 of 1949), in principle, only attorneys qualified in Japan may professionally act in dispute resolution, except as otherwise provided for by laws, such as the Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers of Japan (Act No. 66 of 1986). In regard to this, the ADR Act requires, as one of the requirements for a private ADR institution to be certified, that it has taken the following measures: “In cases where the third party/mediator managing the ADR process is not qualified as an attorney, such ADR institution has taken measures to ensure an attorney is available for consultation when expert knowledge on the interpretation and application of laws and regulations is required in the ADR process.”
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